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Obama Administration scrutinizes airline industry amid financial turmoil

The airline industry is mired in financial crisis, cutting 130,000 jobs since 2000.
The airline industry is mired in financial crisis, cutting 130,000 jobs since 2000.
Courtesy: CardCow.com

The Obama Administration will meet with aviation stakeholders on Thursday in a closed-door forum to discuss the turbulent state of the airline industry.

The assembly - called by Transportation Secretary Ray LaHood upon request from the ACL-CIO’s Transportation Trades Department -will focus on the ongoing struggles of the airlines and examine ways the federal government can help to stabilize the industry.

A string of crises, including the terrorist attacks of 9/11, the SARS outbreak, surging oil prices and the current economic downturn, have all shaken the industry to its core, with air carriers cutting 130,000 full-time jobs and reporting an estimated loss of $33 billion since 2000.

Thirteen air carriers have filed for bankruptcy in the past two years, and, while Thanksgiving is typically considered a booming period for the industry, the ATA predicts a 4% drop in passenger numbers this holiday compared to 2008.

The Administration points to the dire financial state of the industry as cause for concern regarding passenger safety.

In order to cope with losses in revenue, many airlines have begun farming out their maintenance work to foreign companies and cooperating with smaller, local carriers on short-haul domestic flights.

Last year, a report studying 9 major carriers found that 70 percent of major maintenance was being outsourced in an effort to cut costs, with nearly one quarter of the work coming from repair shops overseas – making the work difficult to regulate.

Additionally, nearly half of domestic flights from large carriers were handed off to smaller, regional carriers which generally employ pilots with significantly less flight experience.

Both issues were brought to the forefront in February amidst the investigation of Continental Connection Flight 3407 which went down near Buffalo, NY killing 50 people. The flight was farmed out by Continental to regional carrier Colgan Air Inc. of Manassas, Va.

Administration officials are expected to discuss increased regulation of air carriers in order to better monitor industry practices and place a greater emphasis on passenger safety. Opponents contend that airlines are already subject to significant taxing and regulations and that further oversight would only exacerbate the industry’s current financial straits.

Both sides, however, agree that the airlines are in the midst of an ongoing crisis and that an open dialogue is necessary to accurately address the industry’s future.

When Referring to that future, ATA President and CEO James C. May was quoted as saying, “It is increasingly apparent that the economic head winds facing the airlines and their customers are anything but behind us.”

For More Info: Follow the developments on at ATA Website. Don't forget to subscribe to my updates and follow me on Twitter @Matt_Cornelius.

Comments

  • BBD 5 years ago

    So am I going to have to pay twice the price for a ticket to NYC if I want a plane with two wings?

  • Ron Hall 5 years ago

    American Airlines tops the list of fatal crashes among American/Canadian carriers with 13. But - they have also operated more flights than any of their competitors with 25.08 Mill. The best rate of crashes per flight among major carriers goes to Delta, with only 7 crashes across nearly 25 million flights.