Pentagon evacuation deployment could boost airlines’ top line in Q3

When several US carriers were activated to help with the evacuation efforts in Afghanistan, they were quick to say that the operations would not impact their businesses. It turns out that the flights, part of the Civil Reserve Air Fleet and ordered by the Pentagon on August 22, may actually boost participating airline revenues in the third quarter — a period when revenues otherwise face downward pressure from the Covid-19 Delta variant. Each civil reserve fleet carrier flies under a “cost-plus” contract, or one where the Department of Defense pays the costs of the flights plus a previously agreed to profit margin. In addition, participation gives carriers preferential treatment for non-civil reserve military charter contracts. At least American Airlines, Delta, Hawaiian Airlines and United are participating moving Afghanistan evacuees. “These are probably good opportunities for them to be able to fly those aircraft and get paid for it,” said Daniel Friedenzohn, an associate dean and professor of aeronautical science at Embry-Riddle Aeronautical University. In non-pandemic times, activation could be a drag on airlines’ earnings. The logistics of taking large, wide-body aircraft out of their regular schedule can be disruptive, and the cost-plus contracts can be worth less than flying the planes on lucrative long-haul routes where travelers can pay thousands of dollars for posh lie-flat seats. But these are not normal times. Long-haul international travel down as much as 40% per trade group Airlines for America, and American, Delta, Hawaiian and United are all utilizing their wide-body jets less than in normal times. Story has more.<br/>