Automation Happening Right Under Our Noses...And We Missed It

in LeoFinance8 months ago

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.


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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It's going to be really interesting to see how COVID actually changes the world long term. I think many large companies are going to start liquidating and a lot of gig work is going to be a real focus for a lot of people. @tipu curate

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It coincides with California Passing more stringent laws regarding what "gig work" actually is. In February the job I had tried to transfer me to being a gig worker and I declined, I wanted to benefits of being an employee (or a raise to monetize the rights I was being forced to forfeit). I ended up jobless, "knowing" that I would be called back in a few weeks as the office was a mess and I kept it together.

I was wrong, covid wiped out the need for the office I was working in, and the industry shows no signs of making a comeback.

I know now, that the gig work law is going to be buried. Just because it exists doesn't mean that it will be enforced.

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Entire industries are being decimated; this is something that we have not really seen before.

The truth is the employment situation was too overstaffed anyway. Companies were reluctant to let people go during good times because of the PR hit. Now, they are realizing, if their industry is still standing, they can get by with a lot less employees.

Automation was probably sped up a couple years due to COVID.

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So my perspective on big companies, working for 2 billion + public companies, is that headcount has only to do with their position in the market i.e. shareholder price or their market cap relative to their revenue. When Market cap and revenue come close for large public companies, they risk being bought up by PE and get restructured because often times industries won't let brands go to waste.

I think gig work law shouldn't really apply because it's the introduction to decentralization from a mainstream perspective. Government subsidizing gig law is a means to an end for eliminating other revenue generators for the gov, such as making it easy for gig workers for uber means less taxi's that they sold 100k medallions for.

I think gig jobs will end up moving to a decentralized self governing model eventually and not too long from now as well

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Upvoted 👌 (Mana: 0/4)

I would say that a lot of companies are going to automate many of the processes meaning they can hire less people when things do turn around.

This is exactly what happened in the oil industry when it crashed in 2014. More than 300,000 people were laid off from the fields in West Texas and, two years later, only 170K were rehired. At the same time, deep water rigs saw the number of people needed drop from 25 to 5, an 80% reduction.

There is now incentive for companies to do it. After all COVID taught companies people are health risks which can halt their entire business.

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An associated industry that was growing with the Air-travels sector was International Tourism. There would be a dwindling in another couple of months until some significant restrategizing is made.

Factual shot here.

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Southern Europe, like Spain, is basically killing tourism. That will make the economy that much worse.

It is not going to be a pretty picture on any level.

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This reminds me of the olives...

I have been aware of the plight of airline workers since I worked in mortgages back in 2004, I had a few clients who were always afraid of losing their job and forced into early retirement.

Their biggest fear was losing their benefits, not health insurance and sick pay, their flying benefits. As Delta Airlines employees, they were allowed to fly anywhere for free as long as there was room on a flight. If there was an empty seat, they could take it.

Many of them were ready to retire but didn't, all they wanted to do when they retired was travel and the only way for them to afford it was with their free (mostly first class) travel benefits.

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