Airline service will not disappear, but the overall economy will take a hit
America’s airlines and their labor unions are meeting with politicians at the White House, Senate, and House of Representatives. They are all looking for another $25 billion airline virus bailout. Why should they get bailed out? What will happen if they do not succeed?
The entire aviation and travel industry will suffer. Hence, the entire economy will take a tremendous hit without another airline virus bailout.
We have all heard about the problems facing the airline industry. They have already been blessed with more than $50 billion in support from the enhanced unemployment grants and emergency airline loans. However, the political calculations all factored in a downturn in travel that would only last around six months. Today we realize that travel will not return for at least a year.
Airline job losses have been brutal and may get worse
According to The Hill, published for lawmakers and the Washington, DC, crew, the job losses without any federal support will be drastic without another airline virus bailout.
American Airlines expects to ax 19,000 jobs, and United Airlines said it plans to cut 16,370. Delta Air Lines expects to lay off pilots but will not furlough any flight attendants due to the number of employees who opted for early retirement during the pandemic.
Perhaps several airlines will go bankrupt, but we have been through these scenarios before. However, the total collapse of the travel industry because of the coronavirus will make an enormous difference.
Without an airline virus bailout, the US will face bankruptcies, lost airport income, and more unemployment
These financial aspects affect more than only airlines. They extend to airports, tourism, hotel revenue, employment, and the industries that surround them. The change has been dramatic in this section of the economy.
It is easy to imagine the overall dependency on every airport on passenger traffic. COVID-19 has brought global airline travel to a standstill. Airline payments of take-off and landing fees have all but stopped. The passenger facility taxes have dropped by 70 to 80 percent. Parking fees, dining, and retail income have been eliminated at many airports. And, that doesn’t include the loss of rental car, airport hotel, taxi, ride-sharing, and shuttlebus access income.
International and regional differences in dealing with the pandemic have added to economic woes
That economic standstill has been exacerbated by political lockdowns, regional rules, and lack of a unified national approach. These issues have spread across the planet. This complex system of travel lockdowns and bans has meant new problems as the virus continues its steady march. We as a nation and as a planet are still trying to come up with a working response to stopping the coronavirus spread.
Should airlines go bankrupt and airports miss bond payments, the nation will survive. However, financial distress will trickle down. When it spreads to thousands of small industries that make up the travel and tourism sector, the impact grows. Then, industries that support airlines such as Boeing, Raytheon, Honeywell, GE, Pratt and Whitney, and others, begin cutbacks. The economic tremors grow.
Pratt & Whitney has seen shop visits decline 60 percent since the second quarter, and Collins Aerospace saw a 65 percent drop in commercial spare parts orders, Hayes said, noting global commercial air traffic is down about 45 percent amid the coronavirus pandemic, down from an 80 percent drop in March.
Political bickering between Democrats and Republicans may scuttle any agreement prior to the election
The posturing between the House and the Senate with budget negotiations will not end airline service. The layoffs and cutbacks in service are all designed to allow the business to keep operating. However, flights will be curtailed and the trickle-down effects of the airline woes outlined above will continue.
Unfortunately, for the President, major airline hubs are in Detroit, Colorado, and North Carolina. That may influence the election. Naturally, the President is not interested in facing tens-of-thousands of voters who have just been laid off. The Democrats may be betting that the administration will take the heat. So, we are potentially faced with a classic standoff.
Waiting until after the election for the airline virus bailout will not serve the country
With this classic political squeeze play, the economic stakes are as high as I have ever experienced. Travelers United supports the airline virus bailout bill that will keep airlines funded. When, March 2021, comes around, competition should prevail. And, businesses will battle to serve the flying public without additional regulations but with transparency.
Hopefully, by the final quarter of 2021, a vaccine will have been approved. It will be in the midst of deployment across America and the rest of the planet. The population accepts an incremental increase in the overall national death rate. And, with the election behind us, the rancor between the administration and the media will subside, no matter who wins.
When asked about my predictions, I optimistically hope that the situation is as I describe it. Only then can this coronavirus nightmare that has consumed the country pass. We can prepare for the next pandemic.
The country can wake up to sending children back to school. People will meet face-to-face. Friends hug and travel the world again. That is the Travelers United vision of the future.
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 11 years with Congress, the Department of Transportation and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.