A Stateside View

02/10/2020

Time is up for key aviation funding support programmes in the US reports Desiree Perez, a Florida-based aviation Leadership Coach. So what happens next?

“Thinking of the current state of the aviation industry in the US, I can’t help but thinking of a ticking clock.

In many ways, on this last day of September, it feels as if the aviation industry is facing this ticking clock. Tonight, at midnight, the Payroll Support Program that was extended to the airlines at the beginning of the Covid pandemic, is expiring.

In detail, this means that the funding that was made available to the airlines in March to protect jobs, is running out. The harsh consequences that we will have to face are that ten thousand airline jobs will be lost, which will have a significant ripple effect on other stakeholders within the airline industry. This unfortunate scenario is something that we couldn’t even imagine just eight short months ago.

Loan offers have been extended to airlines. Among all of the airlines, there were seven airlines that accepted the government funded loans. Amongst those seven airlines are Alaska, Frontier, American, JetBlue, Hawaiian, SkyWest and United. Delta and Southwest have decided to rely on private funding.

Although much of the above paints a very grim picture, Airlines for America (A4A) defined the late summer of 2020 as the beginning of the recovery. Amongst this silver lining, it is also important to note that recovery will be much slower than expected and is going to extend well into 2024.

Business travel, which delivers the highest yields for airlines, is not expected to return for an extended period of time due to the overall economic downturn, low trust and travel being the number one cost to be eliminated by corporations.

Currently, the US domestic flights are down 50% and 72% internationally compared to last year with an average of 56% load factor. At the moment, capacity cuts have not caught up with the significant drop in demand which could have a continued impact on the workforce. The recovery is considered to be multi-staged starting with airline and government collaboration in order to facilitate safe travel, followed by cost reduction, business model adaptation and debt reduction. 

There is hope that an extension of the CARES Act will be passed by Congress to prevent furloughs and protect the thousands of jobs at stake.

We are facing the toughest time in aviation history and to all of you who continue to keep the aviation world moving, my hats off to you!”
 
Contact Desiree at desiree@desireeperez.com