COVID-19 and airline employment: Insights from historical uncertainty shocks to the industry

The purpose of this paper is to analyze the effects of uncertainty shocks on airline employment in the light of the current global pandemic. The airline industry has faced many threats throughout history, but none quite as rapid and severe as the one posed by the spread of COVID-19. One constant during uncertainty shocks and industry downturns is that airline labor bears the brunt of the decline. As the industry reduces capacity amid the increase in travel restrictions, the post-stimulus impacts to airline labor are not known. Using time series analysis, the dynamics of historical uncertainty shocks to the industry are examined. During periods of uncertainty shocks, the estimated job loss is nearly 7% of the airline workforce with an upper bound of over 13%. Major airline employment is most impacted, while low-cost and regional airline employment is least impacted. The hardest hit employees are ones related to passenger handling and flight operations, while management employees fair slightly better during these uncertain periods. Further, recovery following uncertainty shocks is estimated to take between 4 and 6 years. Overall, the labor impacts to the airline industry from uncertainty events are substantial and provide insight into the expected industry job loss from COVID-19.