As airlines adapt to the new ‘social distancing’ norm, new measures have been put in place to help fend off the threat of potential bankruptcy. To incentivize travel, amid a fatal virus outbreak, airlines have imposed a rule whereby the ‘middle seat’ will remain empty. It is hopeful that this measure will encourage passengers to travel since they won’t be so tightly ‘bunched’ next to accompanying travellers. In combination with this, airlines have also been removing meal services to disincentivize the spread of any germs by the cabin crew and simultaneously cut unnecessary costs. Delta, Southwest and American airlines have all implemented such policy changes.
However, the policy changes introduced by these american born airlines differ. For example Southwest has taken the most drastic measures by banning snack and drink services on all flights. American Airlines has been more lenient with its approach by cancelling all food services on flights that are shorter than 2,200 miles. For international flights there are no food and beverage services unless the flight is super long haul, whereby one meal will be offered. Delta will still offer one meal on flights that are over 900 miles in distance but these will be pre-packaged.
It is no surprise that these new policies are being introduced, especially after seeing airlines’ most recent quarterly losses. United Airlines recently found out that their shares had tanked 8%, with their quarterly losses toppling just over the $2 billion mark. There seems to be no light at the end of the tunnel as the airline expects such losses to continue for the foreseeable future. Although the airline expects to see approximately $4 billion in loans from the government over the coming months, this sum will not stem the bleeding.
As a contractual agreement stipulated in the Stimulus Package, US airline workers are safe from layoffs until September 2020. Airlines that have accepted aid from the Stimulus Package are prohibited from laying off any staff that work under them. However, after this it's likely that the airline industry will see jobs being slashed in order to decrease costs on the balance sheet. The business insider obtained a letter written by the CEO of United Airlines documenting;
"If the recovery is as slow as we fear, it means our airline and our workforce will have to be smaller than it is today."
With capacity slashed and fleets grounded the effects of Covid-19 have led to many policy changes. It’s this level of adaptation that could provide the difference between survival and administration. For those airlines that are accepting the aid from the Stimulus Package provided from the US government it’s likely that the layoff for employees is likely after September 2020.Labour poses such great costs, especially in this industry, that there is no justification to keep a full staffed workforce when losses keep amounting. Furthermore, wider media states that travel demand could remain low as far as 2021 as the spread of the virus shows no signs of letting up.