The airline industry was among the main ones which were severely impacted by the COVID-19 pandemic. Even large airline carriers such as United Airlines did not avoid suffering considerable financial losses because of the lack of passengers. The reduction in the number of people using the services of airlines was caused by numerous travel restrictions and closed borders introduced by governments. Before the outbreak of the COVID-19 pandemic, the number of airline passengers has been steadily growing for a decade. As a result, a sudden drop in the demand was unexpected for the majority of airline companies and put them in a difficult position. According to research, the airline industry lost more than $100 billion in 2020 alone since the passenger traffic decreased by more than 60%. Essentially, in 2020, dozens of companies operating in the sphere of air travel had to lose millions and even billions of dollars due to the inability to sell tickets.
United Airlines was among those companies which experienced an extremely negative impact of the pandemic. In 2020, the company lost more than $7 billion, which was one of the largest losses in United Airlines’ history. Nevertheless, the pandemic also provided various opportunities for airline companies, including the possibility of providing a safe travel experience. United Airlines can use the current situation with the pandemic and growing rate of vaccination to its advantage and offer flights specifically for inoculated people. Passengers who are afraid of traveling on planes during the pandemic will be more likely to choose flights which guarantee better safety. Thus, United Airlines will have the chance to generate larger revenues by giving its passengers an opportunity to travel in an environment with other vaccinated individuals.
Introduction
COVID-19 Pandemic and Its Effects on the Economy
The pandemic, which began in 2020, affected countries and people in a variety of ways and became an important factor which businesses had to account for when planning their operations. One of the main manifestations of the COVID-19 pandemic was a slowdown of economic growth and a fast reduction of opportunities for businesses. Essentially, the pandemic and, especially, the restrictions imposed by governments disrupted entire economies and, subsequently, people’s lives worldwide (Nicola et al., 2020). The number of people who died due to the disease also played a significant role in the governments’ decision to introduce strict social distancing measures, which then negatively impacted the economy.
The pandemic had an exceptionally harmful effect on employment in numerous countries around the world, which resulted in millions of people losing their jobs. As a result, the pandemic undermined social mobility and the capacity of people to provide for their families, which was particularly noticeable in poorer countries (Estrada et al., 2021). Some nations had to develop special programs and schemes for helping people cope with a loss of income and providing them with the means to maintain a proper level of well-being (Nicola et al., 2020). Yet, since the resources of governments are limited, people could not receive enough support, which would cover all of their pre-pandemic needs, including travel.
During the pandemic, entire industries experienced crises, and the level of the impact varied depending on particular segments. For instance, in the finance industry, a global stock market decline was observed, which was predictable since people had fewer resources to spend (Nicola et al., 2020). Yet, the gravest downturn was experienced by the hospitality industry, as well as the entire travel segment. For example, in January of 2020, the occupancy rate in Chinese hotels fell by more than 80% (Nicola et al., 2020). Such poor performance could be explained by the government measures, and it entailed significant losses for the providers of accommodation in China.
The Strategies Implemented by Companies to Recover from the Pandemic
As mentioned above, the pandemic became a major disruptor in the operations of hundreds of thousands of businesses worldwide. As a result, it forced companies to develop plans and measures to cope with the negative effects of the pandemic. For many enterprises, a switch to remote work was the only option to maintain performance at an appropriate level and avoid going bankrupt (Kumar and Gupta, 2021). Essentially, the advanced technologies enabled businesses to continue operating without losing efficiency and consistency, achieving the organizational goals despite the restrictions imposed by governments.
Nevertheless, some enterprises, especially those operating in the manufacturing industries, did not have the ability to shift to remote work due to the nature of their trade. Thus, plants and factories introduced mandatory virus testing for all employees and had to adhere to strict safety protocols in order to reduce the possibility of being infected for its workers on the premises (Kumar and Gupta, 2021). Thus, some companies managed to avoid delays in their productions and simultaneously did not put the lives of their employees in danger, preventing them from contracting the disease.
Other companies, especially those operating in the tourism and aviation segments, had to rely on government assistance which was provided to them in different forms. Special loans became the most common way of government support given to businesses from the hospitality and travel segments (Kumar and Gupta, 2021). Additionally, some travel companies received a significant tax relief which allowed them to keep more money (Nicola et al., 2020). Nevertheless, the economic well-being and stability of the businesses from the aforementioned segments still were considerably undermined.
The COVID-19 Pandemic’s Impact on Airline Industry
Economic Effects of the Pandemic on the Airline Industry
As mentioned above, the airline industry became one of the main victims of the COVID-19 pandemic. The considerable negative impact experienced by the airline industry to a large extent can be attributed to the travel restrictions which the majority of countries introduced. As the number of people infected with COVID-19 rose, governments around the world did not see any other way of resolving the situation than by limiting the inflow of people to their countries. Nations which were heavily dependent on tourists suffered massive financial losses while the airline carriers faced thousands of cancellations of flights from clients. Subsequently, the earnings of airline carriers decreased substantially, and companies had to look for other ways to offset their losses. Before the outbreak of the COVID-19 pandemic, the number of airline passengers has been steadily growing for a decade prior to 2019 (Appendix A). The market for international travel became extremely small during the pandemic of 2020 and forced many airlines to stop operating certain routes even though they were busy during previous years (Stalnaker et al., 2021). Thus, airline carriers encountered a challenge which they had to tackle effectively to ensure that they stayed solvent and able to continue successfully performing after the end of the pandemic.
It is worth exploring the actual economic impact of the pandemic on the travel industry and namely the airline segment, to gain a better perspective on the scale of the situation. According to official estimates, in 2020, the year when all travel restrictions were introduced globally, airline carriers lost approximately $118.5 billion (Stalnaker et al., 2021). Before the pandemic, certain routes generated a major share of the revenue for airline carriers in summer since millions of people went on vacations during this time.
Yet, since during the summer of 2020, the majority of regions where people go on vacation suffered from the second wave of the pandemic, airline carriers did not achieve their financial goals. For instance, Sardinia, one of the main tourist regions in Italy, experienced a reduction in transport activity during the summer of 2020 (Deriu et al., 2021). As a result, according to a study which analyzed eleven U.S. airline carriers, all of these companies suffered operating losses of $31.1 billion during the third and fourth quarters of 2020 (Stalnaker et al., 2021). Essentially, airline carriers continued to lose money even during the months which had always been profitable for them. Such a situation evidently undermined the ability of airlines to remain able to pay for all the expenses, including employees’ salaries.
It is clear that the primary effects of the pandemic lasted during 2020, yet the emergence of new COVID-19 variants contributed to the growing numbers of infected populations in 2021. Subsequently, governments had to extend all of the restrictive measures to remain active until a drop in the number of people with the disease. Such a situation caused airline carriers to continue losing profits in 2021, and there are already estimates showing the expected losses. According to experts, due to the progression of the pandemic and the policies associated with it, the airline industry players are forecast to lose $38 billion more (Stalnaker et al., 2021). Such estimates are rather realistic considering the fact that certain airlines published their expected losses for 2021. For instance, Qatar Airways, a major airline, reported that in 2021, the annual losses for the company would surpass $4 billion, which is even higher compared to 2020 (Cornwell, 2021). Considering the fact that Qatar Airways is not the largest airline in the world, it may not have the highest losses in the industry.
The problem with the lack of passengers also leads to more competition among the industry players, which must find new ways to adjust to the situations. Before the pandemic, there was a clear distinction between low-cost carriers and premium airlines, as well as between the people who used them. Today, due to the lack of profitable routes and fewer passengers, both expensive and cheap airlines must compete for the same people (Stalnaker et al., 2021). Nevertheless, as demonstrated by the data on operating losses, airlines still fail to offset their expenses.
The Effect of the Pandemic on the Passenger Demand
Passengers are the sole source of airlines’ revenues, and the drop in their number, especially unexpected, remains the only reason why carriers experience financial troubles. Yet, the issue with the reduction in passenger demand itself is a complex one and needs to be studied more closely to understand the motivations of airlines’ clients. Travel restrictions are, of course, a major factor in the passenger demand decrease because many people prefer to travel only in summer, they have a vacation. Yet, since governments of many countries introduced travel restrictions and closed their border for foreign tourists, people simply avoid going anywhere outside their towns and cities. Moreover, while international travel has always been an important source of revenue for carriers, the domestic one has been the priority for the majority of airlines. Nevertheless, domestic travel still experienced a downturn and a drop in the number of people willing to go to other parts of their countries by plane.
The official estimates on the passenger demand demonstrate why airline carriers are unable to attain pre-pandemic numbers of passengers on their planes. According to research, in April of 2020, the demand for air travel among passengers was down by 65% when compared to the same period in 2019, one year before the start of the pandemic (“April travel demand,” 2021). Such information clearly shows that the drop in the number of passengers in 2020 was truly unprecedented and therefore challenging for airline carriers. Basically, companies did not know how to tackle such a problem because they did not have any action plans for it. As mentioned above, the demand for international travel became particularly impacted by the pandemic and all of the restrictions which ensued. For example, in April of 2020, the demand for international airline travel stood at 87% below the April of 2019 estimates (“April travel demand,” 2021). The data makes it possible to conclude that those airlines which heavily relied on international routes lost a large share of their revenues.
April was one of the worst months in terms of customer demand in yet the pandemic also progressed beyond it and lasted throughout the entire year. As a result, in 2020, the overall international passenger demand was less than 70% of the 2019 level, and the capacity of planes decreased by more than 60% (“Airline industry statistics,” 2021). The domestic demand globally decreased by more than 45% when compared to the previous year (“Airline industry statistics,” 2021). Nevertheless, since the pandemic did not end in 2020, the airline continued suffering from the lack of passengers. In January of 2021, there was a 70% drop in the number of bookings made for future travel compared to 2020 (“Airline industry statistics,” 2021). Such evidence points to the fact that people are still not willing to use the services of airline carriers.
The Business: United Airlines
Background of United Airlines
United Airlines can be considered one of the largest airline carriers in the United States, which has been in operation for almost one hundred years. The company emerged after two carriers, Varney Air Lines and Varney Speed Lines, merged into one entity. The company has always been a major innovator in the sphere of airline travel and introduced many features which are used by other companies today. For instance, United Airlines was the first company to employ female flight attendants, which set the trend for other carriers to follow (“United Airlines. Firsts in aviation,” n.d.). The company also became the first in the industry to utilize jetliners which revolutionized the airline travel experience and enabled people to travel farther distances faster (“United Airlines. Firsts in aviation,” n.d.). As a result of its efforts to become the best airline in the United States and effective governance, the carrier has become one of the key airline brands in the country. In addition to its passenger flights, United Airlines also operates several freight planes which are utilized by various companies.
Over the years, United Airlines has managed to establish its presence not only in the United States but also internationally. As a result, the company operates hundreds of domestic and international routes, and its services are used by millions of people annually (“United Airlines. Firsts in aviation,” n.d.). Additionally, the company is a founder and member of the Star Alliance, a network of major airlines from different parts of the planet. The membership in Star Alliance allows clients of United Airlines to have a better experience when traveling abroad. United Airlines values the safety of it is customers and does not put their lives at risk by utilizing old aircraft. Instead, the carrier renews its fleet consistently and performs all essential maintenance procedures to ensure that its planes are safe.
Challenges faced by United Airlines due to COVID-19
United Airlines, as a notable part of the global airline industry, experienced large financial losses because of the small number of passengers using its services during the pandemic. A drop in the number of sold tickets was expected by the company as soon as the pandemic-related restrictions began being imposed by governments. As a result, many of the losses suffered by the company were already taken into consideration during the first quarter of 2020, and the carrier’s management was able to tackle the challenge.
Nevertheless, the size of the financial losses was significant, and it can be expected that the company will have to overcome the pandemic consequences over the next several years. Before the pandemic, intentional routes were essential for United Airlines’ economy, yet in 2020, the revenue from them decreased by more than 80% (Koenig, 2021). To a considerable extent, the reason behind the drop can be explained by the closed borders and the lack of spare resources among the clientele of the company. Such a performance led to a loss of billions of dollars for the carrier. Domestic flights were the primary source of United Airlines revenues before the pandemic, and the situation remained the same after the start of the COVID-19 spreading in the United States. Nevertheless, the company’s domestic revenues in 2020 also suffered a drop of more than 70%, which is consistent with the previously mentioned global estimates for the entire industry (Koenig, 2021). The company became unable to meet its financial performance goals for 2020 and had to adjust to the situation and find new ways of generating revenue.
The company’s losses in 2020 were comparable to that of Qatar Airlines, which was described previously. Basically, the total amount of losses of United Airlines by the end of the year surpassed $7 billion (Koenig, 2021). Such data shows the gravity of the pandemic’s impact on the company and the challenge the carrier faced as a result of it. In the fourth quarter of 2020, the daily cash burn of the company reached $33 million, not including the principal debt payments (Appendix B). In other words, United Airlines did not generate any profit and instead was continuously losing money each day. In the absence of passengers, United Airlines had to rely on its freight department in order to ensure that it had at least one stable resource of revenue.
The onset of the pandemic triggered numerous shortages, especially in terms of protective equipment such as face masks and gloves. United Airlines managed to successfully adjust to the situation and was able to double its cargo revenues compared to 2019 and earned more than $2 billion in 2020 on transporting shipments with vital items (Rivero, 2021). Thus, the pandemic also had a positive effect on the company; nevertheless, the cargo revenue was not sufficient to cover all expenses of the carrier.
In 2021, the company continued to face issues with customer demand since the pandemic did not stop, and thousands of people continued to get infected with the disease daily. United Airlines’ revenue in the second quarter of 2021 was down by 50% compared to the same period in 2019 (Josephs, 2021). Moreover, during the first two quarters of the year, the total losses of the company amounted to more than $1.5 billion (Josephs, 2021). Therefore, it is clear that the problem of the pandemic affects United Airlines to this day, and the company requires solutions to it to avoid going bankrupt.
External and Internal Analyses
SWOT
In order to assess the company’s position in the industry and determine which opportunities it can seize; it is essential to perform both internal and external analyses. The former was conducted with the help of the SWOT framework, which allowed to gain a better insight into the strengths, weaknesses, opportunities, and threats of the company. The results have shown that United Airlines possesses a variety of strengths but also has weaknesses which it needs to address.
The main strength of United Airlines is the size of the company and the diversity of its operations. Unlike smaller carriers which operate only several routes, United Airlines works in dozens of destinations which enables it to quickly adjust its operations increasing its presence on the most profitable routes. Additionally, another strength of United Airlines is its brand which has been in existence for many decades. As a result, millions of people, especially those living in the United States, are familiar with the company and have a high level of awareness of it. United Airlines also has a well-trained staff working in different departments of the company who demonstrate excellent expertise and professionalism. Additionally, the carrier is popular with passengers, and in 2019 alone, there were more than 150 million people who flew with United Airlines (Salas, 2021). Finally, United Airlines has enough resources to conduct cash burns and lose money during the pandemic since it is a large company which can always get loans from different sources.
The main weakness of United Airlines is the reputation of the carrier as an airline which often neglects customer experience. For instance, according to the customer review website called Skytrax, United Airlines has only scored three stars out of five (“United Airlines,” n.d.). The company experiences certain problems in the spheres such as language skills of the crew, service hospitality, and interactions with customers. Thus, despite the fact that United Airlines is a popular carrier, many passengers are skeptical of its services. Additionally, another weakness of United Airlines is the massive amount of expenses the company entails on a daily basis since it operates numerous aircraft, manages multiple facilities, and employs thousands of workers. As a result, during the time of the pandemic, the company continues to face these costs but is unable to cover them by generating enough profit.
United Airlines has a variety of opportunities, including those which are associated with the pandemic. United Airlines can offer cheaper flights on certain popular routes in order to attract more passengers. The company also has the ability to optimize its performance and reduce its expenses by downsizing the departments which are not as vital for its operations. There is an opportunity for the company to invest in the construction of innovative engines and planes, which would be less expensive than the current models provided by Boeing and Airbus. The company can improve the quality of training of its employees who interact with clients, especially cabin crew members. Such a measure will enhance the company’s reputation and will potentially encourage more people to use its services.
United Airlines also faces threats, some of which can force the company out of business. The main threat to United Airlines is the progressing pandemic and the emergence of new variants, which can be more delay than the previous ones. As a result, people can be scared of traveling by planes due to the necessity of spending time in close quarters with potentially infected individuals. Moreover, government restrictions imposed as a result of the pandemic also can disrupt and further worsen the situation with domestic and international flights. Basically, if the pandemic and restrictions continue, United Airlines may not be able to burn cash at the same rate and may have to stop its operations.
PESTL
The primary political factor affecting United Airlines’ operations is the travel restrictions which many governments introduced as a reaction to the pandemic. Basically, the company’s current position where it is unable to provide its services to a full extent is the result of the governments’ actions. Travel bans which numerous countries continue to uphold as well as regional border closures preventing foreigners from entering all can be considered the political factors impacting United Airlines. There are also positive political factors affecting the airline industry, namely, special loans and incentives for carriers to help them survive a difficult period. Many airlines continue to receive assistance from their governments in the form of tax cuts and other policies.
The key economic factor impacting United Airlines is the lack of resources among the potential passengers due to financial problems caused by the pandemic. Since the start of the spreading of COVID-19, many businesses had to close, leaving thousands of people unemployed and unable to earn any income. As a result, people had to change their priorities and avoid traveling to save money and spend them on more essential matters. At the same time, the increased demand for cargo shipments positively affects United Airlines since the company has a cargo fleet. Delivering supplies to hospitals and other medical facilities is one of the ways to generate revenue for the company.
The social factor affecting the company is the potential fear of flying, which many people experience due to the threat of being infected with the virus. Since the start of the pandemic, governments have introduced social distancing measures. Yet, such measures are difficult to observe when traveling on a plane. Therefore, some individuals simply fear contracting the disease while using airline carriers’ services. Additionally, a social factor which concerns United Airlines specifically is the poor reputation of the company among clients. As it was mentioned above, clients often complain about the quality of services they receive when interacting with United Airlines. Another incident onboard United Airlines’ aircraft can cause a scandal and a drop in the company’s reputation.
The technological factor faced by the company is the possible emergence of new aircraft on the market, which will be comfortable than the ones present in United Airlines’ fleet. Thus, the company will have to allocate large resources to buying new planes, which will entail substantial expenses. Additionally, innovative aircraft designed specifically to carry passengers in a situation of a pandemic can be created. Companies which will buy such a plane will certainly gain a competitive advantage, and United Airlines may not have spare resources to do it. Another technological aspect is the creation of new fuel which can be consumed more efficiently. Airlines spend considerable sums on fuel, and a new type of it which could be more effectively used by machines can help airlines to cut their costs.
Finally, legal factors which United Airlines has to consider concern government regulations in the sphere of emissions. Airlines emit large amounts of gasses such as CO2, which are thought to be detrimental to the environment. Countries committed to countering the development of climate change may introduce laws banning the use of inefficient fuels. As a result, airline carriers may have to switch to green fuel alternatives, which simultaneously can be more expensive.
United Airlines’ Current Goals and Adjustment Strategies
Business Goals of United Airlines
As evident from the information provided above, the COVID-19 pandemic significantly disrupted not only the operations of United Airlines but of the entire airline industry and drove numerous companies to bankruptcy. United Airlines is a company which has been steadily losing money almost for two years now, burning cash. Currently, it is unclear whether the pandemic will stop in the near future. Yet, considering the spreading of new variants of the virus and slow vaccination rates worldwide, it is possible that the company will experience pressure during the next year. The cargo department of United Airlines benefited from the onset of the pandemic, yet it does not generate sufficient revenues for the company to cover its expenses. As a result, United Airlines must design an action plan and set clear goals for the next months to have a framework to rely on. According to the official report published by United Airlines at the beginning of 2021, the company decided to focus on the recovery to improve its financial situation (“United announces 2020 financial results,” 2021). Nevertheless, the presence of uncertainty can interfere with the company’s future plans.
The recovery as a goal implies addressing a variety of aspects which United Airlines has to consider as it continues its operations. According to the company’s report, 2021 is viewed as a year which will only indicate a recovery preparation stage (“United announces 2020 financial results,” 2021). In other words, the company expects that in 2021, it will remain unable to generate any profits and will continue to lose money. Nevertheless, the goal for 2021 is to considerably reduce its daily cash burn amount by employing several methods, including cutting costs (“United announces 2020 financial results,” 2021). Thus, the company wants to reform its business to be more resilient and able to counter the challenges related to the pandemic. The active phase of the recovery will begin in 2022, when, according to the company’s representatives, United Airlines expects the pandemic to slow down (“United announces 2020 financial results,” 2021). Essentially, by the start of 2022, the company will have to have a clear vision of how it will improve its balance sheet.
It is clear that 2021 and 2022 will be spent on the recovery measures, and the company sets a specific financial target for 2023. By 2023, the company wants to achieve a full recovery from the COVID-19 pandemic and reach an EBITDA margin larger than that in 2019 (“United announces 2020 financial results,” 2021). According to the company’s report, its official adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization in 2019 was more than $3 billion (“United announces 2020 financial results,” 2021). Such a forecast can be considered too optimistic given the fact that in 2020 the company lost more than $7 billion, and in 2021, it continued to lose money. Nevertheless, the desired EBITDA can be achieved if the pandemic and the restrictions accompanying it will stop by the start of 2023. At the same time, the company itself must devise effective methods of attracting passengers in order to ensure that the maximum number of tickets for United Airlines flights are sold.
Measures of United Airlines During the Pandemic
In order to reach the goals for the next three years, the company needs to adjust to the situation involving the pandemic and offer services which adhere to new standards and policies. United Airlines has already implemented a long list of changes to the way it operates and has introduced numerous improvements to the travel experience of clients. The actions of the company show that it is ready to be flexible and maximize its benefits even in difficult scenarios.
During the pandemic, the company had to rethink its approach to the management of the aircraft and its spaces. For instance, United Airlines introduced cleaning and disinfection policies in partnership with Clorox to maintain its airplanes clean, as well installed electrostatic spraying aircraft interiors (“Coronavirus (COVID-19) updates,” n.d.). Such measures allowed the company to remove the majority of pathogenic organisms which could potentially convey the COVID-19 virus. Additionally, according to the company, it was the first and only one in the industry to enhance its ventilation systems on planes by providing additional power on mainline aircraft clean (“Coronavirus (COVID-19) updates,” n.d.). As a result, United Airlines managed to adhere to strict health and safety guidelines and ensured better filtration of the air. The company also implemented a special coating called Zoono Microbe Shield, which prevents the growth of microbes on various surfaces inside an aircraft (“United announces 2020 financial results,” 2021). Essentially, the company was careful to observe all guidelines of the authorities and experts and made efforts to make the travel experience for clients and crew as safe as possible.
There were additional measures initiated by the company, including a compulsory use of face masks, which, nevertheless, was common and mandated by local authorities. The company’s clients also received an option to undergo touchless check-ins with the help of special kiosks deployed in more than 200 airports (“United announces 2020 financial results,” 2021). In order to ensure that cabin crew did not spread the virus, United Airlines introduced free COVID-19 testing for employees, as well as mandatory checking of their body temperature (“United announces 2020 financial results,” 2021). The efforts of United Airlines to guarantee safety to its clients were truly extensive, which shows the commitment of the company to remain competitive even during the pandemic.
The measured introduced by United Airlines concerning the pandemic were not limited to the establishment and maintenance of a sanitary environment for clients and crew members. The company also introduced considerable changes in other spheres of its operations. For instance, the company removed the change fee for all standard economy tickets for domestic flights with an intention to give customers more freedom and choice in their travel. Moreover, the company even notified clients each time their flights were more than 70% full to ensure that individuals could decide for themselves whether they wanted to travel in a crowded environment. Additionally, all United Airlines passengers can now check, using the carrier’s official mobile app, the restrictions implemented in countries and cities of their destination (“United announces 2020 financial results,” 2021). Essentially, due to these measures, clients of the carrier were able to adjust to the changing situation in terms of the spreading of the virus and authorities’ initiatives. Thus, people traveling with United Airlines during the pandemic understood that the company valued their health and safety and did not want to put their lives at risk.
Demand for Safe Travel Options
Behavior of Airline Passengers during the Pandemic
The pandemic brought numerous challenges to people, which limited their ability to travel and especially use services of airline carriers. The factor which was already mentioned above is the lack of financial resources which could be spent on travel. Many people lost their jobs due to the pandemic, and they did not have the means to go on vacation or simply visit their relatives living in another state. Another factor which did not let numerous people travel by planes during the pandemic is the closed borders. The majority of countries, including those which are considered major tourist destinations, had to stop foreigners from entering their territory to avoid the spreading of the disease. Thus, people who usually traveled by air only to foreign countries became unable to do it because they would not be allowed to enter. At the same time, there was another group of people which nevertheless was not studied as thoroughly. Namely, the people who were simply scared of traveling in closed quarters due to the fear of contracting the disease and facing negative health outcomes.
Although the issue of fear of flying during the COVID-19 pandemic remains a scarcely researched one, there are still several studies which make it possible to assess the attitudes of passengers to air travel. For instance, Lamb et al. (2021) studied the perspectives of airline passengers on their experience traveling on an aircraft in the middle of the pandemic. The results showed that the absolute majority of airline passengers, when asked to share their opinions, reported having trust issues and fear associated with being in close proximity with other people. In other words, people were simply scared to be beside others when sitting in a plane because they treated other individuals as potentially having the disease and being able to spread it.
Such information demonstrates that people remain anxious to board planes during the pandemic even a year after the beginning of the pandemic since the research was performed in 2021. Air travel makes it virtually impossible to observe all social distancing measures without increasing the cost of tickets which creates numerous problems for passengers, as well as airline companies forcing them to lose money. Additionally, the fear of traveling can be caused by the lack of social interactions, which many people experience due to constantly being at home for the past year. As a result, when considering the option of being near many people, some individuals do not want to do it because it scares them.
It is also important to study how people began interacting with airline companies after the onset of the pandemic. According to a study from China, people started buying tickets closer to the departure date as a way to avoid flight cancellations due to worsening situations with the pandemic (Zhang et al., 2021). Essentially, there was a rise in uncertainty among passengers traveling by air. In fact, the uncertainty stays until the moment the plane takes off because the possibility that the flight will be canceled due to a passenger with the virus is high. Another research shows that, during the pandemic, many people preferred buying refundable tickets as a way to avoid losing money if their flights got canceled (Monmousseau et al., 2020). Thus, it can be concluded that passengers became more fearful of their travel experience and anxious about the idea of being near other individuals. Additionally, the high levels of uncertainty forced passengers to be more cautious and have a contingency plan if their flight was canceled.
Opportunity for Provision of Safe Travel Options
The two aforementioned problems concerning the behavior of airline passengers during the pandemic constitute considerable issues for carriers such as United Airlines. The first issue, namely, the fear of travel in close proximity with other people, limits the volume of airlines’ passengers. Essentially, some individuals decide against traveling during the spreading of the virus because they do not want to face any health risks. For instance, elderly people, who are particularly susceptible to COVID-19, may prefer using a car rather than buying flight tickets to get to their relatives. The second problem, the one related to uncertainty, also undermines the ability of airlines companies to generate revenues. The canceling of a flight due to the pandemic is a common situation which costs carriers millions of dollars. Moreover, since passengers are not guaranteed that their flight will not be canceled, some people do not even view air travel as a viable option. As a result, all of these factors translate into a reduction in the volume of passengers and fewer sold tickets and subsequently into annual billion-dollar losses for companies such as United Airlines.
At the same time, the problems such as the ones presented above can be perceived as opportunities which companies can use to their advantage and thus gain a competitive advantage in the market. The common reason for the behaviors involving fear of contracting the disease and missing a flight is the lack of guaranteed safety. People who use airlines’ services during the pandemic are not sure whether their experience on a plane will not lead to them becoming infected. Similarly, when a flight gets canceled during the pandemic, the cause of it often concerns the discovery of an infected passenger. The primary opportunity in relation to these problems which United Airlines can utilize is the provision of safe travel options which would minimize the probability of passengers getting the virus.
It was mentioned that United Airlines already implemented a variety of measures to reduce the spreading of the virus onboard, including mandatory face masks and thorough cleaning of aircraft’s interiors. Yet, the issue with all of these policies is the lack of scientific evidence in support of their effectiveness. For instance, a study by Islam et al. (2021) demonstrated that an airline which introduced back-to-front boarding as a way to limit the virus spreading only increased the exposure to COVID-19. Thus, companies that need to offer a completely safe travel experience need to rely on other methods which have been proven to be effective. As of now, the only way of guaranteeing safety from the COVID-19 disease to people is through vaccination. As a result, United Airlines can feature certain flights only for inoculated individuals. Such a proposal is explored in detail in the Recommendations segment of the current paper.
Ethical Considerations Regarding Implementation of Safe Travel
Ethical Concerns About Use of Safe Travel Options
Implementation of safe travel measures entails different ethical issues which can be impossible to resolve. For instance, since the start of the pandemic, traveling in a plane without a face mask has been prohibited not only by airline carriers but by many governments and local authorities. On the one hand, face masks cover people’s noses and mouths which can spread the virus in small spaces. On the other hand, such measures constitute a form of discrimination towards a group of people. Essentially, individuals who do not wish to wear masks on planes do not have any other option than to avoid using airlines. Thus, the safety measures deployed by carriers ultimately prevent a certain number of people from being able to go other places by planes simply because they refuse to comply with the official guidelines.
There is also a potential ethical issue related to the provision of safe travel options, namely, concerning the correct phrasing used in advertising. Airline carriers have already implemented numerous safety measures to eliminate the possibility of the virus spreading. Nevertheless, many of them do not have any scientific foundations and are used by companies as a marketing trick. As a result, in cases when airline carriers feature phrases such as “Safe travel” in their promotion campaigns, they actually may perform false advertising (Collins, 2017). In other words, they tell clients that by traveling with their company, they will have an opportunity to spend time in a safer environment, while it actually may not be true. Therefore, an ethical challenge arises since companies deciding to call their travel experience safe, may in fact, willingly conceal the fact that their measures are not beneficial for the health of passengers.
Ethical Implications for United Airlines
The main proposal of the current paper concerns the introduction of safe travel flights by United Airlines. Instead of opting for face masks, the company has to introduce flights for fully vaccinated passengers only. Such measures are evidently even more discriminatory towards people who refuse to get inoculated. Some people choose not to get a vaccine because of their underlying health conditions, while others believe that vaccines are inherently dangerous. It is clear that such people will not have the opportunity to utilize United Airlines’ special safe flights. Thus, the discriminatory actions against such people on the part of United Airlines can result in the loss of numerous clients. Some people may choose not to use the services of a company which openly decides to work only with a certain group of clients and discriminate against another.
Additionally, if United Airlines decides to market its flights for fully vaccinated passengers as “completely safe,” it can be accused of false advertising. For instance, if a vaccinated person still manages to contract the disease while onboard United Airlines’ “safe” flight, they can sue the company. United Airlines can be considered guilty on the grounds that, despite guaranteeing to make passengers’ travel experience safe, it did not fulfill its promise.
Nevertheless, United Airlines’ safe travel can also be viewed as an ethical decision and as a way to promote health and safety in society. By featuring flights for fully vaccinated people, United Airlines can encourage other people to get inoculated and be able to travel safely. Such a perspective can be considered utilitarian since, in the given situation, the scenario which benefits the majority of people is chosen. Individuals who refuse to get a vaccine are always a minority who nevertheless can be dangerous to the majority.
Leadership and Collaboration Considerations
Top-Management Obligations
Any substantial change in businesses must be either initiated or authorized by the top managers since they are people in charge of the company and its actions. In order to introduce a safe travel experience, United Airlines’ leadership must be able to clearly communicate the organizational goals the company attempts to reach with the new approach (Henry, 2018). The primary goal of the safe travel proposal is to attract new customers by providing them with a safe travel environment and minimizing the possibility of contracting COVID-19 for them.
Implementation of the new approach requires the company to design a clear and detailed plan as well as protocols which all employees will follow. The company’s top management must focus on designing such an action plan which will serve as the foundation for the introduction of safe travel options. Official guidelines on the new safe travel option will facilitate the process of adoption and will make it easier for employees to perform.
The Need for Collaboration
There is no doubt that the adoption of the safe travel option will involve the efforts of several departments of United Airlines. The company’s employees must be able to check the certificates of passengers showing that they are vaccinated. Additionally, certain workers must be tasked with checking the temperature of the clients. Cabin crew members of safe travel flights must be trained in the measures and techniques to reduce the exposure to the virus on aircraft. Essentially, the offering of safe travel programs will require joint efforts on the part of all United Airlines departments. Coordinating actions of numerous people to make safe travel possible also implies an efficient use of communication.
Recommendations
Addressing the Customer Demand for Safe Travel
Thus, based on the information presented above, there the main proposal which can be made to United Airlines is the offering of a safe travel experience to clients. The exact way of providing safe travel concerns the establishment of special flights which can be accessed only by fully vaccinated people. The primary motivation behind the idea to introduce flights for vaccinated people is to satisfy the demand for safe travel options. People who fear being in close proximity with others due to the possibility of contracting the disease will be able to use United Airlines’ flights. Essentially, a plane with fully vaccinated crew members and passengers constitutes a safe environment, especially when compared to flights standards safety measures such as face masks. Additionally, another problem of air travel during the pandemic is the cancellation of flights due to the discovery of passengers with the COVID-19 symptoms. A flight without unvaccinated people onboard is less likely to get canceled because its passengers are more protected against the disease. Thus, United Airlines can make some of its flights completely COVID-19-free and provide passengers with the most advanced way of traveling safely.
It is clear that there are certain passengers who cannot receive vaccines due to their health problems. United Airlines can either prevent such people from boarding its safe flights or allow them to enter them only if they provide documents about their issue. Additionally, such people should be asked to provide COVID-19 testing results to ensure that they do not have the disease. Some older adults often possess a variety of conditions which can be aggravated by the impact of vaccines on their immune systems. United Airlines can allocate special quotas for such people and assist them in traveling to meet their friends and family. The notion of COVID-19 flights is not a new one, and it emerged soon after the start of vaccination campaigns in numerous countries. Moreover, United Airlines already requires its passengers traveling abroad to undergo vaccination due to the laws of foreign countries (“United announces 2020 financial results,” 2021). Nevertheless, the current proposal concerns domestic flights on the routes which United Airlines operates in the United States. Therefore, by featuring such flights, the company will be able to satisfy the demand for safe travel of the country’s citizens.
Moreover, it is clear that such efforts are targeted not only to resolve the issue with people fearing to use airlines’ services but also to attract new clients. Air travel is essential for millions of people who utilize carriers for different purposes, including for work. As mentioned above, the pandemic increased the competition in the airline industry, forcing carriers to compete for the same clients, while previously, each company targeted their own types of customers, usually based on their income. United Airlines can utilize the existing opportunity provided by the increasing rate of vaccination and once again target a certain group of clients. Yet, this time, the company will offer services not to affluent passengers but to the vaccinated ones. Such a strategy can be considered one based on differentiation which was described by Porter (Thuis and Stuive, 2019). Essentially, United Airlines’ domestic flights for vaccinated people can become a factor which will enable it to gain a competitive advantage, at least for a certain period of time. Currently, there are no large airlines in the United States which offer similar services to their vaccinated clients.
Recovering from the Pandemic
The introduction of the safe travel lights aligns with the strategic goals of the company, which were previously outlined. Basically, the company is striving to fully recover from the pandemic and the restrictions related to it by the end of 2023. As a result, the company will need new ways of generating revenues, and the provision of services to vaccinated passengers is a good opportunity it should utilize. The new safe travel option can be expected to become popular among many people who do not want to risk their health. The popularity of safe flights will enable the company to sell more tickets and thus receive more resources which it can utilize to cover its expenses, including loan payments. The tickets for safe travel can have higher prices due to extra expenses such flights entail as well as because of their uniqueness. The company can charge its clients more for the ability to travel in a safe environment near other vaccinated people.
Improvement of the Reputation
It was already mentioned that the company experienced certain problems with its quality of services in the past. Passengers complained that United Airlines’ crew members did not deliver on their professional responsibilities. The provision of flights for vaccinated people is an opportunity for the company to restore its reputation. Essentially, by giving people a chance to travel in a safe environment, the company shows its commitment to the health and safety of clients. Some people may view it as a manifestation of care on the part of United Airlines for its customers and thus decide to use the company’s services more often.
Conclusion
United Airlines’ financial situation, as well as that of the entire airline industry, was significantly undermined due to the start of the COVID-19 pandemic, which caused the company to lose $7 billion. At the start of 2021, the company published a report according to which by 2023, it plans to recover from the consequences of the pandemic. The main goal outlined in the report is the surpassing of the 2019 EBITDA, which requires the company to earn more than $3 dollars in 2023. The primary concern in relation to the company’s plan is the lack of certainty in terms of the end of the pandemic. United Airlines risks failing to achieve its 2023 goals if the pandemic continues to affects countries worldwide. At the same time, the challenging situation in the sphere of air travel also provides numerous opportunities for the company.
Research shows that many people refuse to travel by plane during the pandemic due to the fear of contracting the disease. There is also a growing number of people who are extremely cautious when booking tickets because they know their flights may get canceled. United Airlines can use the existing situation to its advantage and offer safe travel to vaccinated people. Essentially, the company needs to start operating flights where all passengers and crew members are vaccinated. Such a measure will enable United Airlines to attract new clients, improve its balance sheet, and enhances its reputation.
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Appendix A
Appendix B
