TODAY'S NEWS. TOMORROW'S INSIGHTS.A daily newsletter from McKinsey & Company
Edited by Jason Li Senior Editor, Shanghai
Overworked pilots. Summer is here, and many are eagerly jetting off for vacation. Airlines in the US, however, are facing multiple challenges, including rising fuel prices, bad weather, and labor shortages. Thousands of pilots took buyouts or went into early retirement during the COVID-19 pandemic, and they can’t be replaced quickly enough—even though carriers are on a hiring spree. Amid flight disruptions and 11th-hour changes, pilots say they are overworked and want better working conditions. [NYT]
Not cleared for takeoff. Despite a surge in demand for leisure travel, many airlines are cutting routes and reducing the number of flights on the ones they keep. Ongoing personnel shortages—both on board and on the ground—have prompted airlines to cancel scores of flights. In North America, there were 793,018 canceled flights in the first 23 weeks of 2022, a 21% increase from the same period in 2019. [Axios]
Defying the odds. In every year of its existence, the airline industry has failed to earn its cost of capital. But some carriers have managed to defy the odds to generate consistent value for their shareholders—and are widening their lead over others. From 2012 to 2019, a small group of airlines managed to generate profits while the rest of the industry lost value, reveal McKinsey senior partner Alex Dichter and colleagues.
Six secrets. Profitable airlines focus on six critical areas, McKinsey research shows. For instance, high-performing airlines are able to stand out from the crowd through their reputations. Airlines that are reliably on time and have good operational performance enjoy higher returns, according to McKinsey analysis. From managing an airline’s capital base to building on network privilege, learn how each critical area can go a long way to boosting profitability.
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