University at Buffalo School of Management

Spring 2021 Buffalo Business 11 "There has never been such a dramatic drop in demand over such an extended period of time, or one that has happened so quickly," says Falvo. "Things fluctuate all the time, and different states and countries come up with new rules that travelers have to abide by, so we're constantly shiing and making sure we're compliant, while also having planes going where people want them to go." Busting, but booming Cristian Tiu, associate professor and chair of finance, says one reason airlines were able to sustain losses throughout 2020 was because the cost of fuel fell. "Jet fuel is at about 30 to 40% lower than last year, so that has soened the blow of the increased costs incurred by having to disinfect planes more and impose new health measures." Another way airlines helped curb losses was to drasti- cally reduce the number of flights. But a reduction in passenger flights also meant reduced capac- ity for air cargo, as about half the world's air freight demand is usually met by space in the bellies of passenger planes. Air cargo prices surged as capacity plunged. In response, airlines like United, Delta and American began flying cargo-only flights. From February to November, Delta flew some 1,600 char- tered cargo flights, while United flew nearly 7,500. According to a CNBC report, cargo sales haven't been enough to make up for the $20 billion in losses that U.S. airlines suffered in the second and third quarters of 2020, but it has been an important revenue source with passengers forgoing flights. Private charter flights are also booming, according to Natalie Simpson, associate professor and chair of operations management and strategy, who cites a number of reasons. "The private charter industry has been growing aggres- sively since the late '90s, when the internet first enabled conve- nient access to brokers who could book private aircra for you, versus having to be wealthy enough to own one yourself," she says. "There were people on the fence before COVID about the expense of flying chartered even though they could afford it, but now they're going for it." Beyond the booms in cargo and private flights, Simpson says airlines are getting creative in other ways. Enter: Flights to nowhere. In September, Australian airline Qantas booked its first sightseeing flight for passengers eager to take to the skies at a time when the country had grounded nearly all international flights. The journey took place on a Boeing 787-9 Dreamliner aircraft usually reserved for intercontinental trips. It features the largest windows in a commercial aircra, making the jet ideal for showcasing Australian sights during the seven-hour trip that performed a giant loop taking in Queensland and the Gold Coast, New South Wales and the country's remote Outback. Qantas restricted the flight to 134 passengers— less than half of the Dreamliner's capacity—at prices ranging from around $500 for economy to nearly $3,000 for business class. The trip sold out within 10 minutes. "It's probably the fast- est-selling flight in Qantas history," the airline's CEO, Alan Joyce, said in a statement. "People clearly miss travel and the experience of flying." Airlines also have been working to repatri- ate travelers who were stranded abroad during the pandemic. Since March of 2020, United operated about 1,300 repatriation flights to help bring more than 167,000 people back to the U.S., while Delta brought home more than 28,000 stranded travel- ers in March and April alone. Falvo Simpson There has never been such a dramatic drop in demand over such an extended period of time, or one that has happened so quickly. — Anthony Falvo, BS '17, MBA '18 Senior Analyst for International Network and Alliances United Airlines

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