Tanzina: I'm Tanzina Vega. Welcome back to The Takeaway. Last week, the CDC recommended against traveling for Thanksgiving because of the rising number of COVID-19 cases around the country. While some Americans have insisted on traveling anyway, the decrease in overall passengers could further hurt the airline industry. Earlier this year, Congress approved the COVID relief stimulus package, which included $32 billion for airlines but that money ran out back in October. Leslie Josephs is with me and she's the Airline Reporter for CNBC. Leslie, thanks for being back with us.
Leslie: Thanks for having me.
Tanzina: CDC says not to travel. Americans, some of them are still traveling. Has the airline industry been hurt by that this week?
Leslie: The airline industry has been hurt by the pandemic, probably more than any other industry. Travel, in particular, has just been devastated by COVID-19. Since the latest spike, I should say, in coronavirus cases, airlines are starting to see a drop in bookings, they're starting to see cancellations pick up. What we are seeing is, indeed there is a spike in travel right before Thanksgiving. It's just-- compared with last year, it's terrible.
Tanzina: What's happened since October? We mentioned that there were $32 billion that were given to the airline industry and through the CARES Act that money has since run out. Where do things stand?
Leslie: October 1st was the first day that airlines were able to furlough their workers or cut any other jobs for the non-union employees and they did. United and an American together cut more than 30,000 jobs. One of the conditions of the CARES Act, like you mentioned, passenger airlines themselves, cargo, and some contractors got some separate money. The passenger airlines had $25 billion, and one of the conditions of that, it was supposed to be only to pay payroll because airlines were not making any money, of course, because of the virus, but they were not allowed to cut any jobs until October 1st. The floodgates are now open. Those are not the only job cuts, airlines were urging their workers to take buyouts, early retirement packages, just to get as much off their payroll as possible so that they can get through this without going bust essentially.
Tanzina: Leslie, for folks that may be more frequent fliers and don't have the gold, platinum, diamond status that some other folks do, flying has not been great over the past couple of years. It's hard to have empathy, I think, to a certain extent for the industry as a whole that feels like it's been nickel-and-diming us for a couple of years now. Is the airline industry doing anything differently to accommodate passengers now that they're seeing this decrease in fliers, and we're in the middle of a pandemic?
Leslie: They are. It is a real change. You think back to a year ago when you try to board and you're like, "How am I on boarding group 9A, and how are there so many people ahead of me?" Just the corralling of people and dividing up passengers into smaller and smaller classes [crosstalk]
Tanzina: Then are charging them $25 to sit in the aisle versus the window and things like that.
Leslie: Right. We are seeing fees go away. The major airlines have already cut change fees. They say that this is going to be a permanent change. Although who knows what could happen in the future. They could always make changes later on. For now, they're scrapping those change fees. It used to cost $200 to change a domestic ticket. They're loosening their policies somewhat because they're so desperate for revenue.
It just shows them how last year they could pretty much charge whatever they want, and planes are flying nearly full all the time. Now the tables have turned a little bit and the power is going a little bit, I would say, emphasize a little bit, back in the favor of the passenger. That doesn't mean that fees for picking a seat are going to go away. If anything in the coronavirus, people are probably more particular about where they sit and airlines do know this.
Tanzina: Let's talk about that because what's it like flying. I haven't gotten on a plane in quite some time. What is it like to fly today in a pandemic? Is it safe?
Leslie: Airlines say that the HEPA filters, these hospital-grade filters that are on their aircraft, and they say it's of recent research, show that it's very unlikely to catch the disease on board. That they're very effective and air is circulated regularly throughout the flight.
Some airlines have different policies on sitting. Delta Airlines, for example, has used it as a marketing tool and said, "We're not going to sell the middle seat." You don't have to worry about having an armrest fight in the middle of a pandemic. They said it's not a question of you catching the disease, but it might give customers a little bit more of a peace of mind to have a little bit more space between them and other passengers.
The concern and with the CDC warning last week about travel, it felt so much what happens on airplane, but that when people get to their destination, they might be in large groups, with family and friends and spreading it around that way. That's the other concern. Again, your journey is not just the aircraft, it's, you're in the airport, you're on the security line, you're in the bathroom, you're at a concession within the airport. That's your only contact with people [unintelligible 00:05:23] airplane.
Tanzina: There's been some other airline news, recently, the Boeing 737 MAX, which was in the news, back in 2019 because there were two crashes with that airline, with that plane that killed 346 people. That plane has now been cleared to fly again. Is that right, Leslie?
Leslie: That happened last Wednesday. The FAA has cleared the plane to fly passengers once again. We first talked about this 20 months ago. I think at the time, neither airline executives nor the FAA, or other officials thought it would last this long. There's never really been anything like this in aviation history that's had such wide regional effects. This plane is flown or was flown all over the world. It was a nearly new plane. The two planes that went down were just months old. It's unheard of.
Since the grounding, Boeing has made changes to the aircraft. The FAA Chief, Stephen Dickson, his former airline pilot last week said it would be "impossible for the scenarios, the conditions in the two crashes to occur again, now that these changes have been made by Boeing."
Tanzina: Are people going to feel safe flying on these on these planes?
Leslie: I think the airlines are going to have to find a way to either convince passengers to get on board. The American Southwest, they've said that if passengers are worried about it, they can switch off to another aircraft. These planes are going to be big parts of their fleets. Airlines also have another problem right now, which isn't just getting passengers comfortable with flying on the MAX, they're getting passengers comfortable flying period, because we have a pandemic.
They have a dual problem right now. There are very big orders for this plane. Boeing has more than 3,000 of these on backorder and they're going to be a big part of fleets going forward. It remains to be seen whether travelers actually go on and American looks like they're going to be the first US airline to bring them back on December 29th, their first flights.
Tanzina: Leslie Josephs is an Airline Reporter for CNBC. Leslie, thanks so much.
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