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Aviation Industry Updates: December 21, 2021

By December 21, 2021December 28th, 2021Industry News

American Hiring 18,000 Next Year For Travel Rebound

  • American Airlines is planning to hire 18,000 workers in 2022, on top of thousands of new employees this year to cater to a rebound in travel, CEO Doug Parker plans to tell lawmakers during a hearing about flight disruptions in recent months.

  • The CEOs of American, United Airlines and Southwest Airlines, and Delta Air Lines’ chief of operations, will face questions Wednesday from the Senate Committee on Commerce, Science, and Transportation about mass flight cancellations and staffing struggles despite roughly $54 billion in federal payroll aid doled out to the airline industry to soften the Covid pandemic’s impact.
  • American and Southwest canceled hundreds of flights during brief periods this fall, as they struggled with staffing shortfalls and bad weather. Both carriers have turned to incentives like extra pay or bonuses to avoid repeats during Thanksgiving, which went smoothly, and Christmas and New Year’s holidays.
  • Airlines during the pandemic urged thousands of workers to voluntarily take buyouts or leaves of absence to help cut their labor bills since the aid package prohibited them from laying off staff.
  • Now they are scrambling to add workers as travel demand returns, competing in a tight labor market that has impacted retailers, restaurants, hotels and other industries.

CNBC

Airfares Plummeting For Early 2022 | Are Airlines Terrified Of Omicron Variant?

KEY POINTS:

  • Major airlines have unveiled sales throughout December and discounted airfares in the hopes that more Americans will take to the skies after the holidays. And while flight sales are common, what makes the most recent offerings stand out to experts is how much some airlines are willing to discount.
  • “The airline industry is one of the business world’s most perfect examples of the fundamental laws of supply and demand in action,” Henry Harteveldt, a travel analyst and president of Atmosphere Research Group, told Insider of the recent sales. “It’s a very soft period for the airlines between, say, January 5 and Presidents’ Day weekend.”
  • Airlines now also have to contend with the Omicron coronavirus variant and the fact that fewer than expected business travelers will be filling their aircraft cabins. Domestic flights, as a result, are seeing some of the best deals since there are limited testing and vaccination requirements when traveling between states with no chance of being stranded abroad.
  • “Airlines know that January and February are two of the least popular months to travel out of the whole year,” Scott Keyes, a professional flight deal tracker and founder of Scott’s Cheap Flights, told Insider. “If I’m an airline executive, I am terrified that I am not going to be able to sell these seats come early January.”
  • International destinations with few to no COVID-19-related entry requirements are also seeing high levels of discounting. Fares to Latin American countries where no COVID-19 test is required to enter including Mexico, Costa Rica, and Colombia have been selling for less than $200 on major airlines including American Airlines, Delta Air Lines, and JetBlue, among others.

Business Insider

How A Pilot Shortage Impacts Travelers | Higher Fares And Fewer Options

KEY POINTS:

  • Higher fares. Fewer flights. Smaller and even midsize cities cut off from global airline networks.
  • This nightmare scenario is becoming increasingly possible as the airline industry faces a pilot shortage in the coming years. The shortage, which is widely expected to be felt the most by the smaller regional airlines that operate on behalf of larger network carriers, could effectively force airlines to consolidate frequencies and cut cities altogether.
  • One projection shows a shortage of more than 12,000 pilots in the U.S. by the end of 2023. That study’s author, Geoff Murray, believes regional flying involving 50-seat Canadair Regional Jets and Embraer Regional Jets will be impacted first.
  • “Because of the shortage, the airlines — the regionals in particular — aren’t going to be able to staff those 50-seaters,” Murray, a partner at Oliver Wyman and a former airline pilot, said in an interview with TPG.
  • The Regional Airline Association (RAA), the trade group representing regional airlines, agrees with this sentiment about how dire the situation is for local communities.
  • “To ensure small community air service, we need to quickly grow the supply of pilots while upholding the highest training standards,” said Drew Jacoby Lemos, RAA’s senior director of government affairs, in an email to TPG.
  • At the onset of the COVID-19 pandemic in early 2020, the demand for flying plummeted. There was a surplus of pilots — one that, it turns out, would be temporary. But airlines, desperate to cut costs, offered early retirement packages to their most senior pilots — the ones who tend to command the highest salaries.
  • As the demand for flying rebounded, so did the demand for pilots. However, airlines found themselves with fewer pilots than they had before the pandemic.
  • At some airlines, “the early retirements represented as much as 15% of the pilot workforce,” Murray said.
  • A big reason why the supply of pilots is so constrained is because many people simply can’t afford to become a pilot.
  • As the industry emerges from its biggest crisis in history, it confronts another issue. While the pilot shortage is slower moving, the effects are already being seen, and more smaller cities could be on the chopping block.
  • For now, airlines are turning to a new set of recruitment tools to address this problem. Whether it will work remains to be seen.

The Points Guy

United CEO: 100 Planes Parked Amid Regional Pilot Shortage

KEY POINTS:

  • “We have almost 100 airplanes effectively grounded right now – regional aircraft, because there’s not enough pilots to fly them, which means we just can’t, at the moment, fly to all the small communities that we would like to.”
  • United Airlines made headlines just a few months ago when it pulled service to a handful of destinations, mainly those receiving regional services, due to these pilot shortages. With so much appetite from large mainline carriers for pilots and continued growth in the low-cost sphere, there are not enough pilots to meet demand. In addition, training pilots is no easy task, and the cost to enter the industry has been highlighted as a barrier to training pilots.
  • CEO of American Airlines, Doug Parker, was also asked to weigh in on the issue of pilot shortages. He stated:
  • “Service to small communities is incredibly important to American Airlines. We serve some 230 cities in the United States. Obviously, a number of those are smaller communities…and we would like to serve more, frankly, over time.”
  • “It is going to be an issue for our ability to serve if we can’t recruit enough pilots into the regional airlines. I believe we can get that solved. That is certainly an issue that we’re concerned about going forward. It hasn’t affected American yet.”
  • Executive Vice President and Chief of Operations at Delta Air Lines, John Laughter, also discussed the airline’s regional network in the context of its cuts in Grand Junction, Colorado:
  • “The one area that we are seeing a labor shortage, and I think it’s short lived, is in our regional pilots. As the major airlines are hiring pilots and because of the fact that in 2020 there was a gap where there was much lower flying, which sort of disrupts the training pipeline and the captain upgrade in the regional worldd. That’s sort of impacting us at this point. As we look out, we aren’t able to serve every place that we would like to…We see a recovery happening in 2022.”
  • From the hearing, it appeared there was some appetite for some assistance from the US government, likely financial, to help support pilot training initiatives to keep many of these regional destinations served. This could help relieve some of the pressure on airlines themselves to solve the issue, though it will not be the last time the industry will need to contend with pilot shortages.

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