Are Airline Layoffs Hurting Consumers?
Are Airline Layoffs Hurting Consumers?
The onset of the coronavirus (COVID-19) pandemic as the newest worldwide pandemic has significantly disrupted business dealings across the world and across all sectors. Among the industries that were immediately affected by the pandemic is the airline industry since the virus is easily transmitted among people. Owing to the fact that there is no authorized medication for the same, countries prohibited intercountry travels, causing a shrink in the demand for airline services (Albers and Rundshagen 101863). Consequently, more than 5.7 million jobs within the industry have been lost, a 45% fall from pre-coronavirus levels (Maneenop and Kotcharin 101920). Jobs have been lost in highly-skilled airline roles, the tourism jobs, catering supplies, professional services, and jobs within the aviation supply chains, among others other spheres. Korman and Mujtaba explain that about 59% of tourists often arrive in various destinations across the world by air, suggesting that stopping the air transportation has negatively impacted upon the industry as well (122). Whereas there are various views regarding airline layoffs on various aspects of the economy, this paper aims at justifying why airline layoffs are hurting consumers.
As hinted before, the latest shock waves associated with the onset of COVID-19 are significantly hitting the travel sector, with American Airlines said to be furloughing more than 19,000 employees in the near future (Albers and Rundshagen 101863). Nicola et al. (185) explain that American Airlines, serving more than 250 cities across 40 nations globally, is largely hit by the pandemic since most of its employees do not have to wake up to the jobs they used to. According to a study by Maneenop and Kotcharin 101920), aviation-supported employment opportunities fell by more than 46 million to 4.16 million, reflecting a -52.5% decline in opportunities; direct aviation employment opportunities (like at manufacturers, airports, airlines, and air traffic management) fell by 4.9 million; about 39,300 special repatriation flights took about 5.5 million citizens home borders blocked in 2020’s March; and about 47,000 cargo flights transported about 1.7 million tonnes of cargo, largely medical equipment, to places that needed the same during the height of the coronavirus pandemic response. These are devastating impacts upon an industry that largely new profits only. Evidently, laying off employees in the airline industry will have several sever impacts upon consumers.
While at least 35,000 employees in the airline industry are facing furlough, tens of thousands have taken unpaid leaves already, or completely left the airline industry (Korman and Mujtaba 122). Other employees have also seen their work hours cut and are already worried of pay cuts should a means of cushioning the airline industries fail in the US and globally. With at least 1,900 U.S. planes remaining parked, service cut currently characterizes the industry and more job losses are impending. The total figure goes beyond airline companies to encompass both cargo-associated employments and passenger air travel, and does not include several support jobs (Albers and Rundshagen 101863). Sector analysts say fear of airline travel and businesses maintain their employees close to home have resulted in unprecedented crises to the airline sector, leading to cataclysmic losses.
Not only have the effects of coronavirus on the airline industry been only airline companies, but also on consumers of the airline services and products. According to Maneenop and Kotcharin, fewer airline passengers as a result of COVID-19 implies less demand for hotels, rental cars, and restaurants (101920). With the reduced demand for new airplanes, airplane producer, Boeing, has reduced thousands of jobs (Maneenop and Kotcharin 101920). Nonetheless, Nicola et al. reason flights could eventually become more cost effective for consumers of airline services (187-188). Korman and Mujtaba explain that with the reduced demand for airline services, airline fares are likely to continue being low to the advantage of consumers (122). With planes’ seats continuing to remain empty during various flights both in the U.S. and across the world, airlines are likely to make their services more affordable to their consumers by lowering their fares. This is because empty seat during take offs is nothing that any airline company is unprepared to contend with going forward to ensure that they earn revenues that can help them make ends meet and maintain their employees.
Albers and Rundshagen posit that going by the current trends of employee layoffs that characterize the American and other airlines across the industry, there is likely to be witnessed unprecedented reduction in airline services, and even possibly no service in various regions (101863). The frequency of airline services is also likely to be experienced in various regions across the U.S. and the world. Cumulatively, there are chances of consumers of airline services, especially tourists and businesspeople, inadequately and infrequently meeting their needs, thus a negative impact on consumers’ business and travel needs. Along with service cuts, the airline sector is susceptible to economic shortfalls that will result from the sector’s incapability to get furloughed employees support faster and running when passenger traffic bounces back (Nicola et al.191). Albers and Rundshagen reasons that the airline sector is unlike other sectors since calling employees back entails ensuring that they are properly trained again before they can resume work (101863).
To sum it up, it is evident that there are mixed findings about the effect of layoffs in the airline industry. On the one hand, the layoffs imply reduced overhead costs on airline companies and reduced fares for consumers. Conversely, the reduction of airline services by minimizing the number of airline employees imply a reduction in airline services, which has the effect of curtailing businesspersons from frequently and efficiently conducting their businesses. Despite low fares, consumers are hurt with the layoffs due to inefficiencies associated with few people providing the necessary and demanding airline travel services. Similarly, the reduced airline services suggest that businesspersons will be limited in their businesses because of a limited number that will be allowed to travel on a particular day and the number of flights allowed for a day. Thus, the airline layoffs are hurting airline services’ customers. With the recovery outlook of the airline sector being dim, there is, therefore, a need to avoid the airline layoffs at all costs.
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Albers, Sascha, and Volker Rundshagen. “European airlines’ strategic responses to the COVID-19 pandemic (January-May, 2020).” Journal of air transport management vol. 87 (2020): 101863. doi:10.1016/j.jairtraman.2020.101863
Korman K, and Mujtaba BG, “Corporate Responses to COVID-19 Layoffs in North America and the Role of Human Resources Departments”, Rep Glob Health Res 3: 122 (2020). DOI: 10.29011/2690-9480.100122
Maneenop, Sakkakom, and Suntichai Kotcharin. “The impacts of COVID-19 on the global airline industry: An event study approach.” Journal of air transport management vol. 89 (2020): 101920. doi:10.1016/j.jairtraman.2020.101920
Nicola, Maria et al. “The socio-economic implications of the coronavirus pandemic (COVID-19): A review.” International journal of surgery (London, England) vol. 78 (2020): 185-193. doi:10.1016/j.ijsu.2020.04.018