The airline industry is still seemingly one of the biggest to struggle with a post-pandemic comeback. Major airlines like United Airlines and American Airlines are cutting flights or canceling routes entirely, citing capacity, construction, staffing issues, and more. Meanwhile, airline workers across companies are picketing over longer hours and staffing shortages, and in some cases are winning labor agreements for higher salaries and better benefits. Where does the industry go from here?
Jim Corridore, Senior Insights Manager at Similarweb, joins Closing Bell to discuss. 

Between Bells

Examining Airline Industry as Major Air Carriers Cut Flights, Cancel Routes

well as the world continues to reopen post pandemic. And after the Fed mask mandate, the federal mask mandate was lifted for travel, many were anticipating a blockbuster travel season in the skies. Well, airlines are running into some trouble and they're now having to cut flights or stop flying to some cities altogether, citing pilot shortages and other pressures. So what happens next for an industry that's been desperately trying to return to pre pandemic operations? Well, joining me now is Jim Corridor, senior insights manager at similar web data intelligence digital intelligence provider for small and medium sized businesses. Jim Let's start with united at cutting 12% of flights out of Newark next month. It's a major travel hub. What does this decision indicate? Obviously they have a severe pilot shortage. They are canceling flights. I know a number of people who have had their flights canceled. So what they're doing is they're struggling to reset their schedule and they're doing it out of their largest hub where they have a dominant market share position, hoping that they don't lose too much share in the process. So, you know, it's, it's dealing out of a position of strength where they do have a pilot shortage and they're looking to adjust their capacity, interesting. Um, now, other cities also, some in new york, but elsewhere american stopping flights in september and four small cities citing the pilot shortage. How much of an impact is that going to have on the business as well. It's not just United, but american is taking a step too. Yeah. American is doing the exact opposite strategy. What they're doing is they're cutting routes on marginally profitable, very small cities that are unlikely to impact them as much thinking that they don't need that share anyway. And those flights are probably not profitable for them anyway. So United is dealing out of a market share dominance position. American is looking to cut where they don't need the capacity anyway. But what it does show is that the entire industry is grappling with a severe pilot shortage, cancelations for Delta for Southwest for spirit have been acute throughout the industry and we're gonna have a tough summer. It is gonna be a tough summer and it isn't just the pilot shortages. Whether I think it's a factor jim, I know it has been a factor in the past. Of course, the coronavirus still having some impact on shortages. People need to call out sick and whatnot. What are all of the challenges that these airlines face these days. One of the biggest challenges that actually was good news for the airlines is that demand has returned to pre pandemic levels. We look at web traffic here at similar web and clearly web visitors to airline pages have surpassed 2019, 2020 levels. So the demand is there. But unfortunately, the airlines are unable to fully benefit from this demand because they don't have enough pilots. They did cut pilots during Covid to try and survive. They are in survival mode and now it's not as easy to add back those pilots now that we have boom times again. Right. So of course we talked about United, we talked about american. Do you expect that other airlines might follow suit gym in terms of cutting routes? Yeah. Obviously the only way to really get your network set in terms of any kind of resilience if there is weather, if there are any other kinds of problems anywhere in your network to keep things flowing is to balance your schedule properly. And one of the ways to do that is fairly cut capacity and allow things to run a little bit more smoothly. I think we've seen some of the airlines not moved so quickly to do that. Delta Southwest Spirit has not yet grappled with the problem. They are seeing a lot of cancelations. Of course all the airlines are. But I think we will see scheduled cuts coming this summer and into the fall. What does it mean for prices? Of course it is a bummer that these airlines which have been in survival mode for a while now and amid higher fuel prices can take advantage of the pent up demand. I think mutually un beneficial in fact for both parties here. But any indication as to how much prices might rise in the wake of this. Yeah, I think prices are already up 35 to 40% across the board for airlines and one of the several lines for airlines in this capacity. problem that they're having with the pilots is it's preserving their pricing power so they're gonna continue to cut capacity. They will continue to maintain pricing power and fares will continue to rise, especially around fourth of july around labor day, around any time when there is a strong holiday demand, we're going to see sharply higher fares this year and still probably terrible operations in terms of service. Okay, so for those getting ready to travel, the july 4th holiday jim as you just alluded to is right around the corner, what do travelers need to know and what should they keep in mind to have the smoothest possible trip? Yeah, I think the number one thing that if you haven't already booked your trip, try to book early, get the first flight out. If a plane is already sitting there at the, at the airport waiting for you, there's a much better chance you're gonna get out. Also just be prepared with some kind of backup plans because they are canceling a significant number of their flights and you may be stuck at the airport, they may not be able to re accommodate you to have some kind of a backup plan in mind. It's going to be a tough time if your flight is canceled, you expect to be refunded. Unless unless there's weather, airlines do not have to fully refund you. If there is a weather incident they can they can, you know, respond in other ways, but you should definitely take a look at the contract of carriage, passenger bill of rights to see what your rights are, if there is an issue. And as long as you are mentioning that explicitly, airlines are much more likely to respond to you in a positive way. So I want to ask about another headline that we got earlier today I United um, actually giving its pilots some increased pay here, increasing pay by double digits, expanding maternity leave to eight weeks. Do you expect that other airlines will follow suit jim as they do need to compete for talent Yeah, obviously we're all dealing with the great resignation throughout the United States. Right. And airlines are no different. If they do want to continue to maintain their pilots, they want to attract new people, they're going to have to raise wages. I think that we're going to see wage pressure across the industry, pilots, for mechanics, for flight attendants, I think across the board input costs including obviously fuel costs arising for airlines as well. So there are, there are going to see some tough times in terms of import input costs were already seeing continued talks obviously have a merger between Spirit and JetBlue. Frontier wanted to have a stake in that, but it looks like JetBlue might have the upper hand at least for now. Do you think that deal will go through? It seems likely to me that JetBlue is offering so much more than the frontier spirit field contemplates. It seems that, you know if if the board of directors and the Ceo is being a good fiduciary for shareholders, you have to accept an offer that's almost 50% to 60% higher than what the Frontier is offering. So it seems likely to me that it will be approved. But whether it passes regulatory approval is another matter. I do think there's compelling arguments to be made that the market share, which by our estimates, similar estimates is about 12%, is not overly dominant in any one market, that it won't be allowed by the Court of Justice. All right. Jim Corridor, senior insights manager. A similar Web. Jim. Thank you.