Airlines see growth, innovation after COVID shock
Most U.S.-based airlines are gearing up for strong growth — adding routes, hiring employees and ordering new aircraft — as the industry continues to recover from the pandemic slowdown.
The big picture: Airlines crippled by the health crisis generally weathered the shock better than after 9/11 because of the way federal assistance was structured, industry officials told the Senate Commerce Committee on Wednesday.
- Aid was targeted to support employee payrolls, which enabled airlines to bounce back more quickly when travel demand returned.
- "The Payroll Support Program saved the airline industry by providing a lifeline for its workers," American Airlines CEO Doug Parker testified, echoing remarks by other executives.
What's happening: Airlines are restoring routes, hiring more employees and ordering new, more fuel-efficient aircraft to prepare for strong growth in 2022 and beyond.
- The industry has added 47,500 jobs since the pandemic low in November 2020, a 13% gain.
- Low-cost domestic airlines — Allegiant, Frontier, Spirit and Jet Blue — are seeing the biggest bounce. Their scheduled seat capacity for the first quarter of 2022 is higher than the same period in 2019.
- Larger airlines with international routes, including Delta and United, continue to lag 2019 capacity.
Yes, but: Domestic travel remains about 14% below pre-pandemic levels, and international travel is down 28%, according to trade group Airlines for America.
- A full recovery will depend on the return of business travel, which the U.S. Travel Association projects will happen by 2024.
- Average airfares remain well below 2019 levels: $225 in the second quarter, compared to $333 in 2019 (or $354 adjusted for inflation).
What to watch: Under pressure to reduce their carbon footprint, many airlines are replacing their fleets with more efficient planes that use less fuel.
- Some are also partnering with their corporate customers to push for increased production of sustainable aviation fuels.