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COVID-19

Airline Operations Continue to Collapse Under COVID-19 Stress

Airline Operations Continue to Collapse Under COVID-19 Stress
Joe Cortez

Although airlines are cutting fees and trying to encourage travelers to fly once again, their recent performance suggests the tactics are less about convenience and more about gaining bookings and passengers as the COVID-19 pandemic rages on. Statistics show international travel is almost completely gone compared to 2019, while domestic markets are only a shell of what they once were.

While airlines are cutting fees and adding flexibility to tickets to try and encourage travel once more, new data from the International Air Transportation Association (IATA) suggests air carriers are experiencing “sluggish growth” as the COVID-19 pandemic continues. International passenger demand was down over 90 percent compared to August 2019, while domestic market demand was cut in half year-over-year.

Aviation Industry “Remains Largely Paralyzed” by COVID-19 Pandemic

Even though economies are slowly opening around the world, borders remain closed or under strict quarantine rules. Despite efforts to demand on-site testing in Britain by both airports and lawmakers, the country still requires visitors to quarantine for 14 days after arrival.

As a result, the IATA says there is still a critical lack of demand for travel, which is hurting multiple stakeholders in the industry. In the North American market, revenue per kilometer was off by 80.6 percent compared to August 2019, while available seat-kilometers dropped by 63.9 percent against the same time period.

“The crisis in demand continued with little respite in July,” said Alexandre de Juniac, director general and CEO of IATA, in a press release. “With essentially four in five air travelers staying home, the industry remains largely paralyzed. Governments reopening and then closing borders or removing and then re-imposing quarantines does not give many consumers confidence to make travel plans, nor airlines to rebuild schedules.”

Demand was also critically down for domestic U.S. travel in August 2020. For airlines, revenue per kilometer was down by 72.6 percent, while available seat-kilometers dropped by 50.7 percent. With capacity below 70 percent and load factors at record lows, a recovery for airlines may not be coming until borders re-open, governments are able to reduce the spread of COVID-19, and a vaccine is widely available.

Airlines Try Dumping Fees to Attract Flyers, While Preparing for the Worst

In the meantime, airlines are doing everything they can to get flyers to spend money on airfare once again. All three legacy carriers – United Airlines, American Airlines, Delta Air Lines – and Alaska Airlines have all removed change fees for certain tickets.

Despite the change, the airlines are still preparing to cut a number of positions from their ranks as the Payroll Support Program money from the CARES Act comes to an end. American is preparing to remove 17,500 employees on Oct. 1, while United is planning to furlough 16,370 employees.

View Comments (10)

10 Comments

  1. edgewood49

    September 2, 2020 at 3:42 pm

    Its sad not only for the airlines but look at cruise lines who have had a continued battle with spreading viruses of one sort or another. Remember when it was said the “world is getting smaller” ? Well now we know. When this all abates its going to take quite awhile for travel to come back not to what it once was, I think that is gone for the foreseeable future but to a new level consistent with travel as we will begin to know it. If there is a silver lining in all this its the environment remembering people were saying “at what cost” for cleaning up the environment maybe now we know that answer as well.

    Keep up the great work.

  2. jonsail

    September 2, 2020 at 9:31 pm

    United’s no change fee charge does not inspire confidence. First, if you book, say to Hawaii or another country and a new travel ban is imposed or the deadline for removing one is extended, you don’t get your money back, only a credit toward a re-booking with I think a “tails I win, heads you lose” deal: If the new booking is cheaper I don’t think you get a credit for the difference. If the new booking is more expensive you pay the difference.

    Nor does this no change fee encourage sick flyers to postpone their trip. Basic economy flyers can’t change w/o a penalty so they will have every economic incentive to take their flight even if they feel sick.

  3. OZFLYER86

    September 2, 2020 at 9:36 pm

    but isn’t any quarantine in the UK, self quarantine, which is not checked by anyone ?

  4. Podcat

    September 3, 2020 at 5:57 am

    Couldn’t happen to a nicer bunch.

  5. the810

    September 3, 2020 at 6:32 am

    I’m convinced airlines bet on the wrong market. Instead of trying to appeal to people who would be happy to fly, they tried to pitch themselves to those who are afraid of being around other people. While I see why they did that, this is the result – no one flies.

    People who prefer to stay at home at this time will not change their mind because of few theatrics being thrown into the process of flying. Making planes look like radioactive zones does not boost confidence. And people who would be perfectly happy to go on a holiday tomorrow will consider alternatives that do not include flying, because it’s just too much hassle at the moment. In the end, planes fly empty.

    Airlines can only blame so much on border restrictions. Yes, losing (for example) TATL market is out of their control. But the extremely slow recovery of intra-EU or intra-US market could have been prevented by making air travel more attractive.

    My travel budget this summer is all-time high but airlines got 0,00€ from it because the experience is just not worth it. Everything went into hotels and trains in locations where I could get a pleasant experience for my money.

  6. Counsellor

    September 3, 2020 at 10:49 am

    I’d be happy to fly internationally, indeed, I’ve been trying to get to Germany since May, but every reservation I’ve gotten, even though confirmed, is ultimately cancelled because Germany won’t let American tourists in. You’re going to have to solve the landing problem if you are to get people on your planes.

  7. jonsail

    September 3, 2020 at 3:23 pm

    the810 raises a very interesting point. Even for people not afraid of covid the necessity to wear a mask coupled with the decline of food and drink service in the premium cabins makes flying less attractive. Premium cabin air travel no longer seems luxurious. Still, all things considered, I am not sure I agree with the 810’s argument.

  8. rjpjr

    September 3, 2020 at 3:55 pm

    On-board service is out just for show. How does droppoing a mini-bottle of scotch and a ciup of ice on my tray put me at risk for COVID? Same with (hot) food. Now that we know properly monitored food/drink service (as at a restaurant or take-out) is not killing people, why isn’t service back on airlines? Maybe because the airlines are saving money? Mabye it will NEVER come back in the oh-so-frightening post-COVID future. Lots of bucks saved. Maybe they’ll let me brown bag my libation on board along with my Big Mac….. Oops, forgot – the libation got tossed at security…..

  9. Long Zhiren

    September 6, 2020 at 9:52 pm

    No change fee makes sense on UA. The schedules are changing so much and so often anyway after you book, it’s really crazy. I’ve gotten a couple refunds because of that.
    The hardest thing is when schedule changes obliterate your flight a few days before travel. Alternatives with just a few days before travel are super high priced still. You get stranded. I tried double booking with a second ticket for alternate destination as insurance, but UA will autocancel any double booking for an identical time of travel.

  10. adgrad

    September 12, 2020 at 9:55 pm

    Remember when FF programs didn’t have minimum fees and we flew like crazy people to get top tiers? If they dropped these minimums, I bet there would be an amazing amount of us, who would hop on a plane to make our top tier levels. Right now there’s no incentive to do it and flying with a mask for hours is miserable. Not to venture into politics but rather just mention Biden said that he would create a mask mandate, so this looks like a flying misery for a long time to come. So, drop the minimum spend and fill up the cabin.

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