Summer Bummer

The pandemic dampened summer fun for the last two years, and Americans are eager to get caught up on their travel plans in 2022. Despite high prices, some people feel the urge to get moving. But as it turns out, for the airlines that are supposed to get them to their destinations, skies are cloudy.

While everyone has felt the impact of rising inflation, airlines have been hit especially hard. Fuel represents around 25% of the industry’s operating costs, and the category’s price increase has dwarfed nearly every other captured by the CPI. To make things worse, the industry is experiencing a labor shortage.

Complaint Escalation

The consequences of these industry headwinds include delayed and canceled flights, poor service, and plans to reduce capacity. In May, the Transportation Department logged 2,413 complaints about US airlines, a nearly three-fold increase from the same period in May 2019. The data also highlighted an upsurge of mishandled wheelchairs and bags in the past year.

Given that travelers are paying top dollar for their tickets – the latest CPI report revealed a 34% increase in airline fares for the year ended in June – the growing frustration is understandable. For most airlines, including United (UAL), American (AAL), and Southwest (LUV), the solution has been to dial back capacity.

Undesirable Tradeoffs

The current environment has left both airlines and travelers nostalgic for the pre-pandemic period when costs were significantly lower, inflation was at historical lows, and concerns about a near-term recession were absent.

Complaints about flight delays, cancellations, and missed connections have more than doubled in comparison to before the pandemic, forcing airlines to rethink their strategy. Schedule cuts are intended to make the service more reliable, however, that’s not without downstream effects. Industry observers say travelers may see their favorite routes cut, or have to pay more for tickets as supply shrinks amid red-hot demand. The current environment seems to be leaving both airline and traveler facing difficult tradeoffs.

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