It's not just passenger who are impacted by the air traffic reductions imposed due to the federal government shutdown. One airline economist says airline industry earnings could be impacted greatly if the shutdown continues through the holidays. This is the longest U.S. government shutdown on record.

Washington

The reduction in air traffic operations, prompted by a shortage of air traffic controllers, is having widespread economic effects on the U.S. aviation industry. Airlines are cutting back on flights, leading to reduced hours and job losses for employees, while ticket prices are expected to rise due to fewer available seats and less incentive for discounts. 

The aviation sector, which supports over a million direct jobs and 10 million related positions, represents 5% of the U.S. economy. The holiday season, a critical revenue period, is likely to be affected by increased delays and higher prices, with some travelers opting not to fly. Airlines' handling of affected passengers will be crucial for maintaining their reputations, and the industry faces ongoing needs for infrastructure improvements and more air traffic controllers.

Economic impact of air traffic reductions

And it's not just passengers who are affected here. KTVU's Tom Vacar live tonight at the airport in Oakland with more on the economic toll this is all taking. Tom? Well, this is a very complex industry with lots and lots of employees and by slimming down the airlines to compensate for less controllers, a lot of people are going to lose hours and some are going to lose their jobs. The U.S. airline passenger and air cargo industry has more than a million employees. Severin Bornstein is an energy and airline economist at UC Berkeley's Haas School of Business. If the government actually continues to be shut down through the holidays, that will be very bad news for the airlines and their earnings. The industry also supports 10 million other employees of contractors, suppliers, and related activities such as tourism and business travel. In all, it's 5% of the entire U.S. economy, $1.5 trillion, and the holidays are a big slice of that. They make a lot of money. The flights tend to be very full, as anyone who's ever flown around the holidays knows. That alone slows down getting passengers on and off planes at airports, causing even more delays. And what about tickets? The prices are going to be higher because they're going to have fewer seats and they're not going to feel any need to discount. I think it will put a bit of a chill on holiday travel. Some people who were thinking of going home for the holidays and hadn't booked tickets yet might just say it's just going to be too much of a hassle. While passengers blame the shutdown on the government, for the airlines, treatment of affected passengers will make or break airline reputations. They can get it right and reach out to passengers and make it as easy as possible for passengers to rebook or cancel or get a refund. Or they can get it wrong and end up with very frustrated passengers who can't get through. And flying only big planes with lots of seats or cutting flights to smaller regional airports helps nothing. The last time I checked, 53% of the flights in the United States of America were flown by these smaller planes. By cutting the regional flights, that's very difficult because they're already places that perhaps have minimal service or they're not in places where they have a shortage of controllers and other people. Looking beyond the shutdown and going forward, the industry needs more airport gate spaces. They need faster baggage handling, non-polluting fuels and massive adjustments for climate changes, more extreme weather and turbulence, as well as far, far many more air traffic controllers. Tom Baker, KTVU, Fox 2 News. All right, Tom, thank you for that.

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