Asked about the impact of the Delta variant, the CEO of Delta Airlines sidestepped the name. Instead he called it the “latest variant.” But he was willing to say that corporate spending on air travel was again down substantially.
And it affects us in many different ways.
Why We Fly
To see the Covid impact on air travel, we can look at why businesspeople fly. As you might expect, we will continue making person-to-person sales calls and attending trade shows and conventions. However, we’ve discovered that Zoom can take care of intra-firm meetings and some air to work commuting. Online technological support is also more likely.
The big problem is the large chunk of airline revenue (40 percent) that businesses provide. Any less, and leisure travelers could have to pay more. It is also possible that less business travel could mean fewer flights for leisure travelers.
If you live on a Pacific island, air travel is a lifeline. Crucial for healthcare, deliveries, and employment, its main moneymaker is tourism. For those reasons, government makes sure that its national airlines survive tough times.
You can see the downward direction of Pacific Islands’ airline profits. We can assume that Covid made it worse:
Our Bottom Line: Negative Externalities
With domestic and Pacific Island airlines, when one hurts, many others feel the pain.
A negative externality is an event or decision that “hurts” uninvolved third parties. Domestically, some of those third parties are leisure travelers and shareholders. In the Pacific Islands, the problems ripple to all who suffer when governments have less to spend for their needs.
Consequently, the variant that Delta’s CEO won’t name has a somewhat anonymous impact on many of us.
My sources and more: Because it’s always nice when two disparate articles complement each other, I was delighted with this IMF post and Scott McCartney’s recent column. From there, this column had more detail about why we fly.