Proprietary Data Insights
Financial Pros Airline Searches This Week
Pilot Shortage Plagues Airlines
Labor shortages aren’t uncommon these days. Airlines face a particularly acute shortage of pilots.
And some are getting creative with their solutions.
Breeze Airways, a startup founded by David Neeleman of JetBlue, raised pay for pilots after seven months of operations. New hire first officers for the company will see an 11% increase to $61 to $68 per flight hour depending on their aircraft size.
Other changes include:
By 2025, the industry is expected to face a shortage of 34,000 pilots globally.
Like the trucking industry, without a massive push to train and fill these spots, demand will far outstrip supply.
That’s likely to lead to wages continuing higher until a balance is achieved.
The One Thing Holding Back Airlines
From Delta (DAL) to Southwest (LUV), airlines are missing one key customer – business travelers.
Recovery Relies on Companies
You might be surprised to learn that retail travel has already returned to pre-pandemic levels.
American Airlines (AAL) offered the following chart to explain the gap.
Business travelers make up 12% of passengers but 75% of revenue on certain flights.
These critical customers bring in steady revenues to hotels when they attend conferences and events, some choosing to stay a few extra days with their families.
Some Signs of Life
Using credit and debit card data, Bank of America analyzed airline bookings in recent weeks after Omicron slashed travel at the end of December.
Here are the highlights:
An Uncertain Future
To kick off the year, the Consumer Electronics Show (CES) had many participants join virtually as Omicron cases raged across the U.S.
This reality doesn’t appear to be changing anytime soon.
And with demand exceeding supply in many industries, the need for direct sales calls is waning.
The Bottom Line: Business travel waxes and wanes based on Covid cases.
While it may jump in fits and starts, organic growth should bring it to pre-pandemic levels sometime in the next year or two.
Discount airlines like Southwest and Spirit (SAVE) rely less on business travelers than standard airlines like Delta and United (UAL).
However, the deals may be in the most beaten-down names like American Airlines.
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