Airlines and airports are putting on the brakes heading into the final weeks of summer as the hustle and resolve the industry showed heading into the summer turn into caution, restraint and even regret as the summer vacation season winds down.
After passing through the busiest stretch of the summer travel season, airlines are pulling back schedules and international airports are adding passenger limits in hopes of avoiding a total meltdown heading into the fall.
Over the last few weeks, Fort Worth-based American Airlines cut thousands of flights over the next three months just hours after Chicago-based United said it is putting growth on hold into 2023. This week United cut another 3,900 flights from its October plans, about 3.5% of its schedule, according to Dallas-based Airline Data Inc.
The airlines need to capitalize on high ticket prices to make up for more than $37 billion in losses over the last two and a half years, even with $50 billion in government aid. Even so, airline executives are deciding that restraint is the now only option, even with strong customer demand.
Several factors are contributing to those decisions. Carriers and airports are facing labor shortages, heightened by logjams in training. Outbreaks and new variants of the COVID-19 virus are emerging. Supply chain issues and airplane delivery delays loom, which particularly affects the rebounding international travel market.
“There is just not enough resource in airports, airlines and the entire air travel economy system,” said John Grant, the U.K.-based senior analyst for OAG.
Some of Europe’s biggest airports in London, Frankfurt and Amsterdam are adding capacity caps that are straining the international travel system at some of its most critical connecting points.
Meanwhile, a pilot shortage that has loomed over airlines for more than a decade likely won’t resolve itself for two or three years. Labor unions say workers are fed up with long hours, forced overtime and rebooked flights even as they fight for higher pay to make up for historical inflation.
Airlines entered 2022 with ambitious plans to get back to pre-pandemic flying levels. Consumers were ready, too, and terms such as “revenge travel” and “pent-up demand” dominated airline talk in spring. Even with soaring fuel prices, the high ticket prices and strong demand pushed American, United and Atlanta-based Delta to second-quarter profits, the first profits without government aid in more than two years.
Now the buzzword is “operational reliability.” Instead of pushing themselves to the brink of meltdown, airlines are hoping that smaller schedules will provide a “buffer” heading into the fall.
“Looking forward, we will limit capacity to the resources we have and the operating conditions we face,” American Airlines CEO Robert Isom said last week in a call with investors and media.
It all comes during the busiest stretch for airlines since COVID-19 began. There have been 52 straight days with more than 2 million passengers going through security checkpoints at U.S. airports, according to the TSA. Since March, the percent of seats filled on aircraft has been consistently higher across the industry than it was before the pandemic, according to airline trade group Airlines for America.
But during several stretches over the last few months, airlines and airports have had to explain why cancellation rates and customer complaints are spiking.
“June was a difficult month for the entire industry from an operational perspective, with extreme weather impacting every major hub and air traffic control challenges in certain parts of the country,” Isom said.
Even after cutting flights for the summer months ago, Delta CEO Ed Bastian told CNBC’s Squawk Box earlier this month that “We pushed too hard.”
“While the demand and revenue landscape is the best we’ve seen, the operational environment for the entire industry remains uniquely challenged,” Bastian told reporters later that day. “I’d like to sincerely apologize to those who have been impacted by cancellations, delays and long wait times over the last two months.”
The biggest logjam in the airline industry right now is in training. American and Southwest have each hired more than 10,000 employees during the last year. But it takes weeks or months of training before those new hires are ready to work. And it takes months or years before they’re running at full speed, said Kenneth Quinn, a former general counsel for the FAA who now works with the Clyde and Co. law firm.
For airlines and airports, the staffing shortage has spread from restaurant workers and janitors to baggage handlers and ticket agents.
“Bringing thousands of newcomers into airline payrolls is not a quick and ready relief,” he said.
Even U.S. airports are dealing with issues. The Los Angeles County Health Department reported a spike in COVID-19 cases at Los Angeles International Airport, with more than 450 cases in all, including employees at American Airlines, Southwest Airlines and the Transportation Security Administration. An American Airlines spokesman said the cases stretch all the way back to May and involve less than 2% of its 7,000 workers there. But it still shows the strain COVID-19 can plance on employers struggling to maintain productivity.
Isom said it could be two or three years before one labor shortage is worked out — the need for regional airline pilots. The training pipeline for pilots is long and expensive, leading airlines to fight for the limited number of pilots already certified.
And even if airlines can hire enough workers, lingering COVID-19 outbreaks, caution about other illnesses and challenges such as child care are making it tougher for airlines to run.
“Our staffing issues are really making sure that we can cover the variability that’s in the operations today,” Isom said. “We have more people per flight hour per flight than we have ever had in our company’s history on duty. What we’re dealing with right now is just a lot of variability in the operating environment.”
For airline travelers, the mix of labor shortages, high fuel prices and strong demand mean ticket prices will remain stubbornly high and flights will continue to be scarce, Grant said.
“That means maybe less production coming online,” Grant said. “It also means the consumer is going to have to be willing to pay more.”
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