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Airline demand impacting economy

Published: Jul. 14, 2020 at 2:41 PM CDT
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BISMARCK, N.D. (KFYR) - The demand for travel has drastically decreased since the coronavirus pandemic. This has hit the airline industry hard. Air traffic plays a vital role in travel and commerce and the decline in passengers is affecting our economy.

It’s not just airline employees being impacted by the slowdown in travel.

“When people are flying, they’re buying food. They’re renting hotel rooms. They’re spending money at your shows that they travel to see or parks. Whatever they’re moving to. So that flipping isn’t occurring. So, when you have that money initially starting at the airline, it magnifies several times,” said Eugene Graner of Heartland Investor Services.

Graner says the entire U.S. economy is taking a hit.

“U.S. airlines make up 5% of the U.S. economy. That’s a big deal. Health care is the largest at 30%. But, if you look at a lot of industries comparably, the airline industry is right there near the top. And so, that still being off significantly by over half yet is a big deal on our gross domestic product,” Graner said.

Ten major airlines have made deals with the Treasury Department to receive a chunk of the $25 billion set aside in the CARES Act for airlines. While the terms of the aid program prohibits carriers from laying off workers or cutting their pay rates through September 30, weak demand is forcing airlines to warn employees about potential furloughs. American Airlines, Delta and United are some of the latest.

Some good news. The Bismarck Airport says numbers are picking up at its location.

“We started to trend upward just a little bit in May. And then, June’s been a little bit better too. As you compare Bismarck to the national trends, our trend is just a little bit better than the national trend,” said Bismarck Airport Director Greg Haug.

While demand is still lacking, Graner says the loans should help hold the airlines over until they get back on track.

Haug says he expects numbers will keep climbing slowly, but demand will likely take years to completely recover.

Copyright 2020 KFYR. All rights reserved.

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