US government shutdown costly for Delta airline

The longest shutdown of the United States government on record cost Delta Air Lines an estimated US$200 million, CEO Ed Bastian said Wednesday in the first disclosure by a US airline regarding the shutdown’s financial impact.

Bastian told investors that refunds “grew significantly” while bookings slowed amid the uncertainty in air travel caused by the 43-day shutdown, contributing to Delta’s loss of about 25 cents per share.

The shutdown, which began October 1, led to long delays at major airports and historic flight cancellations at 40 of the country’s busiest airports as more unpaid air traffic controllers missed work, citing additional stress and the need to take on side jobs.

As the shutdown dragged into a second month, the US Federal Aviation Administration issued an emergency order requiring commercial airlines to cancel up to six per cent of their domestic flights — a decision that Transportation Secretary Sean Duffy described as necessary to guarantee safe air travel.

“When you’ve got the secretary of transportation telling people we don’t have controllers, questioning the safety at some level of travel, which has never before happened,” Bastian said, it led to more customers holding off on booking their holiday travel.

More than 10,000 flights were cut between November 7, when the FAA’s order took effect, and when the restrictions were fully lifted on November 16, less than two weeks before Thanksgiving, the busiest travel period in the US.

Despite the disruption to air travel, Bastian said Wednesday he believes the shutdown’s impacts are in the rearview. He said Delta had a busy Thanksgiving week and that bookings through the end of the year, especially around Christmas and New Year’s Day, were “really strong”.

“I think we’re through it and it was transitory,” Bastian said of the shutdown. “We’re looking forward to a strong December, a strong close to the year.”

Airports impacted by the flight restrictions during the shutdown included large hubs in New York, Chicago, Los Angeles and Atlanta. The flight cuts started at four per cent and later grew to six per cent before the FAA rolled the restrictions back to three per cent, citing continued improvements in air traffic controller staffing after the shutdown ended November 12.

AP