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Thursday, March 28, 2024

United & American Airlines to Cut Routes by 50% for Next 2 Months

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By: Kevin Mason

Airline flight have gotten so cheap that many Americans are gobbling up tickets despite worries about the Coronavirus.

Case in point: the total cost of a series of flights originating in Chicago — to Denver, then to Charleston, South Carolina, and then to Costa Rica – cost only $435.

“Airlines have been slashing flight schedules, especially on international routes, to cope with downward-spiraling demand from fearful leisure customers and a slowdown in business travel. One industry trade group has warned the pandemic could cost airlines worldwide up to $113 billion in revenue,” reported AP. “The proliferation of empty airline seats has some travelers making spur-of-the-moment ticket purchases to take advantage of steeply discounted prices.”

For the airlines, it’s a matter of survival. “In perhaps one of the greatest industry downturns since 9/11, a sharp reduction in travel demand caused by the spread of COVID-19 compounded by President Donald Trump’s travel restrictions between the US and Europe has resulted in an influx of consumers wanting to change or cancel their travel plans,” noted businessinsider.com. “A note by Cowen to clients stated that the airline industry has seen more cancellations than bookings after the desire to stay home and ride out the pandemic continues to grow.”

Case in point: United Airlines President Scott Kirby “laid out a doom-and-gloom scenario in a presentation to investors on Tuesday about the airline’s aggressive play book to cope with the coronavirus crisis,” reported USA Today. “He said he hoped the dire predictions — projected revenue declines of 70 percent in April and May, worse than after 9/11 — didn’t come true. In a matter of days, they did and the airline is throwing out that playbook and making even deeper cuts.”

Kirby informed his employees via a memo yesterday that their airline will decrease its flights by half in the months of April and May, a move that is expected to continue into the summer. And the planes that do take off will be far from full.

American Airlines is also scrambling to keep its head above water. On Saturday, executives said that airline intends to drop three quarters of its international flights through May 6 and keep almost all its widebody fleet on the ground.

These and other industry moves are all desperate attempts to keep afloat during the pandemic. The actions “reflect the increasing severity of the downturn that has pummeled airlines worldwide as the virus spreads and travel restrictions expand. White House officials are discussing temporarily allowing cash-strapped carriers to keep some taxes and fees they collect from passengers. Separately, Sydney-based CAPA Centre for Aviation warned the pandemic may bankrupt most airlines worldwide, and many have probably been driven into technical bankruptcy or substantially breached debt covenants already,” according to Fortune.

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