Five New Year’s Resolutions for the U.S. Air Industry

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The new year is always a time for reflection and setting new goals. Advertisements for weight loss results will skyrocket in late December and early January for this very reason. Intentions should be ambitious but achievable, even though it makes any of them too easily defeated by reason.

Here are five resolutions for the U.S. airline industry that are dealing with not only the past year, but some more seated problems that still need help.

Be disciplined as capacity is restored

Airlines have high average costs. After all, people, fuel, planes, and airports are all very expensive. But airlines also have very low costs, meaning that when the plane is expected to fly, the cost of filling empty seats is almost negligible. That’s why too much business potential leads to price discounts, as all airlines struggle to fill empty seats and are willing to price down to their marginal cost to earn those returns.

This is a particularly difficult issue when there is uncertain demand. Airlines need to generate positive cash flow and they can do this by flying airlines that cover all marginal costs. But overcapacity will keep the industry in a low-cost environment difficult to escape until long after strong demand. It is an error to create criteria such as “potential 2019”, as this was an unregulated capability compared to today’s demand environment. It will be better to maintain capacity that allows aircraft to be relatively full at discounted price levels. This will do more to ensure the long-term health of the industry than almost anything else in 2021.

Be very optimistic about money by the end of the year

Almost every U.S. airline still ends up every day with less money than they woke up to. This has prompted airlines to accelerate their balance sheets to ensure they have enough liquidity to survive until demand returns. Making smart decisions about capacity, cost control, messenger communication, and more airlines may be able to get enough help from vaccine distribution until the end of the year generating positive cash as a business. Like some NFL teams that not only need to win but need the help of others to make the playoffs, airlines need outside events like ending government quarantines. and shutting down to encourage travel and gathering again. But taking care of their own costs and efficiency issues is crucial for every airline.

Be perfectly clear with passengers

Whether it’s taxes, rebates, operating irregularities, or more, airlines can do more to communicate with their customers and be completely transparent. Some airlines are already well aware of this, but the industry as a whole is still earning low marks in courier service. Courier service does not always mean doing things that every customer likes, such as no costs and very low fares. It means being clear about what customers should expect and then meeting or exceeding those expectations. Every point has a value on the price barrier, so both high-cost, full-service airlines can perform better here as well as lower-cost, lower-cost airlines.

Commitment to being greener

Prior to the Covid pandemic, “air shake-up” was a growing issue for airlines and most airlines were directly addressing their combined carbon emissions. to ambitious goals in this area. The rapid decline in demand and the need to manage day-to-day money has put these efforts on the burnout, but as airlines start generating money again they can take a leadership role. take in this area.

Economies work because people and goods can move freely and efficiently. The strongest economy and environment do not preclude airlines. It means efficient airlines that are well run and offer capacity equal to the demand for both people and passengers. Promising longer rates, as some airlines have already done, is trying out alternative fuels, and there are more ways in which airlines can show that they are a strong partner with a world that is increasingly concerned about the health of the environment.

Make peace with Labor

Okay, everyone needs a New Year’s resolution that is a real stretch, so this is one for the airlines. Some airlines have maintained very good relationships with their employees for several years, but as a business there is a history of working relationships full of failures and vitality that has held back the industry and the unions. It has never been more important to move towards greater trust and transparency between the management of companies and their employees, as the future of this business is less secure than ever. Can this “outside attack” that has transformed passengers’ perceptions of flying into a way of finding better ways to work together and gain real trust? Airlines and unions that use this opportunity will be better prepared for the future, and will bring a definite advantage to themselves in a world that may not require as much airline capacity as it does. the industry traditionally offered.