Inclement weather estimated to cost airline industry over $5 billion
March may be here, but reports on this winter's damage continue to come to light. The 2013-2014 season is projected to be one of the worst in national history, costing state governments, businesses and communities billions of dollars.
Specifically, the airline industry is projected to lose anywhere between $5.3 to $5.8 billion, research group masFlight reported.
These financial losses are largely due to the fact that the weather overwhelmed East Coast airports' business continuity plans, causing thousands of flight cancelations. The problem with air travel is that if the weather is not safe for plane to fly, there isn't much the airline provider or these hubs in the New York-New Jersey metro area, Atlanta or Chicago can do, Businessweek explained.
The cost of these cancelations went beyond the airport because about 90 million customers spent hours on the phone waiting to reschedule flights, cancel reservations and file requests for refunds. masFlight found that airline workers spent an additional 18 hours to provide accommodations for each passenger, resulting in more than $500 million in additional operating expenses.
About 5.5 percent of total flights were canceled between December 1 through February 28, which caused losses to exceed the usual airline industry loss of $1.5 to $2.9 billion during the winter months.
"They'll be able to get some of it back, but there is some of it that is lost forever," Helane Becker, an analyst with Cowen & Co.
However, based on United Continental's report on its first quarter earnings, it is possible that the airline industry suffered major losses. United regularly completes about 96 percent of its flights, while the winter dropped that completion rate down to 87 percent, USA Today reported. Altogether, the weather affected more than 22,000 travel arrangements for the company.
This shows that no matter how prepared businesses can be, they can falter from situations beyond their control. To find ways to improve your company's resiliency in the face of challenging situations, contact business continuity consultants.