Thousands of airline workers to lose jobs because of drop in travel caused by coronavirus
Many U.S. airlines are overstaffed due to reduced flying schedules and low demand for air travel amid the coronavirus pandemic.
Marriott CEO Arne Sorenson described the sudden loss of hotel guests as “breathtaking in its decline.” Southwest Airlines CEO Gary Kelly said the plunge in ticket bookings had a “9/11-like feel.” Royal Caribbean Cruises Ltd. CEO Richard Fain called the shutdown of his industry a “weird, unworldly” time.
Travel industry leaders spared no superlative in March when describing the instant devastation from the unfolding coronavirus crisis.
Yet six months after the World Health Organization declared a pandemic, the toll from COVID-19 turned out to be even worse for the industry in most cases, the projected timeline for a travel rebound and recovery extended again and again as case counts remain high, travel restrictions abound and business travel shows few signs of life.
U.S. airlines who had been confident $25 billion in government payroll aid would be the bridge they needed to keep workers employed until travel rebounded are now less than a month from laying off tens of thousands of employees. That’s on top of thousands who have voluntarily left or taken leave.
Although air travel has picked up – the TSA screened a pandemic-record 968,673 passengers on Labor Day, U.S. carriers are still losing money every day. Southwest’s Kelly said in August that the airline’s business needs to double from current levels just to break even.
Many hotels and resorts around the country, from the Marriott Wardman in Washington, D.C., which opened during the during the Spanish Flu in 1918, to the historic Arizona Biltmore in Phoenix, still have not reopened.
Hotels that have reopened are struggling to fill rooms, even as quarantine-weary travelers embark on road trips. Nearly two out of three hotels are at or below 50% occupancy, according to an Aug. 31 study by the American Hotel & Lodging Association, and four out of 10 hotel workers remain unemployed.
Cruise lines, an early victim of coronavirus damage as passengers became sick in droves on some ships, have basically been out of business for six months. The last departure from a major U.S. port was on March 13. The next: Nov. 1 at the earliest.
The impact of this pandemic – and the subsequent suspension of cruise operations – has been devastating to economies throughout the world,” Kelly Craighead , the CEO of the industry trade group Cruise Lines International Association, told USA TODAY.
The devastation posed by the pandemic includes nearly half a million members of the “wider cruise community” referring to cruise employees and those who are ancillary employees and small businesses in the U.S. that depend on cruising, she added.
The U.S. economy is projected to lose $155 billion in 2020 – or $425 million per day – due to the lack of foreign visitors kept at home by the pandemic and international travel bans, according to the U.S. Travel Association, a trade group.
The industry as a whole is going to come back slowly during the fall, U.S. Travel Association president and CEO Roger Dow predicted in an interview with USA TODAY. He says people will drive to their destinations or take shorter flights for the time being, building on trends from summer.
But that won’t be enough to save some businesses: “The main thing we’re very concerned about is 83% of travel businesses are small businesses, and a bunch are just going to flat disappear,” Dow said. “They can’t hang on much longer.”
Making matters worse, he said, “Congress kicked the ball down the road – again – on the latest relief package (by failing to pass a deal Thursday), and Congress has to act now. If they don’t, these folks are going to go under and we’re not going to get the millions of jobs back or restore the economy.”
Summer – traditionally the most lucrative time of year for hotels – was not enough to get many establishments to the break-even point.
Chip Rogers, the president and CEO of the American Hotel & Lodging Association painted a similarly grim picture: “The next six months are going to be brutal. There’s no question about it.”
Leisure travel has been about as good as the industry could have expected. If the business traveler returns in 2021, Rogers thinks most hoteliers would call that a measure of success. But “as good as can be expected” won’t be good enough to save some hotels – such as Hilton’s Times Square hotel – from closing their doors for good.
The worst-case scenario, said Rogers, would be if business travel doesn’t return in 2021. There’s “no way the industry can survive on leisure travel alone,” he added.
But the absolute worst-case scenario for the travel industry as a whole would be a major resurgence of COVID-19: another shutdown would be a “disaster,” said Dow. The best case would be the arrival of a vaccine and medications to treat COVID-19 – the sooner, the better.
Dow was the most optimistic of the experts USA TODAY spoke to for this story: He predicted demand would rebound to pre-pandemic levels in one or two years instead of three.
“I think it’s very hard to predict sunshine when you’re in the middle of a hurricane. I think once this thing lifts because of pent-up demand, safety measures in place, I think it’s going to come back much more quickly,” he said. “I expect to see 2021 be probably as 70% of what 2019 was and 2022 to be the year we’re back.”
10: The number of passengers on an average U.S. flight on April 1, compared with 104 on Jan. 1 as the holiday season drew to a close. The number rose as high as 70 in late June but fell to 58 by late August.
55,487: The number of weekly U.S. flights in the week beginning April 19, compared with nearly 183,000 a year earlier. The number of flights has more than doubled from that pandemic low point, with 112,991 weekly flights in late August. That is still down 40%from a year ago. Airlines then slashed early fall flights in response to a summer spike in COVID-19 cases in multiple states, though some carriers have since added back flights for October.
70%: The projected decline in airline passenger traffic for 2020, more than five times the decline seen in the first six months after 9/11.
21,914: The number of consumer complaints filed with the U.S. Department of Transportation in May, the bulk of them about airline refund issues. The same figure a year ago: 1,296.
What’s next for the industry? Tens of thousands of layoffs in October, when payroll support for airlines expires. Workers are looking to Congress for a last-minute deal. But that may not happen unless a compromise is found between the “skinny” GOP bill rejected by the Senate last week and the House Democrats’ package, which is similar in size to the original $2 trillion CARES Act signed in March. If the layoffs proceed, anticipate heavy flight cuts and an uncertain holiday travel season unless travel demand picks up.
1,057: The number of U.S. hotels still closed, according to STR data. Over the last six months, the number of net hotels closed have formed a bell curve: 978 in March; 4,662 in April; 3,823 in May; 2,230 in June; and 1,447 in July. Most of the hotels closed are full-service hotels that rely on groups and meetings, according to Jan Freitag, STR’s senior vice president of lodging insights for North America.
18,000: The number of workers at casino giant MGM Resorts laid off in Las Vegas and other cities in August.
$1.7 billion: How much U.S. hotel workers are losing in earnings each week while still laid off or furloughed.
60+: The percentage of rooms filled in South Dakota, Montana, Idaho and Wyoming in July, with the states leading the country in hotel occupancy thanks to travelers’ appetites for outdoor vacations in wide-open spaces
What’s next for the industry? Thousands of hotels still face potential closures or not being able to hire back staff given low occupancy rates, and Marriott’s recent headquarters layoffs indicate the hospitality industry is facing a crisis from the top down. Watch for short-term rental companies like Airbnb and Vrbo to try and keep the buzz going about local and longer-term stays.
0: The number of cruise passengers who have sailed from the U.S. since mid-March. That count will stay the same at least through Oct. 31. Pre-pandemic, 550,000 passengers would sail on a typical day worldwide in 2019, Bari Golin-Blaugrund, senior director of strategic communications for Cruise Lines International Association, told USA TODAY.
8.75 million: The number of customers who will have missed out on their cruises by that time. This estimate is based on CLIA’s estimate that more than 14 million passengers sailed from the U.S. in 2019.
334,000: The number of lost cruise-related jobs, including 163,700 direct and ancillary American jobs, will have been lost by the end of September from mid-March.
2,500: How many jobs worldwide are lost each day cruises are not operating.
$19 billion: This is approximately how much was lost between the time cruising stopped in mid-March in the U.S. through the end of August. By the end of October, that number can be expected to swell to around $26 billion.
$110 million: How much the U.S. economy alone loses each day the cruise industry remains on pause, according to CLIA.
What’s next for the industry? U.S. cruises could resume as soon as Nov. 1, but that restart date has been pushed back multiple times, and some lines, including Princess Cruises, have voluntarily extended their suspensions beyond that date. Booking numbers for 2021 remain strong, major cruise companies, including Carnival Corp., Royal Caribbean and Norwegian, revealed on earnings calls.
78 days: How long Las Vegas casinos were closed. They shuttered March 18 and gradually started reopening on June 4. Some hotels remain closed, though at least one big property – Park MGM on The Las Vegas Strip – expects to open in October. Air traffic is rebounding with the number of travelers at McCarran International Airport surpassing 1 million in June and topping 1.6 million in July, but those numbers are still a fraction of the 2019 passenger volume for the gambling and entertainment hot spot. More appear to be driving there: highway traffic reached 90% of summer 2019 numbers, according to the regional Convention and Visitors Authority.
4 months: The duration of Walt Disney World’s closure. The Orlando theme park closed on March 15 and didn’t welcome guests again until July 11, missing key vacation periods, including spring break and early summer. Tourists haven’t rushed the gates since the reopening, and Disney World responded by cutting September hours. Although hotel occupancy in Orlando has ticked up slightly, the situation there remains among the lowest in the country. In California, Disneyland’s reopening date remains up in the air due to continuing coronavirus restrictions in that state, though park officials say they’re ready whenever the state gives the green light.
125 days: The number of days New York City’s Empire State Building observation deck was closed. The attraction reopened on July 20. New York City tourism is among the hardest hit by the pandemic because the city was an early coronavirus hot spot, and officials set strict reopening guidelines. New York Gov. Andrew Cuomo has recently announced that restaurants in the city can resume indoor dining at 25% capacity beginning Sept. 30.
19 Smithsonian institutions: The Smithsonian closed all of its attractions in or near Washington, D.C. closed during the pandemic, including the National Air and Space Museum and National Museum of African American History and Culture. At least three have since reopened: The National Zoo, Smithsonian Gardens and The Steven F. Udvar-Hazy Center near Washington Dulles International Airport. White House tours resumed Sept. 12. In July, Washington, D.C., hotels filled just 23.6% of their rooms, though that was more than double April’s dismal occupancy of 10.8%.
What’s next for the industry? Tourists have evidently flocked to remote destinations where they can more easily social distance. Although the leisure travel season is predicted to last longer this year as people make good use of their more flexible work-from-home arrangements, the latest hotel and airline numbers still suggest continued trouble. In addition, destinations like Disney World have already adjusted plans for holiday celebrations later in the year given COVID-19 concerns, potentially disappointing would-be travelers.
Sources: USA TODAY research, Airlines for America, STR, American Hotel & Lodging Association, OAG, U.S. Department of Transportation, Bureau of Transportation Statistics, Hawaii Tourism Authority, Cruise Lines International Association