The Pandemic, Pigskin, Politics and Profits of the Plane Truth
The Year of the Pandemic, 2020 put a serious damper on the airline industry. Two years ago, many of America's airports were akin to the dusty tumbleweed frontier towns of the frontier American west. After being unable to see friends and families due to the Corona Virus, now that most Americans have been vaccinated, many are taking to the skies to see friends and family that they haven't seen in person in two years, despite an uptick in the Omicron variant.
The Transportation Security Authority stated that it expects to screen approximately 30 million passengers from December 20th through Jan. 2, 2022. The TSA has also reportedly screened 4 million people a day for the fourth day in a row on the 20th. It was the most screenings that TSA has had since the Monday after Thanksgiving. Forecasters had already predicted that the airlines would see a 184% increase from last year this time. Thanks to medical developments such as the vaccines, more destinations opened up. Therefore, forecasters knew that long distance travel would return "with a vengeance".
This was evident the Sunday after Thanksgiving, the single busiest day in 2021 when 2,451,300 were reported having been screened by TSA. United Airlines begged to differ by predicting that December 23 would be the single busiest day.
United said that it expected to carry an average of 420,000 passengers daily, up from the 400,000 daily it carried around Thanksgiving. That's about 8 million passengers for its holiday period, which United sets from December 16th through January 3rd. Two hundred additional flights were added daily to handle the increased loads. Many were inclined to fly given the fact that Christmas was on a Saturday, many had Friday as an off day thus having a 3-day holiday weekend as opposed to Christmas falling in the middle of the week. This proved ideal for distant travel, especially to destinations and family that the pandemic prevented last year. In short, people want to resume their lives to pre-pandemic.
Travelling has immense benefits. People desire to create new memories. Many people understandably regret not being able to witness high school or college graduations, weddings, athletic events, reunions, and general outings. Therefore, they are willing to forgo the recent rise in COVID cases to resume a life with those who've mattered the most. Creating memories is why many people keep traveling.
Mark Twain once said, “Twenty years from now you will be more disappointed by the things you didn't do than by the ones you did do.” Research shows that those who travel are less prone to health issues as they are more active and less sedentary. When people travel it is generally because they are able to enjoy something or someone that is not readily available in their general area. Therefore, there is a sense of personal satisfaction that one gets from travelling.
There is more to travelling than just merely going somewhere. It is a psychological experience. To see a loved one in the short distance in an airport has a profound effect on the human psyche. To witness in person, iconic structures such as the Golden Gate Bridge, Eiffel Tower, Great Wall of China, the Hoover Dam, Niagara Falls and host of other sites leaves a person forever changed. Therefore, travelling fulfills a fundamental need for humans. Human beings a curious for a reason. If necessity is the mother of all inventions, curiosity is the provocateur.
The history of Western civilization is based on sea faring explorers dispatched to the far corners of the globe. More importantly close to home, America truly began to grow during the westward expansion. The poet TS Eliot once stated that, we will "not cease from exploration". Therefore, exploration and travel are necessary for human existence for a host of reasons. People simply want to reestablish family bonds and kinship ties. With the sharp increase in holiday travelers this holiday season, airlines, hotels, car rental companies, bus, and train lines are seeking to recuperate some losses for last year's travel ban and cessation.
Travelers are also likely to experience some higher prices and other changes from last year. Triple A (AAA) recommends travelers book flights, car rentals, accommodations and other activities as early as possible, as prices are not expected to decrease as the holiday nears. if travelling by air, ticket prices for Christmas week are up 5 percent from last year, with the average lowest round-trip fare at $154. For those flying during New Year's, prices will be considerably higher, with the average lowest fare at $182. For hotels and lodging, the cost of a night's stay at mid-range hotels has increased about 36 percent, with the nightly rate averaging $320 on Christmas and $267 on New Year's Eve. Daily car rental rates are averaging about $130, a 20% increase from last year.
The COVID-19 pandemic had a very adverse impact on the U.S. aviation industry. Passenger traffic in April 2020 was 96% lower than April 2019 and stayed 60% below 2019 levels in 2020. Effects cascaded across airports, repair shops, and the supply chain. Due to the reduction in demand, airlines parked or retired many aircraft, which reduced the demand for maintenance. In response to the pandemic's effects, aviation stakeholders reported that they acted quickly to mitigate financial losses and position themselves to maintain business viability until demand increased. Therefore, it is critical that people travel along pre-pandemic levels.
One slightly overlooked aspect of holiday travel is that of the collegiate bowl games. A few years ago, a study completed by San Diego State University concluded that the economic impact of the nation's 41 college football games generated $1.5 billion. For the cities that host these bowls, it really pays to have teams with a strong travelling fan base. The Birmingham Bowl this year will host Auburn University and the University of Houston. Since 2006, the city of Birmingham has seen an economic impact of more than $141 million from the Birmingham Bowl.
According to Randy Grant, the author of The Economics of Intercollegiate Sports,
Payouts for the schools participating in bowl games in the 2013-2014 season were between $32,000 and $22 million. The payout received is predicated on how big the bowl game is and how much interest the game generated. The money that the teams receive from playing in the bowl, comes from the organization that owns the bowl game. The bowl games pay the conferences which then divides the earnings among the schools. From the New Year’s six matchups, which are the largest of the bowl games, the economic impact is more than $93.7 million by themselves, according to the San Diego State University study. Several New Year's bowls were cancelled due to COVID-19. However, the two major bowls that feature the top contenders for the national championship will be the major draw.
At 3:30pm ET on ESPN, the 2021 College Football Playoff Semifinals begin with the top-ranked Alabama Crimson Tide of the SEC taking on the fourth-ranked Cincinnati Bearcats from the American. The two teams will square off in the Goodyear Cotton Bowl at AT&T Stadium in Arlington, Texas. The fourth and final New Year’s Eve bowl game is the second College Football Playoff Semifinal. The second-ranked Michigan Wolverines from the Big Ten face the third-ranked Georgia Bulldogs of the SEC in that contest in the Capital One Orange Bowl at Hard Rock Stadium in Miami Gardens, Fla. The game is scheduled to kickoff at 7:30pm ET on ESPN. New Year’s Day 2022 includes five bowl games, beginning with the Outback Bowl at 12:00pm ET. Other games slated for Saturday, January 1, 2022 include the PlayStation Fiesta Bowl, Vrbo Citrus Bowl, Rose Bowl Game, and Allstate Sugar Bowl.
For medium sized cities such as Birmingham, a great bowl is ideal and very beneficial for end of the year revenue. After the summer season, many hotels and not booked to capacity minus a few races at Barber's and the Magic City Classic. Therefore, a well-attended bowl game allows hotels to reap a substantial profit to carry them through the winter months. For the 2021 Birmingham Bowl, it is an imperative for the bowl to be successful. As opposed to Legion Field, this will be the first bowl game in the new 47,000 capacity Protective Stadium.
Because Auburn is one of the two major flagship schools in the state and an SEC powerhouse, more than likely the game will sell out and reach its capacity. Furthermore, many will fly into Birmingham from Texas. Why is this game so important? The City of Birmingham committed $90 million, $3 million a year for 30 years, towards construction costs of the new stadium with hopes that it would pay dividends in terms of increasing the surrounding community property value and tourism spending. The adjacent Sheraton Hotel, as well as restaurants and bars in the Uptown entertainment district expect to reap serious profits.
It is paramount that Birmingham has a successful sports culture, with particulars to college football. With the departure of the Iron Bowl in 2000, the largest revenue generating venue has been the Magic City Classic between in state rivals Alabama State and Alabama A&M. The Magic City Classic, which is the largest HBCU football game, generates a $23 million impact on the city of Birmingham annually. This year also saw Birmingham host the 85th Annual Tuskegee-Morehouse Classic at Legion Field. This game, which is the oldest HBCU game, had a $1.5 million economic impact according to Cornell Wesley, the Birmingham city Director of Innovation and Economic Development. Furthermore, that same weekend saw home games at nearby Miles college and UAB at Protective Stadium. Given the economic impact of college football in this city, Birmingham is well on its return as the "Football Capitol of the South". Not to mention when the University of Alabama makes a National Championship appearance, the Birmingham-Shuttlesworth International Airport sees major passenger traffic.
In 1996-97, there were only 18 bowl games. Five seasons later, there were 25. Now in 2021 there are 41 post season games, including 10 teams with the minimum record necessary to qualify at 6-6. Shortly before the Pandemic, the NCAA recently approved a possible expansion to as many as 86 teams in 44 postseason games, including the national championship game. This means nearly two-thirds of all major-college football teams could earn a participation trophy in the form of a bowl appearance. The idea is to attract exciting and competition worthy teams from out of state with strong traveling fans bases, especially your household name schools. This then evolves into profits in the hospitality, dining, shopping, and entertainment industries.
The Walt Disney Company, which owns ABC and ESPN televised 35 of the 40 games in 2018. Walt Disney profited hundreds of millions of dollars in advertising revenue during the holiday season, which was easy to do considering this is when families are often at home and off work. ESPN Events, a division of ESPN, even owns and operates 13 major bowl games, including the Bahamas Bowl. In 2018, the Bahamas Bowl hosted Ohio State vs UAB. despite it being the least-watched and least-attended bowl game last year, it drew a crowd of 13,585 and an average television audience of 882,000 for Ohio's 41-6 win against UAB, according to the Nielsen ratings.
According to NCAA documents, colleges and their conferences earned a collective profit of $448 million from 2017's bowl games. That stems from $561 million in bowl payouts, minus $113 million in expenses associated with participating in the bowls, plus the $25 million expenditures from unsold tickets. ($465 million) came from only six games: those being the Fiesta, the Cotton, and Peach bowls, plus the three games of the Playoff; Rose, Sugar and championship game. Those funds were shared with teams that did not participate in those games, such as UAB and Ohio in the Bahamas Bowl. For example, $15.4 millions of Conference USA's $18.6 million in bowl payout money came from those top-tier games despite it not having a team in them. Nine teams from Conference USA, which houses UAB went to bowl games last year and racked up a combined $5.2 million in expenses, including UAB in the Bahamas, according to NCAA documents. If not for that playoff money, Conference USA would have been $2 million shy of covering those expenses. To offset the $25 million in lost ticket sales is why so many schools desire to play in a bowl.
The city of Birmingham paid ESPN $550,000 in 2018 to help fund the ESPN-owned Birmingham Bowl, which is title-sponsored by jewelry retailer Jared. It was previously called the PapaJohns.com Bowl and the BBVA Compass Bowl. Due to Auburn being a major in state team, the overwhelming turnout was clearly in favor of Auburn in the first ever sold-out game of the all-new Protective Stadium, the new home of UAB Blazer football. Surrounding venues such as those in the Uptown entertainment district like Top Golf, the Sheraton hotel, and other hotels, restaurants and bars in the 5 Points district made major profits.
Alabama athletics generated a surplus of more than $33 million for the 2013-14 fiscal year. In 2019, the Buckeyes reported $50.6 million in football ticket revenue, while the Crimson Tide reported$36.1 million. At the beginning of the Pandemic and the stay in place order, many wondered the fate of the college and professional sports. Tuscaloosa Mayor Walt Maddox concluded that no football at all could result in approximately $2 billion in lost revenue to the city of Tuscaloosa by itself. Alabama football is a significant economic driver for both the city of Tuscaloosa and the state. According to statistics from the University of Alabama, home games during the 2015-16 season brought in an estimated $175.5 million, or $25.1 million per game.
As recent history has shown us since Nick Saban became head coach of Alabama Crimson Tide Football, the Birmingham-Shuttlesworth International Airport is filled the night and morning by those heading to the national championship game. The majority of the inventory of most car rental companies are booked by those seeking to drive depending on where the game will be played. Also, several hotels typically see a sharp increase in short term stays by those travelling from distant parts of the state.
For the central Alabama region, it is financially beneficial that the University of Alabama fares well in its athletic program. Although, the city of Tuscaloosa gains the lion's share of the revenue generated by the school, some trickles down to a host of other cities and entities such as hotels, restaurants, clubs, and bars. Not only is it paramount that the Crimson Tide have a successful run, but all of Alabama's D1 programs including HBCU football as well. In addition, COVID-19 and its Omicron variant will have to be conquered. Already thousands of flights have been cancelled due to the record increase in new COVID cases. However, it is not beneficial to anyone to value profits over the general health and well-being of society.