Experts in Flight

It would be easy to conclude from recent data that airlines and the travel industry are thriving. According to the U.S. Transportation Security Administration, the number of travelers passing through American airports has returned to normal levels, and a May 2023 industry report found that, on average, hotels expect revenue not only to increase as compared to the year before but to exceed 2019 levels by more than 100%.

At the same time, delays, cancellations, and other travel headaches have become all too common due to extreme weather and staffing shortages. According to FlightAware, a company that tracks flight data, an average of 30,000 flights across the globe are delayed daily, with about 9,000 of those representing U.S. domestic flights. When more than 4,000 flights are delayed in the U.S., travelers generally begin to feel the impact. On the ground, hotels are booked but short-staffed; a recent report found that nearly 80% of hotels are struggling to find workers.

“The U.S. airline industry is evolving,” said Ram Gopalan, associate professor of practice in the School of Business at Rutgers University in Camden. He has spent over a decade at blue-chip travel and tourism companies, using mathematical analyses to solve organizational and logistical challenges. “In 2020, tourism and the airline industry took a significant hit because of the pandemic—volume dropped nearly to zero as operating costs increased.”

While revenues have bounced back, post-COVID, to more robust levels in the past year, Gopalan noted that some of the weaknesses revealed during the pandemic, combined with challenges that already existed, have led to the industry's current state. Unfortunately, experts estimate that it may be years before those weaknesses and challenges can be addressed adequately, meaning the delays and cancellations may be here for the foreseeable future.

While it is often referred to as the aviation industry, commercial air travel in the U.S. is managed and controlled by a mix of private companies (the airlines), public entities (the municipalities that operate the airports), and government regulatory bodies (the Federal Aviation Administration, among others). The current issues facing the industry are spread equally among them and will require a coordinated effort to address them correctly.

For the airlines, the primary concern is staffing. Over the past several years, airlines offered buyouts and retirement packages to manage costs. This happened even as the industry was facing an anticipated tsunami of retirements; it’s estimated that over the next 15 years, nearly 50% of the commercial airline workforce will be forced to retire under the mandatory retirement rule for pilots.

“Pilots are increasingly in short supply,” said Gopalan. “While it affects different airlines in different ways, the sheer volume of pilots that will retire in the next decade will be a significant problem for the industry.”

Gopalan noted that this will be harder for carriers with varied fleets because not all pilots are qualified to fly every type of airplane. The situation is made even more difficult because of the time it takes to train new pilots—about two years. The U.S. House of Representatives in July 2023 approved a bill raising the mandatory retirement age for pilots from 65 to 67; however, the measure has yet to be taken up by the Senate.

Despite the shifting landscape, airlines and the travel industry are seeing a notable increase in passengers.

“The pandemic severely restricted travel at best, and many people stopped traveling altogether,” said Briance Mascarenhas, professor of management at Rutgers School of Business–Camden. His research includes a focus on the international airline industry. “With most of the pandemic-era travel restrictions now lifted, people eager to travel have been unleashed.”

The data bear this out. In one recent survey, 49% of respondents expected to travel more in 2023 than they did the previous year, and 87% expect to travel at least as much as they did in summer 2022. While delays and disruptions still happen regularly, travelers seem prepared to face these challenges and take them as an inevitable part of the experience.

One effect of the increase in travel is that tourism-related businesses are now among the country’s fastest-growing employers. This hiring binge has helped keep the U.S. unemployment rate at a record low, even as other sectors, like tech, are experiencing cuts.

Aircraft manufacturers have also seen a spike in orders from airlines looking to expand capacity. According to a recent industry report, more than 1,400 commercial airliners were ordered in 2023, surpassing the number sold in 2019. This reflects the increased demand from the traveling public and the forecasting the airlines have done regarding expected growth.

The outlook isn’t entirely rosy: Inflation has affected consumers’ choices, with some opting for less extravagant locations or more moderate hotels and restaurants. “The number of people traveling will slow as interest rates rise to contain inflation, but when or how that might have a substantial impact remains to be seen,” said Mascarenhas. He added that disruptions were caused by extreme weather due to climate change and political instability around the globe.

For now, however, the traveling public is keeping calm and carrying on. It’s an attitude that the industry would be wise to adopt as they work to move forward and modernize, said Gopalan. “Everyone involved—from the federal government to the airlines, to the airports, and the cities and states they serve—needs to work together to manage changes we know will happen in the years to come.”

Design: Karaamat Abdullah