Labor Cost Increases See Airline Margins Fall Written 3 April 2023


American Airlines aircraft at Phoenix Sky Harbor International Airport. | Credit: Quintin Soloviev/Wikipedia; CC BY-SA 4.0

Aviation International News reported that labor costs have steadily increased for US airlines since air travel has started to come back, tracing the increase back to mid-2021. Moody’s Investors Service said that it “sees aggregate labor expense for the eight U.S. airlines it rates increasing by 19 percent in 2023 and another 8 percent in 2024, as the low U.S. unemployment rate continues to create staffing and labor cost headwinds – as will the mandatory retirement age of 65 for pilots if Congress does not pass legislation to raise the limit to age 67.” Moody’s says that while combined revenue for the eight largest US airlines should reach $212 billion this year (a 13% increase from 2022), “capacity shortfalls brought on by shortages of aircraft, spare parts, maintenance capacity, and labor will help support ticket prices well into 2024, even if a recession takes hold and slows demand, said the report’s author, Moody’s Investors Service senior v-p Jonathan Root.”
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