Hi, I'm Jeff Rea, your host for Economic Outlook.

Welcome to our show, where each week we take a deep dove into the regional economy and the people, the companies, the communities and the projects that are helping our region grow.

The covid-19 pandemic has devastated the travel and tourism, leisure and hospitality industries with none hit harder than the airline.

We'll take a closer look at air travel in the midst of the pandemic and what the airline industry is doing to reemerge as life returns to some normalcy.

Coming up on Economic Outlook.

Airline travel is at its lowest level since nineteen eighty four as the travel industry virtually ground to a halt at the height of the pandemic.

The recent signals suggest the industry is beginning to reemerge, which has a big impact here locally on an international airport to talk covid and the airline and what lies ahead for the airline industry and for the airport.

We're joined today by Mike Daigle, the executive director of the South and International Airport.

Just one other note before we get started here, WNIT.

We're respecting social distancing and as such, have both our hosts and our guests joining us today virtually instead of in person.

Mike, welcome aboard.

Good to have you today.

Thanks, Jeff.

It's a pleasure to be here.

So obviously, Mike, in the tease, I mentioned sort of what's happening in the in the industry.

I think of tourism, hospitality, travel have been some of those industries most impacted by the pandemic going all the way back to March of this last year or so.

So you're in obviously the seed of running the South Bend international airport and seeing firsthand the impact.

So just walk us back through the last 12 months and sort of what's been happening with the industry at the kind of at the beginning of the pandemic.

Well, great question.

And I'm going to go back just a little bit more than 12 months.

So we were seeing unprecedented growth here at the South Bend International Airport thanks to the support of our community.

In 2018, we had about 20 and a half percent growth.

In 2019, we added another 13 and a half percent growth on top of that.

And then we come into 2020.

So in January of 2020 things were pretty normal.

We had about a 13 and a quarter percent growth again in February and a little over 14 percent growth in March.

We heard about this thing called a pandemic.

Things were going around.

Traffic was starting to slow up a little bit impact obviously around the country to lots of people, lots of businesses.

April was the worst month we've had.

Our traffic was five percent of normal.

So, for example, if we had in the month of April, about thirty four thousand people who came through the building and climbed on an airplane in the month of April, 2020 we had fourteen hundred.

So just a just an unprecedented drop.

I was running an airport when 9/11 occurred with the World Trade Center and this was even worse from going through there.

We came back pretty well in the summer.

We started to see recovery occurring.

We started to see traffic going back up.

And we were down to we were down about 50 percent, 60 percent at one point.

And then in the fall, we slowed down a little bit more and then had to pick up in November, which was expected.

And then December slowed down again a little bit.

The latest numbers I saw yesterday is that the airline and airport industry for 2020 carried about 40 percent of normal.

We carried about 50 percent of normal.

So a little bit better than the national average, but still significantly less than what we were expecting this year.

So, Michael, we understand so so those flights got canceled or those ran with just a very few people on the plane.

I'll be honest, I have in travel time, I've been out to the airports.

So give us a snapshot of what's happening at the airport during that time.

Are there just a handful of each day or are the flights just empty?

So there was a period of time where the cancelations were pretty high.

We now have every route back except the Minneapolis St. Paul.

All those routes are going.

We don't have the same frequency we had to a couple of markets that we had before, but the things are still pretty good.

But they're not selling every seat on the airplane in some cases.

And so some of the airplanes are flying out with 60 percent of the seats filled.

And that's as far as they're going to go with that.

So each airline has their own separate policy of how many seats are going to sell on an airplane.

And so they're doing their very best to obviously keep keep everybody safe.

So, Mike, I going to stay on that safety feature there for a second because maybe a couple of things have impacted travel.

I mean, I think a little bit of whether the restrictions on places you go or different communities because of COVID, but also probably some consumer fear about do I want to hop in this?

Is it going to be safe?

Will I catch the virus there?

So can you talk specifically a little bit about maybe the airlines and some of the practices they've taken to help reduce the spread and ensure safety?

And then also, obviously, it's caused a big adjustment for you, too, at the airport in terms of keeping your customers.

So help us understand some of the safety practices and whether whether it's safe to get on an airplane and fly across the country.

So there was a recent study that just got completed by the Department of Defense that evaluated one point two trillion travelers with a T and what what they found was the number of cases that could be attributed from airport to airplane, back to airport.

And so they looked at it from the time you arrive on the airport property till the time you got off the airport property at your destination, they looked at that the amount of cases that they believe could be attributed, they couldn't even prove that obviously.

Is infinitesimal.

It is so tiny, it's almost non measurable.

What they determined was in part of their study was the airflow on an aircraft.

Let's say the airflow comes from overhead and goes to the floor so it doesn't flow from the front of the airplane to the back.

It goes from the top down to the floor.

And then from there it goes to the back of the airplane and goes through the filtration system that each of the aircraft has.

And filtration system is phenomenal, not just for covid, but for just about everything else that's out there.

They are amazing aircraft filters for the quality of the air.

So obviously all of the airlines have increased their maintenance on the filtration systems.

They've also increased the cleaning of the aircraft and everything else.

Each of the airports around the country have also instituted new practices and new procedures, as we did here to itself.

Then we now are cleaning flat surfaces much more often.

We have stickers where people can stay socially separated.

We have announcements through the facility that say, please wear a mask.

Our cleaning company has increased the amount of cleaning and also the how deep cleaning they're going.

And so there's been just an enormous amount of effort through there.

The one thing that's unknown or one note that people will not know, rather, is that so in most airport terminal buildings and the most very large buildings, you have an ability to in the heating and cooling system to mix.

Some of the inside air with outside air, and so if it's the summertime, rather than bring in one hundred percent outside air, cool it and then put it in the in the building, you may mix that 50 50 or different percentages so that you have some air that's already a little bit cool, mixed in with fresh air so that air quality remains fine.

One of the things we did very, very early in this process is we went to one hundred percent outside air.

So during the winter when we're heating the air, it's one hundred percent fresh air.

Any air that's in the building is being vacated outside the building.

And so but that's not something that's commonly known.

And I know many of my peers around the country have done the same practices at their facility.

It's another small measure that helps keep the air clean and the buildings safer for people to travel.

One of the, if I may, so one of the things that was talked about in the study that I read was that.

The danger or the likelihood of covid infection really has more to do on where you're going and what you're going to do when you get there, if you're traveling on an aircraft from South Bend to pick the destination you want to go to and you're going to go there and you're going to go see family who's also being healthy and being wise and making good decisions on mask wearing and sanitizing, social distancing, all those things that the risk of capturing it or acquiring covid is probably pretty minimal.

But if you're going someplace where you're going to go into large crowds because each state has different rules, then the danger of COVID may come up higher.

If you're going to a large amusement park or if you're going to other events, that would have very large crowds.

And so the travel itself is not a very large risk from everything that we're being able to deduce from all the data and the technology and and the science that's being shared with us.

So at the end of the day, it's more about where you're going and what you're going to go do.

Great, Mike, let's talk about the airlines for a second.

I think they saw that at forty six billion dollar impact to the airline industry.

And he was a pilot, for example.

Not not flying these days.

Has flown for for several months.

So how quickly?

So, like, I'm trying to wrap my head around how how do I even plan for reestablishing routes and planes and the unknown to the virus, the spike in cases, the roll out of vaccines that I'll be thinking about.

So just help us think of that from the standpoint of the airline executives thinking, you know what, we're going to we're going to start flying again from South Bend to Minneapolis and what the decision making looks like and trying to decide that route.

So our director of Air Service Development, Julie Curtis, has had conversations with our airlines that goes back to figuring out how they're going to do that and what they're looking for to move forward.

And each airline approaches the solution a little bit differently.

Some of them are really looking to see, you know, when the airplanes at capacity, do they add another one?

And we've seen that through the process of going through the last year, whereas passengers were coming back, we would add more frequency or they would add more frequency.

Not sure if that model will work through 2021 or even maybe into 2022 as we go forward.

The airlines are all optimistic that the vaccinations that people are taking will assist as we go through the summer.

There's people who believe there's some people who believe that come April we're going to start seeing more travel still because people have a desire to go.

But we we break down, travel into two major camps.

One is leisure, and then the other one is business.

Travel.

The business travel is where right now there's been probably the largest reduction.

There's been some in the leisure, but not as much.

So people who are headed to Florida or they're headed to Phenix to see family or do those kinds of things, some of those folks are going those routes are still doing well.

In fact, we're hearing that they're doing very well compared to other markets in the Midwest.

The business travelers, in my conversations with many of the CEOs in our local communities, they want their folks to start traveling again.

They want their folks to go out and hit sales, and they want their folks to do all the things that help them keep their businesses going and growing.

The concern continues to be is when they get to where they're going and then they're going to hotels and then they're going to go to restaurants and they're going to go to meetings and they've got to get in taxicabs or ubers or lyfts or all those other things.

And there's a lot of unknowns.

And so there's more hesitancy, the more unknowns there are.

So at the end of the day, the business traveler has not returned with the same speed as the leisure traveler or the vacation traveler.

We think we'll see more of that.

One of the local CEOs reminded me of a commercial that he saw a long, long time ago, which had the CEO of United Airlines had a was in a boardroom with a bunch of his employees, and he was handing out airline tickets to many of his senior staff to go out and visit with people.

And he had one, too.

And they asked him where he was going and he said, I'm going to see a customer of mine or a customer of ours who fired us.

And the point of the whole commercial was that people still want to do business with people they know, people they trust.

And while Zoom and teams and multi platforms that help us do these things, there's still no replacement for a face to face conversation and look the person directly in the eyeball.

So we believe that the business traveler is going to come back.

They're going to want to go out there and say, I'm going to grow my business, I'm going to keep my customers, I'm going to serve my customers, and they're going to go do that.

They may still use technology.

And we've been using technology for a long time, not just the video platforms, but everything else.

And I think that will still be part of it.

But at the end of the day, people still want to see people.

They do business with.

My concern.

They're like in a normal pre pandemic time it is.

What's the balance is business travel half and leisure half is it is easy to assess that way in terms of the make up of who's traveling and sort of the bulk of of the load there.

So each community in each airport is different.

And so if you think about it a little bit, if you go look at Indianapolis or Fort Wayne or Evansville for the commercial airports in Indiana, they would all have.

Slightly different ratios based upon the routes they serve and everything else.

So here in South Bend, our estimate is is about thirty five percent is leisure travel.

And that's not just on one airline.

That's because people fly any of the airlines when they're going on vacation or they're doing other things that they want to enjoy.

So our best guess, because it's really hard to tell who's always on business or leisure, it's easy when somebody is through the building carrying a briefcase and wearing a coat and tie.

They're probably headed on a business trip.

But there are also others who travel very casually and they get dressed when they get to their destination for their meeting.

So our best guess is about thirty five percent of our business travel is leisure.

So, Mike, you mentioned earlier that when we back pro or pre covid that the airport was really humming and a record number of people are utilizing it and in large part, thanks to your leadership, even helping to raise the profile and helping our local community understand the benefits of using the local airport and how those dollars get spent here locally.

So when I look at some of these same reports, some of them are saying twenty three or twenty four before we get back to sort of pre pandemic levels, we want we know your crystal ball is better than most.

And so, so, so what are you thinking in terms of of getting back to some normalcy and when we might get back to sort of approaching pre pandemic success?

I'm I believe that by the end of 2021, we will start seeing numbers that are approaching what we probably had last year or in twenty nineteen, maybe still a little bit less.

But we really believe that with the recent announcements of the vaccines and that's continuing to grow distribution, there's been some hiccups due to weather across the country in a few places.

But we think that as that continues to grow, people will have more confidence in their and their ability to travel safely.

So we think that that's going to continue to go there.

Now, there are so many unknowns in all of this, as you well know.

But we also believe that at the end of the day, again, by the end of the year, we're going to start seeing those numbers going back toward normal ranges.

Great, Mike, so I haven't traveled for, let's say I wanted to it is now.

Is there great value or are the airlines really incenting people to hop on an airplane?

If I've never been to Hawaii and I wanted to fly?

And why is now the right time?

Is it more affordable than it might normally be?

Well, airfares right now are very inexpensive, almost across the board.

There are a few exceptions to that.

You brought up Hawaii.

Hawaii has special rules to fly into Hawaii that the state has imposed.

And so if you want to go to Hawaii, the airfare may be pretty inexpensive, but there's some restrictions that come with that.

And so you want to be careful and find out all of those things before you go.

All right.

I'll do that.

I appreciate it.

Let's move locally and talk of economic impact and then international in particular.

So when I'm thinking about, you know, people aren't flying as much, I think of all the all your operations, for example, right there.

That means people aren't renting cars.

They're not buying food.

They're not you're not having to maintain airplanes like normal.

There's a whole economy, if you will, that use.

Of course, the airport has a significant economic impact here on our region to talk about maybe those challenges, the industry and how it impacts sort of your overall operation there on the on the economic side.

So the airport, the latest study was done in 2012.

We were planning to do one in the year 2020.

And we've held off doing another economic impact.

The one in 2012 showed about a one point seven billion dollar impact annually on our local economy.

And that comes from the people coming in and going out.

And you're right, we have a lot of activities, whether it's parking your vehicle or taking care of, you know, having a cup of coffee or a meal, all those things, airplane landings coming in and going fuel sales, where a number of a number of months ago, for example, we were selling seven, eight hundred thousand gallons of fuel a month and now we're down to about three hundred and fifty or three hundred eighty thousand gallons a month.

So all of those things helped provide the revenue the airport needs to keep the lights on, heat and cool the air in our building and also to pay our staff to plow our runways with the snow we've gotten and we're still getting today.

So at the end of the day, we went back in early May and we actually went through the entire budget and found which line items that we were planning on doing, whether it was improving the experience, improving the overall appearance, those kinds of things.

And we started prioritizing those things with the focus of taking care of our team first, because we need our people to do their job.

We need our people to be here to serve the customers.

And so we went ahead and we focused on those things first and then we went through and did that and prioritize those.

As traffic has started to come back, we have put a few things back into the budget that we're going to go ahead and spend some dollars on.

And we're still watching it very, very closely to make sure that we can obviously pay our bills.

The utility company wants to be paid for our electricity and our water and all those things that we have, and we need those things for our customers.

So I go back to the mission statement that we have and we've had for a short time now.

It's to serve the traveling public and community.

And so while we serve the traveling public, when you show up on our property, we also want to serve the community as a larger than that facility also.

And there are many things we do to continue to be within the community and to assist them to.

And we're going to continue those things.

Continue my conversation with Mike Daigle, the executive director of an international airport.

Mike, when we think of the airport, we think of commercial flights and the fun destinations that you fly through.

But that's only a piece of the overall picture.

Things like private aircraft is an important piece of what you do out there.

Cargo.

How is the pandemic impacted those avenues of it.

So it's impacted just about everything, cargo's probably had the least impact negatively of anything else.

So, for example, our corporate and General Aviation International flying, we were averaging about one hundred and thirty or so international arrivals a year in 2020.

We had thirty seven.

So huge decrease in the activity levels through there as we were shut down around the country.

For the most part, it's just we're starting to slowly see some things, but sometimes when we see a slight increase, then it steps back after that to we've seen the other corporate in general aviation aircraft also go less.

The fall for us is a very, very busy time of year with Notre Dame home football games where we could have a couple of hundred aircraft that fly in for that weekend.

And we didn't have any of those this year because there were no stadium seats available.

So that's hurt dramatically also, so that the total amount of aircraft landed way, the total amount of fuel sold, all those operations and everything else, those have all been very negatively affected.

You touched on international and international flights.

And obviously, as we watch that, the news and what's going on around the world, there's a big impact.

I think the number that the international travel was down about seventy eight percent over this last period.

So that will recover at a similar rate with domestic travel, sort of be the key for a while before people are ready to go travel around the world.

Any predictions on what happens on the international side?

I think the international will come back more slowly because of all the things that are going on around the world.

I think the domestic travel will bounce back faster and bounce back first.

The international will will slow down to some countries will be very long time before they open.

Others may open more quickly, depending on how they are dealing with vaccination process and how their own immunity is going on in their countries.

Great, And in about last minute and a half or so, I think, thinking more of the airline staff, all this sort of as they ramp back up, pilots have been sitting on the sideline for a while, other workers.

So what do you do to get people going again?

Does a pilot have to be retrained or I don't know what goes on with sort of getting like one of the major airlines sort of getting back up and running.

So if you have not flown in a period of time and the regulations are very specific on some of those things, then you have to go through mandatory retraining.

If you reach a certain length of time where you have not flown, then the training is more extensive and more impactful going on.

So each of the airlines have flight simulators that they'll put their folks through before they put him back in the real aircraft.

And the great thing about the flight simulator program is you can do emergencies in the flight simulator program that you cannot do in the real aircraft and you would not want to do in the real aircraft.

And so that really helps pilots hone those skills to a level that's just tremendous to make sure that we continue to have one of the safest modes of travel possible in the world.

Great, but he's Mike Daigle, the executive director of Stuff, an international airport.

Mike, I learned so much every time I'm with you about this amazing operation.

We're grateful for your leadership and grateful for the assets that the airport is to the region.

And our viewers, I know we're appreciative of you giving us some insight, especially during this difficult time.

So thanks for being here today.

It is my pleasure.

Thank you very much.

That's it for our show today.

Thank you for watching on WNIT or listening to our podcast to watch this episode again or any of our past episodes, you can find Economic Outlook at WNIT.org or find our podcast on most major podcast platforms that encourage you to like us on Facebook or follow us on Twitter Jeff Rea.

I'll see you next week.

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Thank you.