Due to the recent COVID -19 Coronavirus pandemic, the airlines are suffering enormous losses from an extraordinary drop in air travel demand. Commercial aviation has been one of the hardest hit business sectors during the virus outbreak as domestic and international air traffic has reached a standstill.
Many of the airlines are losing between 50 to 100 million dollars per day and they expect to only bring in approximately 10% of the sales volume they would normally bring in for the current economic quarter. In total, airlines will likely lose over a $100 billion dollars in revenue this year alone.
The passenger numbers are down over 90% compared to the same timeframe last year and most airlines are cutting flights for months in advance as they are bracing for a prolonged economic downturn. Airlines are rapidly exhausting their existing cash reserves as aircraft that are flying are nearly empty and most aircraft remain grounded.
To assist in this crisis, the federal government has provided the major airlines $50 billion dollars in federal coronavirus aid. Most of the aid comes as grants to ensure that employee payrolls can continue, and loans to help compensate the airline’s negative cash flow.
To receive the assistance, airlines are instructed that they cannot use the funds to buy back stock, pay shareholder dividends or pay executive bonuses and they must develop a plan as to how they will pay back the loans to the government and taxpayers for the aid.
One of the major conditions for the federal aid is that the airlines must continue scheduled air transportation to every U.S. city that was served before the coronavirus outbreak.
The main concern is to ensure airlines continue service to the smaller destinations in their routes. Commercial aircraft not only carry passengers but many types of goods, including U.S. mail, are transported in their cargo holds. Commercial flights are instrumental in maintaining a logistical lifeline in transporting government and public health personnel, as well as medical devices and supplies to the hardest-hit areas in the country. Commercial aviation is still an essential service during this crisis.
Although the flights need to continue, airlines are able to consolidate their flights to a single daily or even weekly flight to each of the cities in their routes. Even with that consolidation, many flights still have nearly empty cabins with some flights even containing a single passenger.
Nearly every airline has waived the fees they charge to change or cancel flights. Although refunds cannot be obtained on nonrefundable tickets, most airlines will allow the customer to rebook the flight for a future date before the end of the year and some airlines extend that date until the summer of 2021.
On the aircraft that are still flying, airlines have made a number of changes to the service in the cabins to increase the safety of the passengers and flight attendants. To reduce the interactions between flight attendants and passengers, most snack and beverage services have either been suspended or altered on flights.
Airlines are cleaning the cabin areas and lavatories before and after each flight using hospital-grade disinfectant and most aircraft receive a more thorough enhanced cleaning overnight. Aircraft usually are equipped with HEPA (High-Efficiency Particulate Air) filters to filter out microscopic particles in the air and the aircraft introduce outside air into the cabin so that a complete exchange of air is accomplished every few minutes.
As for what the future of commercial aviation will look like, the recent past has shown that it may be a slow recovery for the airlines. It took approximately 2 to 3 years for air travel to fully recover after the 9-11 attacks and the 2008 recession and this pandemic will encounter an even slower recovery, or possibly never fully recover.
Leisure travel will probably lead the way and it is projected that business travel may never have the passenger volume of the past. The adoption of teleconferencing and streaming meetings will likely continue as businesses continue to cut back on expenses. As they realize the cost savings compared to traveling, it is doubtful that companies will go back to face-to-face meetings unless deemed necessary.
It is likely that the airline industry will remain well below the current workforce totals for the foreseeable future. Fewer flights will reduce the need for personnel and airline manpower will likely be permanently dropped by as much as 20-25% across nearly every employment category. With reduced flights, airline mergers may even be a long-term solution to reduce administrative overhead, fill the aircrafts with passengers and help keep the industry profitable.
Unfortunately for travelers, fewer flights mean fewer choices, in terms of available flights, flight times and seating preferences which, in most cases, could result in higher fares when flights do resume in the future.
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