You should probably get your plane tickets soon
SYLVIE DOUGLIS, BYLINE: NPR.
(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")
ADRIAN MA, HOST:
This is THE INDICATOR FROM PLANET MONEY. I'm Adrian Ma.
PADDY HIRSCH, HOST:
And I'm Paddy Hirsch. This summer should be boom time for U.S. airlines. Americans are straining at the leash to get back into the air - mask-free, if they feel like it. The TSA says passenger volume is almost back to pre-pandemic levels, and analysts say demand could go even higher than that over the next few months. But there's a catch.
MA: Are you, like, a baseball game? Because you are always full of catches.
HIRSCH: Oh. I'm a cricketer myself.
The thing is that while we're shaping up to have huge demand for airline travel this year, we're also potentially facing some supply issues - supply of aircrew, of air routes, of air fuel and, maybe most important of all, of airline pilots.
(SOUNDBITE OF FILM, "AIRPLANE!")
LESLIE NIELSEN: (As Dr. Rumack) Can you fly this plane and land it?
ROBERT HAYS: (As Ted Striker) Surely you can't be serious.
NIELSEN: (As Dr. Rumack) I am serious. And don't call me Shirley.
MA: That is "Airplane!"
HIRSCH: I just love that movie so much. Things aren't as bad as they are in that movie, of course, but it's still pretty bad. Pilots are not happy. In some cases, they're picketing, and it's piling on to the problems that airlines are already experiencing trying to meet a surge in consumer demand.
MA: Today's show - the mismatch of supply and demand in the airline business. Where the gaps are, what airlines are doing about them and what that means for Americans hoping to fly away this summer, coming up after the break.
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MA: Air travel is back in the U.S. American Airlines, Delta, United - all of them are predicting a return of profits this summer, and that is after a pretty brutal couple of years in the pandemic.
HIRSCH: Hayley Berg is an economist at the travel app Hopper. She says demand is around 90% of what it was in 2020.
HAYLEY BERG: The main difference that we're seeing this year is that most demand from Americans is still for domestic travel. And those who are looking internationally are looking at more regional destinations - Mexico, Central America, South America, the Caribbean - rather than the long-haul trips that we typically see is very popular this time of year.
MA: It's an environment ripe with promise for the airlines, but profits the CEOs are predicting are not guaranteed. There are a few things that could get in the way, and one of the first is staffing. Airlines have laid off thousands of people during the pandemic. And while they have been hiring like mad to try and get ready for this summer, in a lot of cases, they're not even close to where they need to be.
HIRSCH: Yeah. Federal data from February found that airline staffing was down 2% from the same month in 2020. Now, 2% may not sound like much, but if demand is going to be the highest it's been in 30 years, as the CEO of United Airlines recently predicted it could be, then airlines are going to have to hurry up with the hiring if they want to reap the benefits. That means more flight attendants, more ground crew, more mechanics - all of whom have to be hired in one of the tightest labor markets in decades.
MA: And maybe the biggest challenge is happening in the nose of the aircraft. Pilots are in really short supply, and airlines are struggling to get the left and right seats filled in their cockpits. Casey Murray is an airline captain with Southwest, and he's also president of the Southwest Airlines Pilots Association union. He says this shortage has been on his radar for years.
CASEY MURRAY: It's been forecast for the past decade. But really, 2017, 2018, 2019 - everybody started seeing a drop off in the number of pilots that were in the pipeline or even thinking about the pipeline.
HIRSCH: Yeah. Airline pilot used to be one of those dream jobs back in the '80s when the economy was booming. But a lot changed when the airline business hit some bad turbulence in the '90s.
MURRAY: It was a rough time for airlines. We saw lots of bankruptcies. We saw 9/11, which created some further issues. And then the Great Recession - we saw more bankruptcies. So all that being said, it hasn't been the most attractive career choice, as far as longevity goes, for many years.
MA: And Casey says the pandemic just made a bad situation worse.
MURRAY: All the airlines shed through various voluntary programs, early retirements. And so now that we're back on the other side of it and the industry is recovering, it's really exacerbated and accelerated that shortage of pilots. And it's going to be a problem for the rest of the decade.
HIRSCH: Now, with consumer demand recovering, it looks like it could be a pretty good time to become a pilot. But Casey says the road to the cockpit, or the jetway, if you like, is a long one.
MURRAY: It takes a lot. It takes a lot of time and a lot of education to get here. I mean, it's very difficult, and it takes a tremendous amount of economic as well as time commitments to put in the time to become an airline pilot.
MA: Some airlines, like Delta and Alaska - they're trying to be proactive. So they're creating their own training programs. And that way, they can have their own pipeline. But Casey says all that's done is create another shortage.
MURRAY: Southwest is having problems putting people through the pipeline right now due to some issues with even hiring instructors to train.
HIRSCH: And all of this is a problem for airlines because while they have this golden opportunity to make a profit after years of losses, they might not have the resources they need to take advantage of that opportunity. I mean, if they don't have the pilots, they can't fly the planes. If they can't fly the planes, they can't sell the seats.
MA: And the airlines appear to be dealing with this problem in a couple of ways. First, they're squeezing their pilots - pushing them to pull more shifts and work longer hours. And pilots are obviously not happy about this. Alaska Airlines pilots are picketing. At Southwest, Casey Murray says his union just wrote the airline to say they want some systemic changes to be made to avoid pilot fatigue.
HIRSCH: Pilot fatigue - I don't want a fatigued pilot flying my plane or a grumpy one, for that matter. Hayley Berg at Hopper says the second way airlines are reacting to this pilot shortage is by taking a highly flexible approach to the market, reducing traffic on some routes and maybe even dropping routes altogether.
BERG: They're going to be figuring out dynamically, where is there the most demand? Where should we be offering a few services a day versus maybe just one service a day? Where do we need a large wide-body plane versus where can we just service with a smaller plane?
HIRSCH: And over the years, airlines have developed this almost magical ability to adjust their services to meet consumer demand and to adjust prices on a minute-to-minute basis to fill planes and maximize their profits. But the magic of dynamic pricing only works when conditions are perfect, and all sorts of factors can spoil the conditions.
MA: Like illness - over the holidays, for example, a third of United Airlines workers at Newark Airport called in sick in a single day, stranding hundreds of angry passengers. And there's weather. Early in December, more than a thousand flights were canceled due to heavy snows in the Pacific Northwest - more angry passengers all demanding refunds in hotel rooms and meals.
HIRSCH: And then, of course, there's the biggest spoiler of all - oil prices. As the price of oil rises, so does the cost of jet fuel.
BERG: When jet fuel prices increase, that is passed on to the consumer. Typically, about 30% of a jet fuel price increase will be passed on to consumers. So we see a 10% increase in jet fuel prices, about a 3% increase in your ticket price. Obviously, we're seeing tremendous increases in jet fuel in the order of 52% versus January. So if that continues, yes, airlines will have to adjust prices to counteract that rising cost.
MA: Fuel costs could really end up raining on airline companies' summer. And that is because while, you know, demand may be rising, it's not rising equally across the board. Business class, which is, you know, usually a cash cow for airline companies, is actually recovering more slowly than coach class.
HIRSCH: And coach passengers, of course, are notoriously cash-conscious. Demand in economy is highly elastic...
MA: Econ vocab.
HIRSCH: ...Meaning that it can turn on a dime. If prices for economy seats go up too much, then demand could suddenly slump. That's the theory, at least.
MA: But so far, we don't actually seem to have reached that point, even though prices are going up right now. In fact, the average cost of a domestic economy airfare is up 7% from 2019, and it's rising at 7% per month, according to Hopper.
HIRSCH: There's a lot at stake for the airlines here. If things go wrong - another COVID spike or a massive increase in fuel prices - demand could evaporate and put the airlines right back on life support. But if things go well this summer, it could put the airlines back in the black. So they're going to be praying for clear skies and a strong tailwind.
MA: Hey. And, you know, maybe if things go well, they'll even pay back the $25 billion in loans they got during the COVID bailout. What?
MA: What did I say?
HIRSCH: Oh, Adrian, you're hilarious.
MA: This episode was produced by Nicky Ouellet with engineering from Gilly Moon. It was fact-checked by Corey Bridges. Viet Le is our senior producer. Kate Concannon edits the show. And THE INDICATOR is a production of NPR.
(SOUNDBITE OF FILM, "AIRPLANE!")
HAYS: (As Ted Striker) How are the passengers doing?
NIELSEN: (As Dr. Rumack) I won't deceive you, Mr. Striker. We're running out of time.
HAYS: (As Ted Striker) Surely there must be something you can do.
NIELSEN: (As Dr. Rumack) I'm doing everything I can. And stop calling me Shirley.
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