Automation Happening Right Under Our Noses...And We Missed It
The coronavirus is having an enormous impact. No industry is feeling the pain more than the airlines. These companies are in hot water and it is not likely to cool down anytime soon. Forecasts are that it will take a minimum of 2-3 years before the industry is back to where it was before.
2019 was a record year for the industry. There were 946 million passengers who flew on United States carriers during the year. This was the continuation of a longer term trend as shown by this chart.
With the impact of the virus, the airlines are going to be forced to cut personnel. For the moment, due to the $25 billion in money they got from Congress, the employees are safe. Part of the deal is to retain them for 6 months. The question for all involved is what happens in October?
The challenge with what is taking place right now is the fact that airline personnel were already reduced. While the airlines flew a record number of passengers, they did so with less employees.
Here is a chart showing the employment in the airline industry.
https://image.cnbcfm.com/api/v1/image/106560346-1591041440793-20200601_Schedule_air_transport_employment_rev.png?v=1591041452&w=740&h=451
It is easy to see how the two charts often went in different directions.
From the early 2000s, the total number of passengers increased while there was a steady decline in personnel. Both charts bottomed with the last recession beginning to make their way back up.
Even though the number of airline employees grew significantly since the lows, there is still a large drop off from the peak.
We notice that the latest number is around 453,000, down from a high of 550,000. This is a loss of close to 100,000 employees.
When you look at this on a percentage basis, it is pretty bad. This is a decline of 18%.
The media made a big deal about the number of jobs lost in manufacturing. At the same time, they mentioned what was taking place in retail. However, who mentioned the situation in the world of the airlines?
To my knowledge, nobody gave it much play.
Nevertheless, here we see an industry that everyone is aware of yet there are a lot less people working in it. I bet few thought of the impact on jobs when we check in using the Kiosks. Online booking meant they could eliminate most personnel who dealt with ticketing. Certainly, they made advancements on the mechanical side, requiring less personnel on that end.
This is a fairly typical transition. While it is unlikely that people were outright let go, over time the jobs simply faded away. As people quit or retired, they simply were not replaced. Technology allowed for greater productivity without all the employees.
For an industry that was down 18% before the coronavirus in terms of personnel, we can expect that number to get a lot bigger over the next 6 months. The airlines are going to be much smaller going forward.
This is something that we can bank upon.
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