- Oops!Something went wrong.Please try again later.
High fuel prices and labor shortages are making the busy summer season a challenge for carriers
NEW YORK , June 7, 2022 /PRNewswire/ -- Global airlines are seeing fast-rising air travel demand at a time when they're still recovering from COVID-19 and face labor shortfalls affecting every job from pilots to baggage handlers, according to a new report from consulting firm Oliver Wyman. In Europe and the United States, for example, sudden spikes in demand have led to a recent spate of cancellations and delays.
"While we are seeing a very solid rebound in passenger travel, operational problems and labor shortages across the industry have become acute problems," said Tom Stalnaker, Oliver Wyman's global aviation practice lead and co-author of the Airline Economic Analysis.
Demand is simply outpacing the ability to bring capacity back online, added Khalid Usman, a partner in aviation and co-author of the report. "If you've flown recently, you would have felt this firsthand. Carriers are struggling to find people when they need them," Usman said.
Oliver Wyman's Airline Economic Analysis (AEA) is an annual report that looks in detail at trends that affected airlines and the aviation industry generally over the past year. It analyzes what these trends will mean for the industry moving forward. Among the insights in this year's AEA are:
Demand recovery is steady and solid across both leisure and corporate travel, and US airlines are looking at one of their best quarters in recent history.
Leisure demand is close to pre-pandemic levels. Corporate bookings, while still lagging leisure travel, are rising, and international demand continues to improve as travel restrictions ease.
Tight labor market conditions go beyond having enough crews for flights; it also reflects staffing problems in the ranks of ground staff, baggage handlers, air traffic controllers, TSA agents, and vendors that help supply airlines and airports.
Additionally, there are not enough people to repair aircraft. A stunning 85% of senior executives in Oliver Wyman's annual maintenance, repair, and overhaul survey said that finding new hires was their biggest challenge.
All of this is having a direct impact on carriers' on-time performance. In February 2022, the latest US data available showed on-time performance at 76.8% — seven percentage points lower than in November 2021, which included busy Thanksgiving travel days.
Aviation will also have to worry about the global push for net zero emissions. As a hard-to-abate industry, it may have to wait until at least the mid-2030s for low-carbon breakthrough technology to be available for the biggest reductions. But over the next five to 10 years, it is expected to turn to sustainable aviation fuel, with 80% lower emissions than conventional jet fuel, to help control emissions.
Cargo has become a substantial contributor to airline revenue, as demand expanded with a spike in e-commerce volume, an increase in overnight delivery, and modal shifts to air cargo.
About the Airline Economics Analysis
This year's in-depth report covers a range of aviation industry-specific economic and performance data as well as global capacity during the pandemic. For our 2021-2022 edition, we expanded our report to be more global in nature, reflecting the worldwide impact of COVID. This edition includes forward-looking commentary about the industry recovery. The analysis outlines the varied pace at which different regions were affected by the virus and will ultimately recover from it.
About Oliver Wyman
Oliver Wyman is a global leader in management consulting. With offices in more than 70 cities across 30 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. The firm has more than 5,500 professionals around the world who work with clients to optimize their business, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is a business of Marsh McLennan [NYSE: MMC]. For more information, visit www.oliverwyman.com. Follow Oliver Wyman on Twitter @OliverWyman.
View original content to download multimedia:https://www.prnewswire.com/news-releases/as-leisure-travel-recovers-to-2019-levels-airlines-struggle-to-match-the-rebounds-intensity-according-to-oliver-wyman-301563314.html
SOURCE Oliver Wyman