Airlines Say They’re Close to a ‘Tipping Point’ Due to the Shutdown
(Bloomberg) -- U.S. airline bosses stepped up their criticism of the partial government shutdown, warning that the closing threatens to snarl air travel.
“We are close to a tipping point as employees are about to miss a second paycheck,’’ JetBlue Airways Corp. Chief Executive Officer Robin Hayes said on a conference call Thursday with analysts and investors. “The longer this goes on, the longer it will take for the nation’s air travel infrastructure to rebound.’’
CEOs at larger carriers backed him up, with American Airlines Group Inc.’s Doug Parker warning of “long lines’’ and “delayed airspace.’’ Southwest Airlines Co. said it lost out on as much as $15 million in sales this month because of the shutdown, and CEO Gary Kelly called the closing “maddening.”
The flurry of comments, coming as several airlines reported earnings, reflected an increased sense of urgency as the longest government shutdown on record dragged into its 34th day. While CEOs said travel safety was assured, the political standoff threatened to worsen flight delays, lengthen security lines and disrupt the system that millions of passengers rely on each day.
“We’d be crazy not to be concerned about this,” Kelly said in an interview. “Everyone needs to be on notice and on guard that this shutdown could harm the economy and it could harm air travel,” he said on a conference call with analysts and investors.
Airlines pointed to a range of effects from the government shutdown:
- While corporate travel remains robust, bookings under Southwest’s government contracts are “clearly off,” Kelly said.
- Delta Air Lines Inc. said last week that the political standoff was costing it about $25 million a month.
- American said it was seeing a “moderate” softness in tickets purchased 14 days or less before travel.
“This is certainly not a long-term demand issue,” Parker said. “Our government presumably will open again one day. It’s certainly been long enough. We are putting a strain on people who are working after missing a couple of paychecks. That will, at some point, result in people not being at work.”
On Wednesday, 7.5 percent of U.S. airport security officers were off the job, more than double the 3 percent rate on the same day a year earlier, the Transportation Security Administration said in a statement.
Still, wait times in security lanes generally were less than 30 minutes, the agency said. The Federal Aviation Administration said it hadn’t seen any impact on air-traffic control in the last few weeks.
“We have not observed any appreciable difference in performance over the last several weeks compared to the same periods during the previous two years,’’ the FAA said in a statement.
While there is there is little evidence so far of increased flight delays or safety risks, the rising alarm from airline CEOs was echoed Thursday by union leaders. They warned of an uptick in worrisome signs as workers face a second pay period without getting a salary.
Among the air-traffic ranks of young trainees, there have been at least a dozen resignations, an unusually high number, said Paul Rinaldi, president of the National Air Traffic Controllers Association union. While those figures aren’t huge, they signify growing frustration with the shutdown, Rinaldi said at a press conference at Washington’s Reagan National Airport.
In addition, safety programs that normally operate in the background -- such as reviewing anonymous safety reports and developing new technology -- have been temporarily halted or slowed, he said. He also said he had received increased anecdotal reports of minor errors by controllers from around the country.
“This is unraveling as we speak,’’ Rinaldi said. “We are inserting risk into a system. For 10 years we have done everything to mitigate risk out of the system.’’
©2019 Bloomberg L.P.