Airline recovery falters before it even gets off the ground
Any hope for a rebound in air travel this year has vanished, with coronavirus cases surging in much of the U.S. and some states imposing quarantines to keep visitors away.
Why it matters: The airline industry is already suffering the worst crisis in its history. The soaring infection rates mean planes will be grounded even longer, putting tens of thousands of people out of work in the coming months.
Driving the news: United Airlines this week warned that 36,000 employees — nearly half its U.S. workforce — could be furloughed in October, a grim omen about the state of the aviation industry.
- With bookings at just 25% of normal July traffic, and a projected 35% in August, United offered workers a sobering assessment.
- "Given the recent resurgence of COVID-19 cases across the country, it’s increasingly likely that travel demand will not return to normal until there is a widely available treatment or vaccine."
What they're saying: "A gut punch" is how Sara Nelson, president of the Association of Flight Attendants-CWA, described the projected job losses in a tweet.
- "They are also the most honest assessment we've seen on the state of the industry — and our entire economy," she added.
- Airline workers are bracing for more furlough notices in the coming weeks, as government support programs are set to expire at the end of September.
Just a few weeks ago, there had been a glimmer of hope for a modest rebound in air travel this summer.
- Airline bookings — mostly for leisure travel — have improved slightly from their April low and airlines were beginning to slowly ramp up passenger capacity.
- But that was before the new spike in cases across the Sun Belt, including Florida, Texas and Arizona.
- New York, New Jersey and Connecticut — which successfully beat back the virus — are now requiring visitors from 19 states to quarantine for two weeks. Chicago adopted a similar quarantine for visitors from 15 hot spots.
The budding recovery barely got off the ground.
- On Tuesday, United said it was cutting back on the August flight schedule it announced days earlier because travel demand was sliding again. Increased bookings to Newark, for example, collapsed after the region's quarantine order, United said.
- Delta Airlines, which is adding back about 1,000 flights this month, to about 30 percent of its normal schedule, struck a cautious note in a memo to employees Thursday.
- "The continued growth of the virus through the Sun Belt, coupled with quarantine restrictions being implemented in large markets in the northern part of the country, give us renewed caution about further schedule additions at this time," wrote CEO Ed Bastian in an employee memo.
The big picture: Foreign countries don't want American visitors either.
- Europe banned American travelers, along with those from Brazil and Russia, because they failed to control the spread of the virus, and China still has a ban on U.S. travelers.
- Overseas cargo flights can offset some, but not all, of the decline in international passengers.
- American Airlines, which expects international travel to continue to be depressed next year as well, is cutting routes to Asia and South America from several U.S. cities.
What to watch: Leisure travelers are staying close to home, and driving, while business travel won't likely rebound until conferences and conventions do.