Looking to the Skies: A Centennial Institute Session Recap
December 3, 2021|Jonathan Hammond
If there was one word to describe the state of the U.S. aviation industry in 2019, it was “soaring.” Airlines in the United States carried a record 811 million domestic passengers and over 1 billion passengers systemwide. With such upward trends, the global airline industry expected to generate a net profit of $29.3 billion in 2020.
Unfortunately, COVID-19 put an end to such optimistic estimates.
In the first couple of months of the COVID-19 pandemic, passenger travel fell by 95 percent. Seventeen percent of pilots were furloughed globally, while 20 percent of North American pilots found themselves unemployed. In January 2021, almost a full year after the start of the pandemic, airline passenger throughput was less than half than was recorded in 2019. Even more than a year after the start of the COVID-19 pandemic, airlines are still wondering what a post-pandemic industry will look like.
To help answer that question and mark its centennial anniversary, Eno hosted a series of webinars, panels, and discussions on the major, pressing issues facing transportation, including the aviation industry. One of such panels was entitled “Looking To the Skies: What is the Future of Aviation?” and included the following speakers:
Andy Cebula, Vice President, NextGen & New Entrants, Airlines for America
Captain Bob Fox, First Vice President, Airline Pilots Association
John D. Clark, Vice President of Business Development, SSP America, Inc.
Panelists explored some of the most prominent issues facing aviation today, including depressed passengers and revenues, more aggressive fliers, and changing travel habits.
While leisure travel has recovered in many markets, business and international travel still substantially lag pre-COVID levels. Business travel made up 75 percent of profits on some flights even though only 12 percent of passengers were traveling for business reasons. Cebula (Airlines for America) noted that “the recovery from COVID…[for] all of us individually and how it’s affecting our lives will then affect what’s most key to the carriers and that is business travelers. Tickets being sold that are business related are down by 62 percent compared to what they were in 2019.” Although air level cargo transportation grew 17 percent in 2020 due to increased demand, international business passenger travel may remain 15 percent lower than 2019 levels through 2023.
Although the U.S. reopened its borders to international travelers in early November, international travel is still down 54 percent from its 2019 levels. This affects not just airlines, but also the businesses that support air travel. For instance, many airport concessionaires that relied on these passengers for their survival closed across the country. Clark (SSP America), which represents airport concessionaries, suggested that these businesses are struggling mostly to pay their rent, but also need revenues to support capital investment and labor while also increased operational flexibility to account for changing customer needs. One study by the Airport Restaurant and Retail Association noted that concessionaires will not be able to address issues like rent backlogs until passenger levels are back to roughly 80 percent of their 2019 measurements. As of mid-November 2021, passenger levels have returned to around 82 percent of 2019 levels.
To help woo passengers, airlines, airports, the federal government, and manufacturers employed several strategies, from mandatory mask mandates to improving aircraft circulation systems. Additionally, individual airports are providing additional services such as aeroponic gardens and childcare facilities to help employees and passengers alike. Finally, $48 billion in payroll support from Congress helped many U.S. airlines avoid bankruptcy.
Tigers in the Skies
Another issue facing airlines is the rise in unruly passenger incidents. Since the start of 2021, 85 percent of flight attendants dealt with unruly passengers, and one in five have had at least one physical altercation. In 2021, the Federal Aviation Administration (FAA) reported at least 3,642 mask-related incidents and over 5,000 instances of unruly passengers. In 2021 alone, the FAA investigated 943 reports of unruly passengers. To put current statistics in perspective, the FAA only investigated a total of 146 reports of unruly passengers in 2019.
To combat increasingly violent behavior, the FAA instituted a “zero tolerance” policy that subjected all incidents to a fine up to $37,000 for each violation. In addition to fines, the FAA suggested that airports put up clearer notices for masks in their jurisdictions to prevent confusion and potential outbursts from angry passengers. In a recent hearing on air rage hosted by the House Transportation and Infrastructure Committee, chairman Peter DeFazio (D-OR) suggested that the FAA discontinue the sale of “to-go” alcohol, as well as staff more gate attendants to intervene in instances of violence.
Additionally, once an incident is reported, it does not guarantee federal action. Out of the 973 investigations initiated by the FAA, the agency only initiated enforcement action in 227 cases. Stopping recurring unruly passengers is a difficult process due to legal constraints on sharing “no-fly” lists between different airlines. Additionally, lack of federal officials capable of addressing incidents of violence on flights is a major issue particularly for smaller airports. Similarly, flight attendants have little time to file reports as they are continuously on the move.
Plane Public Policy
As the panel came to a close, all three panelists offered their predictions for the future of the airline industry and the challenges it will face. Cebula outlined a plan to standardize industry public health measures, such as the cleaning of plane interiors, to make sure that the processes are consistent across the industry. Fox emphasized that clear communication between airlines and public health authorities regarding contact tracing and travel restrictions will help the industry protect passengers and crewmembers alike. Finally, Clark mentioned that collaboration between airlines and airports will be especially important for the industry. Clark stated that, “in recent months, we have tried to have a more collective dialogue with airports, and we actually worked together to help reduce some of the perceived barriers that it takes to work in the environment,” from concerns over contract tracing to vaccine implementation.
The remarks of all three panelists illustrated the range of issues that the aviation industry still faces, even as passengers return to the skies. To hear more from the panelists on the future of aviation, please check out a recording of the panel hosted during Eno’s Centennial Institute on September 22, 2021.