Government Shutdown Affecting Airlines
Jennifer Billock January 23, 2019
The still ongoing government shutdown is claiming yet another victim: airlines. Many of the major operating airlines have seen stock market hits since the shutdown began, with many unable to move forward on certain new routes or put new aircraft into service thanks to furloughed workers and inspectors.
As the government shutdown enters its second month, a new victim of furloughed agencies and employees is coming to the forefront: major U.S. airlines. The big players are taking hits in the stock market, which fell 300 points this week. According to Forbes, “United dropped 2.63 percent, while Southwest fell 2 percent. Delta fell 2.1 percent to 47.10, near its year low of 45.08. And American fell 3.62 percent to 32.74, near a 52-week low of 28.81.”
The airlines are facing other issues as well. It’s been widely reported that the Transportation Security Administration is not functioning properly during the shutdown thanks to employees working without pay or just calling in sick because they can’t afford to get to work. But flight routes and new aircraft are suffering, too.
Southwest expected to be running new flights from several California locations into Hawaii early this year—but it’s not going to happen yet because the aviation inspectors needed to certify the aircraft are furloughed. And Delta is anxious to start flying its new Airbus A220s, but it’s the same issue. The Federal Aviation Administration inspectors needed to green light the planes aren’t currently working. Plus, any planes that are out for repairs can’t return to their fleets because no one is there to sign off on the safety reports.
[Photo: Pixabay]
First, there are many government employees travel, and there are many people travel to DC for businesss. During government shutdown, airlines lost those revenues. All 3 majors have hubs in DC, there is a reason for that. Second, government shutdown have ripple effect across the country, not just DC. People planned to visit National Parks cancel their trips during shutdown. Bankers deal with SBA loans cancel their trips to visit their clients because they can’t process the loan. Third, consumers might chose other options to avoid the inconvenient. This actually hurts more than the first two. Consumer confident is a tricky thing. Economists can tell you a whole lot about this.
Fine Art Landscape Photographer, did you read the whole article? Southwest can't get final approval for its Hawaii flights because of the shutdown, Delta can't get approval for a new plane type because of the shutdown, and those are just the most famous examples. The stock market is probably betting that the more the shutdown goes on, the more airlines will affected in ways like this, because the agencies they have to deal with for ANYTHING new/change/etc that needs government approval are shut down. And airports too, if they need federal government approval for anything, that's on hold during the shut down too. So there's a LOT MORE that it means beyond longer TSA lines.
How does government shutdown cause stocks to go down? Government shutdown has an effect on TSA and because of it there might be less staff at airports. All it means that passengers will need to get to the airport 15+ minutes earlier. If there is construction on highway near airport which causes 15+ minute delay for passengers does it mean that it will cause airline stocks to drop? Fact remains that passengers are still able to buy tickets there is no impact on their ability to do so.