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We’ve seen stocks for the major US airlines tumble over the past few days and have heard of airlines like United slashing their routes and parking their aircraft.
Now, it looks like Delta is feeling the wrath of the coronavirus as it just has announced a 40% capacity reduction — a reduction that has been worse than what occurred post 9/11. The reduction will involve parking around 300 aircraft and it could continue to get worse over the next few weeks.
Delta is also eliminating flying to continental Europe for the next 30 days (London is excluded), reducing capital expenditures by at least $2 billion for the year, and offering voluntary short-term, unpaid leaves as well as an immediate hiring freeze (among other steps being taken).
Also, Delta CEO Ed Bastian stated that he will not be taking a salary over the next six months which I thought was pretty admirable (in 2018 he made close to $15 million in total compensation).
In a recent memo to company employees, he also asked employees to “see what you can do to help us save cash.” That’s the type of thing that I was referencing in my prior article about the potential for some within the airlines to cut corners and its potential effect on health and safety.
I’m not saying that will happen with Delta but it seems to reason that if some airline employees already failed to live up to proper standards when it comes to things like basic cabin sanitation, then what is going to happen when the CEO is asking managers and employees to do what they can do to save cash?
I don’t think it’s unreasonable to suspect that it could deter some employees from taking extra steps to sanitize aircraft in those borderline cases, since I would imagine that enhanced cleaning measures would lead to fewer aircraft in the sky and more man hours needed which would all reduce revenue.
For example, who exactly determines if someone is symptomatic and what criteria is used?
It seems like it could be very subjective and that some people responsible for making that determination could be more inclined to only designate someone as symptomatic who has symptoms more on the “very obvious” side, all in an effort to keep their superiors happy and keep things running as smoothly as possible.
It’s really a tough position for the airlines to be in right now.
But I think for now they are just going to do what they can to stay alive.
Many people are wondering why airlines are not offering full refunds on flights and this is one major reason why.
If they were to offer full refunds then they would lose out on a ton of cash flow and may not be able to bounce back from that. But by offering waived change fees and credits for refunds, they can at least preserve some of those earnings in these tough times.
It’s going to be a long few weeks for the airlines but I believe they will bounce back and that a lot of people will be excited about traveling again very soon. We will see.
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Daniel Gillaspia is the Founder of UponArriving.com and creator of the credit card app, WalletFlo. He is a former attorney turned full-time credit card rewards/travel expert and has earned and redeemed millions of miles to travel the globe. His content has been featured in major publications such as National Geographic, Smithsonian Magazine, Forbes, CNBC, US News, and Business Insider. Find his full bio here.