It’s not an exaggeration to say that the COVID-19 pandemic has thrown the travel world into a tailspin, with a staggering impact on the $880 billion global airline industry. The earliest pains were felt in February, as flight capacity in and out of China dropped 71% compared to 2019. Flight capacity for Hong Kong went down by 92%. Flights to and from Italy plummeted 89%, while Germany and Spain have 93% less capacity as of this month.
So it is no surprise that airlines have been forced to ground a significant portion of their fleets, reports Forbes (April 4, 2020). Large aircraft like the superjumbo A380 were some of the first to be grounded, with diminished demand for the seats. However, whether it’s widebodies or narrowbodies, airlines still have the issue of where to store these planes. Delta and American are each parking about half of their fleets – or more than 1,200 aircraft. Tulsa Airport has been able to close a seldom-used runway to fit about 50 American Airlines planes, charging them about $150 a day to store. American also parked 100 planes in New Mexico, 50 in Pittsburgh, and more in Mobile and Greensboro. In addition to the cost of parking, a facility may charge maintenance costs that begin at about $2,000 per plane a month. Every day, each plane needs to have its engine run, has to taxi far enough for the tires to rotate fully, and has to have its hydraulics, avionics, and electronics checked.
Capacity planning, the topic of Supplement 7, is difficult enough during normal times. But look at the capacity cuts made these 6 airlines: Ryaniar, Flydubai, and Spice Jet, 100%; American, 80%; United, 65%; Southwest, 60%. And on Sunday, April 12th, 122,029 travelers flew through U.S airports–compared to 2.5 million on the same day a year ago!
Classroom discussion questions:
- What is the difference between demand management and capacity management?
- How does this differ from the capacity issues faced in the recession (2008-2010) and the 9-11 terrorist attacks?