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Saturday, August 1, 2020

Airlines may not recover until 2023, but first, Florida needs to adequately address the pandemic at hand

Posted By on Sat, Aug 1, 2020 at 5:44 AM

click to enlarge PHOTO VIA ORLANDO INTERNATIONAL AIRPORT/FACEBOOK
  • Photo via Orlando International Airport/Facebook
As multiple U.S. airlines prepare for a round of layoffs that are expected to reach well into the tens of thousands, a new report by Moody’s states commercial air traffic may not recover until 2023, at the earliest.

Just months after Congress approved a $25 billion bailout for U.S.-based airlines, the major carriers are already acknowledging that it might not be enough to stop significant layoffs. Those airlines that took part in the bailout agreed not to lay-off or furlough employees until the end of September. Still, American Airlines has already warned it that it could let around 25,000 employees go, nearly a third of its entire workforce, come October. United had warned it was looking at 36,000 jobs being cut but has since begun working with various unions to ensure the final number is lower.



Layoffs have already happened at Central Florida airports, including a heartless dismissal at MCO that saw workers cleaning the Chili’s only to be then let go with no notice. That layoff move went viral, but dozens of other workers at the airport or in related nearby businesses have also been furloughed or let go. Some workers have pushed back but so far little hope has been provided to workers affected by the pandemic. 

The slowdown has also caused MCO to cut back on its expansion plans, slashing $371 million off of construction projects underway. Four gates at the South Terminal, now under construction, have been postponed with the airport acknowledging the move will cost them more in the long run. Meanwhile, the airport’s 2021 budget saw a $45 million cut.
click to enlarge The layout of the South Terminal Complex - IMAGE VIA GREATER ORLANDO AVIATION AUTHORITY
  • Image via Greater Orlando Aviation Authority
  • The layout of the South Terminal Complex
A pandemic like the one the world is currently grappling with hasn’t been seen since commercial air travel became common, which means predicting the consumer reaction to it and when consumers once again feel safe to travel is a bit difficult. This has caused various scenarios to be posted over the past few months, with some pointing to mid-decade before the industry recovers, while others, including the International Air Transport Association, having a more optimistic forecast that shows a recovery to 2019 levels by the end of 2022. Moody’s is a bit less confident than the IATA but more optimistic than some other analysts have been, with their latest report stating they expect a recovery by the end of 2023.

“Passenger demand for air travel drives demand for key stakeholders in the aviation industry, including airport operators, aircraft leasing companies and aircraft manufacturers, as well as a multitude of service providers that keep airlines and airports running," said Moody's Senior Vice President Jonathan Root. "We expect that each of these stakeholders will be significantly impacted for at least the next three years, with 2020 declines for their products and services anticipated to be in the 40% to 50% range, if not higher."
Moody’s report was very clear that any recovery will first require mitigating the pandemic, something that U.S. leaders, especially in states like Florida and Texas, have so far been unwilling to attempt. While many around the world are now coming out of the pandemic, in Florida and other parts of the U.S. record rates of infection are still being reported. These record numbers have caused some businesses to pull back, opening and then closing. In Orlando, the inability to control the virus has meant a summer with no European tourists and ongoing uncertainty for many hospitality workers. The prolonged pandemic in the U.S. has only exacerbated issues surrounding any attempt at economic recovery.

It has also meant that, while air traffic is slowly recovering in places like Europe, where it is expected to see a 60% peak day recovery by the end of next month, at MCO officials are predicting that it may be 2021 before it sees a similar improvement with this fiscal year, which began in October 2019, seeing 45 to 50 percent reduction in passengers coming through the airport.

The recovery in Orlando requires convincing visitors around the world that the city and state are safe to visit, so far, it seems the exact opposite message has been heard by many. Until tourists believe otherwise, Florida and MCO’s recovery won’t be realized.


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