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Airline cancellation predictions for this summer and the rest of the year

Cowen Senior Research Analyst Helane Becker, joined Yahoo Finance Live on May 31 to discuss rising costs for airline tickets this summer.

Video Transcript

[MUSIC PLAYING]

HELANE BECKER: First of all, we don't have enough pilots. We've talked about that before. The industry saw about 10,000 pilots retire in '20 and '21, and another 2,000 ish are set to retire this year. So in order to get back to 2000-- or yeah, to 2019 capacity levels, we need to hire a minimum of 12,000 or 13,000 pilots.

And then the other big issue is vendor shortages. We don't have enough people working at the airports and catering and airport shops. And gate agents is another issue. Air traffic controllers is another issue. A number of airlines, JetBlue and Delta come to mind specifically. United announced it previously canceled about 100 flights a day each over the summer months to try to keep some slack in the system.

Because if you're always flying 80% or 90% full, as many airlines are, and then you have pop-up thunderstorms, it's very hard to recover that and get everybody where they want to go in a timely fashion. But by eliminating some flights in advance, they can be better prepared, hopefully, to get people where they want to go in a timely fashion without upsetting too many people.

It's going to be particularly bad this summer. We just don't have enough seats, and we don't have enough people to handle that three years' worth of demand. So we've seen, I think, a 34% increase so far this year. We forecast we would see 7% in April, May, and June. And we seem to be seeing that. Yes, I am surprised that the airlines were able to pass that along. But again, it comes back to the very strong demand.

We are concerned, however, for after Labor Day, what happens when people have taken their trip, and now we get back to some kind of reality. School's back in session. We'll see what happens. We think we'll see a big decline in leisure demand in September, October, through kind of mid-November. And then we'll see a pickup for the holidays.