Airline industry is bouncing back; vaccine passports being considered

A Southwest Airlines plane lands at McCarran International Airport in Las Vegas. (Jason Rzucidlo/AmericaJR)

Washington — The U.S. Chamber of Commerce hosted its 2021 Aviation Summit on Wednesday, March 31 in an online-only live webcast format. It was also available for on-demand viewing afterwards.

The Aviation Summit featured remarks from all corners of the aviation industry, discussing the path out of crisis toward safe and widespread commercial travel, as well as a looked toward the trends and technologies shaping the future of flight. The webinar addressed the pressing challenges of today, mapped our course for a prosperous tomorrow, and imagined the potential for aviation’s future. 

Flight 1: Charting a Path Back to Global Travel

The Hon. Carol B. Hallett, counselor to the U.S. Chamber of Commerce, welcomed everyone to the Summit.

“Since we met last March, we’ve become pioneers ourselves in unchartered territory,” Hallett said. “But we have persevered and we will not give up. Indeed, we’ve really redefined together—the limits of what is possible. As we make progress, winning the battle against the Coronavirus, more and more people are beginning to travel again. In fact, more than half a million people are boarding planes in the U.S. each week now over a year ago this time. So that’s good progress.”

The Honorable Carol B. Hallett, Counselor to the U.S. Chamber of Commerce

The first speaker was Nicholas E. Calio, president and CEO of Airlines for America. His speech was titled “Flight Path To The Future.”

“What a different a year makes,” Calio said. “Last year, on March 5, we were gathered without masks in a packed hall at the Reagan Building. We celebrated that U.S. airlines were transporting 2.5 million passengers and tons of cargo each day. I talked about ‘Flight Path to the Future: Connecting the World Through the Miracle of Aviation.’ I said ‘America was open for business’ as Coronavirus was just coming on our radar screens. Airline CEOs went to the White House and the President said ‘It’s safe to fly where these airlines are flying.’

But on March 11, he announced that the U.S. would be suspending all travel to Europe. Our passenger volumes plunged down 96 percent in days. Thousands of airplanes were parked in the desert. Airports were ghost towns. The bottom fell out of the industry with unprecedented speed. Fierce market competitors set aside their brand hats and locked arms with one single mission: survival. Our members turned AforA’s board room into a war room as they fought to save their companies, and the jobs of flight attendants, pilots, mechanics and gate agents. The men and women who seamlessly provided essential services throughout the pandemic [were] flying medical personnel, PPE, and most recently, the vaccine. Airline employees sent more than 400,000 emails and tweets to Congress with one clear message: Save our jobs.

Because of the dedication of the men and women in aviation, and because of the fortitude of this industry, we did save thousands and thousands of jobs. Not once, not twice, but three times. It is possible because we worked together with a united voice and a shared goal. Today, I’m happy to say that if traffic picks up this summer, our employees will be on the job, certified, trained and ready to go. Since last Spring, we’ve relied on science and data to guide our decisions as we implemented layers of protection to reduce the risk of virus transmission. Carriers jointly announce requiring face covering requirements and health acknowledgment forms. Airlines enhanced their disinfection protocols and educated the public about their hospital-grade ventilation systems and launched new touchless technologies to reduce touchpoints.”

Nicholas E. Calio, president and CEO of Airlines for America (AforA)

“We’re continuing to identify additional solutions such as temporary digital health credentials. AforA built and led a consortium of industry stakeholders. We asked the Harvard School of Public Health to study the entire travel experience. The research was confirmed that the multiple levels of protection are significantly reducing risk. In fact, the study found that being on an airline is as safe as, if not significantly safer, than routine activities like going to the grocery store or eating out. This research was significant in controlling the media narrative and restoring the confidence in travel.

We’ve learned a lot from science and we’ve learned that we can plan with this pandemic but we can’t forecast. We are encouraged that passenger traffic has been increasing recently and bookings are showing signs of improvement. We’re cautiously optimistic that air travel will return to sustainable levels by this fall. The vaccine is helping. There is a lot of pent up demand. You can’t walk on the beach, close a business deal with a handshake or hug your grandchild over Zoom. Nothing can replace face-to-face personal interaction. That said, passenger volumes are still down more than 40 percent. U.S. carriers collectively burned $150 million of cash everyday in the first quarter.

Our recovery is going to be challenging—longer than 9/11 and the financial crisis. But the past year has proven that we are resilient. It reminds me of a quote from Henry Ford: ‘When everything seems to be against you, remember that the airplane takes off against the wind, not with it.’ But we stay focused and we remain unified. Now, our focus turns to reopening markets, relaunching the travel industry and reigniting the economy. We are also deepening our commitment to climate changing. Yesterday, AforA and our partners launched an industry pledge to achieve net zero carbon emissions by 2050. Last week, Secretary Buttigieg said this is our best chance in our lifetime to make a generational investment in infrastructure and to create a stronger future. AforA’s member carriers already have strong climate records. Together, we will lead recovery, rebuild aviation and reconnect the world.”

CNBC Auto and Airline Industry Reporter Phil LeBeau moderated a panel discussion titled “The Path Back to Global Travel.”

“The Path Back to Global Travel” panel discussion

LeBeau said: “I’m looking forward to each of your perspectives in what we expect in the near term and further out for air travel and for the airline industry. Ben let’s start first off with you. Just give me your pulse of the industry right now, not just at Alaska but as you look around and as you see more people are flying. What’s your sense of where the industry is right now?”

Ben Minicucci, president and CEO of Alaska Air Group, answered: “I think March is the first month in 12 months where we feel the most optimism over the last year. From our perspective and the industry’s perspective, March for us and other airlines would be the first positive cash flow in 12 months after billions of dollars of losses. There is a lot of reason to be optimistic. When we look at passengers carried and advance bookings, they are stronger than they have been over the recent months. I was feeling a little bit concerned in January and February after that third wave. We’re not declaring victory, there is still a lot of work to be done. But I think the pace of vaccinations with a third of the nation vaccinated with the pace of vaccinations increasing, I think there is a lot to be optimistic about. We’re looking forward to a strong, solid summer and I hope the recovery into the fall and next year. Phil, what I would say is, we’re optimistic that the trend will continue barring any other increase in infections.”

LeBeau: “Fantastic. Sara, let me get your perspective. Your membership has been through a lot through the last year especially as you and the Airline CEOs, others in the industry were lobbying capital hill for a payroll support program that was crucial in keeping your members employed. What percentage of your membership is back in the regular rotation, if you will, where they were prior to the pandemic?”

Sara Nelson, president of the Association of Flight Attendants International, responded: “Our industry has done a really incredible job of doing our part of trying to save lives and attacking this pandemic and hopefully squashing it all together. Nick also talked about how closely we worked together over this past year to do something that didn’t happen in any other industry. It happened because industry and labor worked together. We put forward a plan based on our experience following 9/11 where the industry reorganized through bankruptcies which put a ton of stress and strain on the flight attendants and other workers and really attacked the value of our jobs. We put forward a different plan this year, because we worked so well together, it’s a model for how to rebuild our economy. It’s actually the model that President Biden is using now in his Build Back Better plan. This was about putting all of the relief to the frontlines, using the payroll systems that are already in place at the airlines, to pay people and keep them connected to their healthcare and retirement payments and other things and allow them to be able to take care of themselves.

We also continued to pay our taxes and there was a tremendous return to the public. We were continuing to spend into the economy. Unlike after 9/11, there’s not a lot of other jobs to go to. This was an extraordinary plan that helped the U.S. government, our communities, and the airline industry. While we did have that gap from October 1 through the end of December where we had mass furloughs, we are getting people back into their positions. That is happening because we were able to get action on that emergency plan in December and continue this in the American Rescue Plan. We will actually be able to meet the demand that is up and coming that Ben was talking about this summer because of this federal support program that also kept critical airline-aviation workers in our jobs in our security clearance and our safety certifications. It’s now going to be the way that we restart the economy after this pandemic.”

LeBeau: “Kevin, quick question for you…How are the airports doing financially? I was flying this past weekend and it’s a far different story than when I was flying six months ago at some of the airports I’ve gone through. Financially, where would you say the decision is for your member airports as they try to rebuild their businesses?”

Kevin Burke, president and CEO, Airports Council International – North America, answered: “I always like to remind people that all flights begin and end in an airport. To answer your question Phil, it was a rough year and will continue to be a rough year. This time last year, we were down about 97 percent down from where we were in 2019 which was a banner year. Financially, it’s coming back and it’s coming back slowly at 50 percent. On any given day, we’d normally have between 2.4 million and 2.7 million passengers going through checkpoints. Anything over a million these days is good.

We’re looking at a fairly slow recovery. However, the more vaccines they get the more safe they feel going into the airports, going on the planes and going to the travel locations. When airlines are healthy, airports become healthy as well. Our big challenge is both domestic and international. We’re going to recover quickly domestic, international is a little bit more challenging because of the different rules and regulations especially with quarantine. I’m a naturally optimistic person that things are going to recover.

Congress was a big help here, Phil. We got a total of $20 billion to help our airports get through this pandemic and we just found out this morning that President Biden is going to announce this afternoon that airports are going to get an additional $25 billion in his infrastructure relief package. We’ve gotten relief. We certainly want to see all of the businesses that are in our airports recover. It’s not just about the airport—all of the restaurants and retail operations, car rental services, they all need to recover. When flights come back, they are going to be needed. The third thing is it also puts a light on infrastructure challenges of our older airports. Our airports in the U.S. are on average 40 years old. They were not designed for 9/11 or COVID-19.

As you’ll see in a lot of our airports, we’re getting a lot of passengers back with queuing at six feet is going to be a challenge keeping people separated. As a naturally optimistic person, I see lots of great light at the end of our tunnel. We’re looking at a recovery time of 2-3 years back to 2019 levels here in the U.S. Our Canadian airports are in very bad shape because their government does not help them out financially. We’re looking at 5-7 years recovery time for them to go back to 2019. The reality there is we need to open up the border with Canada. They are our second largest trading partner. Financially, we’re doing much better than the year before. 2019 was a banner year but we’re plowing ahead thank God for Congress they recognize the importance of airports.”

LeBeau: “One question that was sent in was the question of a worldwide digital health passport, a vaccine passport. There’s a number of pilot programs out there that are being tried around the world including here in the U.S. What’s your sense in terms of how widespread these become and how much do you think they will accelerate international travel?”

Minicucci replied: “The initial idea has a lot of merit. I think it will enable international travel to come back. I think the concerns some folks have around a digital passport is it has a lot of complexity. Number one is establishing a global standard so that this passport can be used across any country you fly around the world. I think that goes back to the spirit of collaboration with having the federal government cooperate establishing these global standards so they are accepted worldwide. I think that’s the biggest complexity to overcome. Secondly, individual privacy is a big issue. We have to figure out. Third, how do you transfer private medical records into whatever health app we end up agreeing to. I think if it unlocks international travel, it’s something we should pursue aggressively. It’s going to take collaboration across different stakeholders to really get this thing done.”

Nelson added: “There are issues with equity. I think that it’s simple as what Ben said, we need to have a standard about how this is being applied but it also needs to be not mandatory. This needs to be something that people choose to do possibly speed up the process of getting through the airport and getting out to the plane. It must be a voluntary program and not mandatory in order to make travel work.”

LeBeau: “We’re going to hear from President Biden today. His infrastructure plan is going to be massive. What within that $25 billion would you like to see prioritized when it comes to our airports and air infrastructure if you will?”

Burke answered: “It’s a great question. We have average 40-year-old airports. We have to match the airports to the 21st century. The good thing about the Biden administration, during the campaign, the president focused on the fact that we need to modernize these airports. So that $25 billion will go a long way to begin the process but it won’t complete the need. We had just released our 2021 Airport Needs Study and over the next five years we’re going to need $115 billion to bring our airports up to what I’d call 21st century standards. We have to modernize along with the airline industry and everybody else to be able to accommodate things like a pandemic and I hope we don’t have to face a pandemic again. Clearly, in many of our airports it became very clear that six foot separation at gates and check-in area and TSA checkpoints were not adequate to be able to handle this. We have to take a whole new approach to say if we’re going to modernize all of the other parts of the aviation infrastructure we need to start with airports. We need to be able to accommodate all of the passengers that will be going back through our airports. The $25 billion is going to help a lot but we’re going to need $115 billion over the next five years. We’re thrilled that the Biden administration recognizes our needs.”

LeBeau: “What’s the number one pressing need right now for airports? More than anything else, this is where the money needs to go.”

Burke: “Modernizing our terminals to make sure that we have enough room for people to go to these terminals to be able to sit there safely and be able to accommodate the needs of our airline partners who have very different aircraft than they did 40 years ago. When I talk to airport directors, the most important partners they have are their airlines. We look forward to working together with them to modernize.”

LeBeau: “I have a question someone sent in about Zoom, remote working how it might impact corporate travel. Obviously, we’re seeing leisure travel coming back. Corporate travel is truly anyone’s guess when we see it start to pick up again. What’s your sense in say nine months from now where will corporate travel be?”

Minicucci: “I think there is the same pent up demand with corporate and business travel as you’re seeing with domestic and leisure right now. I think the same will apply to corporate and business travel. The question is when? I think as the rate of vaccinations improves and we have 80 percent of the population vaccinated by the fourth quarter, I think you’re going to see business and corporate travel increase. The question is how much? I think in the fourth quarter we’ll see a significant increase in business travel. How much is still unclear. I’m optimistic with the rate of vaccinations and as companies start to ease their travel restrictions, I think we’ll see an increase in business travel. I do think you’re going to see a bunch of people getting back and visiting customers and doing sales calls and doing that face-to-face.”

LeBeau: “Somebody asked EVTOLs (electric vertical takeoff and landing crafts) and whether or not we will see those anytime soon let alone within our lifetimes taking people short distances whether it’s to the airport or point-to-point. What’s your take in terms of EVTOLs?”

Burke: “I think we’re going to see them in our lifetime, Phil. The question is going to be…how well the federal government adapts regulations for the companies that want to do that type of technology. I’m an optimist. I think we’re an ever evolving aviation ecosystem and that is a great example of… it’s not there yet but it will be. I think we have to be open to the fact that it will be there. It’s another reason why we have to look at places that take off and land at airports to modernize that to be in the 21st century. We fully support anything that lands at an airport as long as it’s safe and protects the people there. I’m all for it. As we see this evolve I’m sure it will be a very productive part of our ecosystem.”

Lebeau: “Ben, how long before we see Alaska operating or partnering with another carrier or a subsidiary or a third-party with EVTOL service?”

Minicucci: “We’re looking at it very closely. There’s a lot of companies working on this technology. I think it’s going to come in more rapidly than we think. Probably in the next decade we’re going to see something based on the research that we’ve done. If you look at the someone of the environmental goals that everyone is setting for 2040/2050 and short term goals that really help reduce the climate impact, this is going to be an essential piece of the strategy to get to a point where it’s netzero in 2040/2050. You can’t do it with sustainable fuels alone—you need technology. I think this is a huge enabler. I think we need to help these technology companies with investment and research so we can really accelerate it.”

LeBeau: “Last one to you Sara, would you get on an EVTOL?”

Nelson: “Yes, we’ll make sure those are good jobs too. If there is a passenger cabin of some sort, then there needs to be one of aviation’s first responder there to take care of people and make sure that they have a safe transport.”

The next speaker was Scott Kirby, CEO of United Airlines. His speech was titled “Return to New: A Look At The Future of Aviation.”

“I’d like to start by thanking the administration and the Hill for the all the work that they’ve done in the past year to get aviation and the economy through the worst financial and economic crisis in our history,” Kirby said. “A broad bipartisan response but the continued support all the way through the American Recovery Act has been critical to those parts of the economy that have still been devastated by the Coronavirus pandemic. It’s remarkable to think back to a year ago where the country had just gone into lockdown and we at United Airlines were burning in excess of $100 million per day. While we still have a ways to go before we get through the light at the end of the tunnel,

It’s nice that at United Airlines we can see the light at the end of the tunnel. In March, it’s going to be the first month since all of this started that our core cash burn is actually back into the positive territory. As we look out into the business, domestic and leisure travel has almost entirely recovered. It tells you something about the pent up desire for travel. Business demand is still down over 80 percent and of course international borders are still largely closed. Those are huge chunks of our business that are still at almost zero. But it’s really nice to see the recovery and the fact that humans desire for connection are going to come back and come back stronger as soon we go through the final phases of getting the vaccine quickly rolled out and ready to go. What that has allowed us to do is turn our sights to the future.”

Scott Kirby, CEO of United Airlines

“We started talking about this as Return to New. I used to say return to normal and I realized that meant running the business the way we had always ran the business. Instead of taking this as an opportunity to completely rethink how we run the business. One of the most important things that we’re going to do in that regard is the focus on customers. We were doing this before but we really, really doubled down. United Airlines has been a leader in terms of health and safety initiatives, in terms of digital technology to make the travel experience better. We were the first airline to permanently eliminate change fees early in the pandemic. We’re making real changes so that our customers can count on us and like the part of their journey where they’re on the airplane. That’s a fundamental change that’s going to pay huge dividends for us in the years to come. One of the things we realized as we’ve gone through this crisis is that we have an opportunity to play a larger role in society and make real change.

There’s two big areas that United Airlines is going to stand for and be a global leader–not just in aviation. The first is on diversity, equity and inclusion. We’ve done a lot already but we have a few big announcements to come so stay tuned for those. And then on climate change–we’ve already become a leader in the world. With our commitment to 100 percent green. That is unique compared to every other airline and most companies in the world. Because when we say that, it’s a commitment that we will get there without using offsets. We’ve been focused on making investments in sustainable aviation fluid. We’ve also been focused on sequestration. We’ve made an investment in electric aircraft. Those are the kinds of things that are really going to change the future for United, for our customers and for the globe. We’re proud to be a part of it. We’re going to be a stronger airline on the other side of this. Here’s to United Airlines being your number one airline and your first choice in the years to come.”

Domestic air travel is bouncing back quite fast. However, it will take several more months or even a year before business travel comes back. As far as vaccine passports go, they are still being considered. No final say on those right now.

For more information about the U.S. Chamber’s Aviation Summit, visit https://events.uschamber.com/aviationsummit2021


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