Government shutdown could cause a dangerous domino effect for airlines
Economic impact of air traffic reductions
It's not just passenger who are impacted by the air traffic reductions imposed due to the federal government shutdown. One airline economist says airline industry earnings could be impacted greatly if the shutdown continues through the holidays. This is the longest U.S. government shutdown on record.
Oakland, California - With respect to the airlines and the aviation industry, the government shutdown is starting a dangerous domino effect. By slimming down airlines to need less controllers, the government could cost a lot of other people their jobs.
The U.S. airline passenger and air cargo industry has more than a million employees. Professor Severin Borenstein is an energy and airline economist at UC Berkeley's Haas Business School.
"But if the government continues to be shut down through the holidays, that will be very bad news for the airlines and their earnings," said Professor Borenstein.
The industry also supports more than 10 million other workers of contractors, suppliers and closely related economic activities such as tourism and business travel.
That is 5% of the U.S. economy; nearly $1.5 trillion and the upcoming holiday season is a big slice of that.
Borenstein adds this, "They make a lot of money. The flights tend to be very full, as any who has ever flown around the holidays knows, and they have more planes in the air."
That alone slows down getting passengers on and off planes at airports. That causes even more delays.
What about tickets? "The prices are gonna be higher because they're gonna have fewer seats and they're not gonna feel any need to discount. I think it will put a bit of chill on holiday travel. Some people who were thinking of going home for the holidays and hadn't bought tickets yet might just say, 'It's gonna be too much of a hassle,'" said Borenstein.
While passengers blame the shutdown on the government, for airlines, treatment of affected passengers will make or break airline reputations.
They can get it right and reach out to passengers and make it easy as possible for passengers to rebook or cancel or get a refund or they can get it wrong and end up with very frustrated passengers who can't get through," said the Professor.
And, flying only big planes with lots of seats, or cutting flights to smaller regional airports helps nothing.
"Last time I checked, 53% of the flights in the United States of America, we're flown by these smaller planes. By cutting the regional flights, that's very difficult because they're already places that perhaps have minimal service, or they're not in places where that have a shortage of controllers and other people," said attorney Mary Schiavo, a pilot and former U.S. Transportation Department Inspector General.
Going forward, the industry needs more airport gate spaces, faster baggage handling, non-polluting fuels and massive adjustments for climate change's more extreme weather and turbulence, as well as far, far more controllers.
Featured
San Francisco, Oakland airports on FAA list of flight cuts
Airlines will phase in the cuts at the direction of the FAA, starting with eliminating 4% of flights at the 40 airports on Friday and working up to 10%, according to AP sources.