Come Fly With Me

Frank Sinatra’s 1958 hit personifies how the public romanticized airline travel in the late 1950s.  The 1950s are considered to be the golden age of air travel.  However,  the cost of a ticket was out of reach for most of the public.  In fact, 80 percent of the country had never been on an airplane. However,  air traffic was gaining traction among the traveling public. 1958 marked the first year that more people traveled to Europe via air versus sea. 1958 was also the year that the Federal Air Administration was created.   

A lot has changed since 1958.  Air travel has become an affordable mode of transportation for most of the American public. In 2018 U.S. and foreign airlines serving the U.S. carried an all time high of 1 billion passengers. Prior to the pandemic, airline traffic was projected to compound at an annual rate of 4.6 percent through 2028 according to the IATA.  

The pandemic has certainly put a dent in that growth rate. Boeing’s CEO, Dave Calhoun, said in an interview on NBC on Tuesday: 

I don’t want to get too predictive on that subject but yes, most likely. Something will happen when September comes around. Traffic levels will not be back to 100%. They won’t even be back to 25. Maybe by the end of the year we approach 50. So there will definitely be adjustments that have to be made on the part of the airlines.

He went on to predict that a major airline will go bankrupt before year end.

While the comments on a stand-alone basis are troubling, the airlines’ multiplier effect on the economy has to be taken into consideration. Just think about your typical trip to the airport and what you use: 

  • Paid parking lots 
  • Taxis or ride share
  • Rental cars
  • Food and drink 
  • Travel agencies 

As you start adding up all of the indirect suppliers, you can see why the air industry contributes 3.6 percent of global gross domestic product, or in absolute terms, 2.7 trillion dollars.   

The restriction or limitation of travel is one of the reasons the pandemic so troubling from an economic perspective.  A recent Economist cover was titled “The 90% economy”.  As long as we have a restriction on travel,  the multiplier effect is staggering.  

For so many industries, as the Economist pointed out,  a vaccine is the only thing that will allow us to return to normal. This will especially be true in the travel industry.  

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