What Airlines Losing Money Could Mean for You

Airlines have been hemorrhaging money in recent months, another casualty of COVID-19. How will airlines stay afloat and what does it mean for you?

On a day by day basis, there are about 70 percent fewer passengers traveling through airport security lines than there were at the same time last year. But how does that affect you, as a traveler?

Labour costs may be cut by 50 percent

Due to the travel collapse, airlines will need to cut payroll costs by 30 to 50 percent, the equivalent of tens of thousands of jobs. United Airlines says that about 36,000 employees could be furloughed, while American Airlines says it plans to lay off or involuntarily furlough 19,000 unless they receive more aid.

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Some airlines may fold

Smaller international airlines, including Virgin Australia and Columbia’s Avianca, have already folded. Others may soon follow suit, depending on how long the industry is in crisis. The International Air Transportation Association predicts that global travel won’t recover until 2024, due to a lack of consumer confidence, continuing global COVID-19 outbreaks, and disruption of business travel, CNN says. This has a major effect on the survival of the airlines: It’s expected that international passenger traffic will fall by 55 percent in 2020 from the 2019 numbers.

Change fees will be eliminated

Here’s some good news for passengers: Some airlines—in a desperate attempt to lure leery passengers—will continue to eliminate those pesky change fees. “The reason they’re making these changes is to increase consumer confidence in booking flights,” Henry Harteveldt, a travel industry analyst and president of travel market research firm Atmosphere Research, told Afar. “The airlines know that consumers are scared to book flights because of the public health landscape.” If passengers book flights in advance—even if they end up changing these flights—the airlines can better predict where people want to fly, and they can have a better sense of planning. This also puts these airlines on the same playing field as Southwest, which has long been revered for its lack of change fees.

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Prices may drop

Another plus for passengers? Possibly. Experts are conflicted, but most agree that the price of plane tickets won’t go up at least in the short term, despite the industry’s troubles. The airlines are in a very tricky situation: They’re actively losing money, they don’t have any idea when the downturn will end—and yet, they still need to lure passengers, so they can’t raise rates. Once passengers do return, you can expect higher prices for airline tickets than before the pandemic as airlines struggle to make up for their losses.

It’s a good idea to book 2021 travel stat

No one knows what the future will hold, but what we do know is that the booking policies are super flexible. Most airlines, hotels, and cruises will return your money without any fees—especially if you have a COVID-related cancelation. If they don’t give you a full refund, the travel companies are offering credits for a no-fee 24-month travel change, so you’re pretty much good to go. If you’re really worried, you can purchase trip insurance. The benefits to booking now are that you will have more options for using your miles if you’re booking award travel; there are tons of deals available; and if you see a great price for a dream trip, there’s really no reason not to book now and see what happens next.

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Flight attendants will be hardest hit

The position accounts for more jobs than any other in the airline industry—so they will be affected the most by the layoffs, Savanthi Syth, an airline analyst for Raymond James, told ABC News. Since carriers have shrunk, meeting the demand for fewer passengers, there are fewer employees needed. Plus, food and drink service on most flights has been cut, so the flight attendants aren’t as critical.

Airlines are transporting items rather than people

Desperate for revenue, some airlines are filling up the planes with everything from strawberries to medication in an effort to make some money as they fly. Since COVID-19, cargo rates rose more than 10 percent, as the airlines let it be known that they have ample extra room to ship cargo. That’s because passenger traffic is down by 90 percent. It’s not a totally fair tradeoff, though. The airlines could lose $252 billion in passenger revenue, according to the International Air Transport Association.

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Though passengers are scared, it’s safe to fly

The Flight Safety Foundation, a global advocate for aviation safety, announced in October that a six-month analysis of the air travel industry’s response to the virus concluded that the industry’s efforts have reduced the possibility of transmission in the air. “With the health and safety measures that airlines, airports, and security personnel have now put in place, the risk of contracting this virus appears extraordinarily low, much lower than in other public places,” says Hassan Shahidi, president and CEO of the foundation.

Sources:

  • TSA.gov: TSA checkpoint travel numbers for 2020 and 2019
  • CNN: “The airline industry could shrink by half to survive, United Airlines chairman says”
  • CNN: “Global air travel won’t recover till 2024, says airline body”
  • Afar: “The Major U.S. Airlines Have All Ditched Their Change Fees—for Good”
  • OAG: “US Majors Heading for a Thanksgiving Roasting”
  • ABC News: “Unfriendly skies: Airline workers brace for mass layoffs”
  • Flight Safety Foundation: “Flight Safety Foundation: ‘It’s Safe to Fly'”

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Originally Published on Reader's Digest