The airline industry generally has taken three to four years to fully recover from major disruptions, said Samuel Engel, head of the aviation group at consultant ICF. Economic downturns often accelerate trends that were already underway, like pulling down marginal routes and, more recently, the decline in demand for large aircraft, he said.
“The last couple of years, you have seen extensions of flights toward end of day and early morning, and growth of long, thin routes to secondary cities in Asia,” he said. “Those types of things get pulled back, and some don’t reappear until quite late in the economic cycle.”
The coming industry pullback will also encompass revamping fleets and retiring older aircraft that are more expensive to operate and maintain. American Airlines has accelerated retirement of its oldest planes—51 Boeing Co. 767s and 757s—and will do the same with its fleet of 20 Embraer SA E190s and some 50-seat regional jets. It’s also weighing whether to retire its oldest Boeing 737s.
Delta is evaluating whether to speed the retirement of its oldest Boeing MD80 and MD90 aircraft, while United has said its oldest Boeing 757s and some 767s could also be grounded permanently, ahead of schedule.
“Without a quick improvement in demand, we could see the airlines look to shed 800 to 1,000 aircraft, which could result in a reduction of 95,000 to 105,000 airline jobs,” Cowen analyst Helane Becker wrote in an April 13 client note. “The rightsizing of the fleet and work force is an unfortunate truth.”
This article was provided by Bloomberg News.