The government aid that has kept airlines and, by extension, the companies that supply and service them on life support for the last few months expires this week and the repercussions could be immense. An analysis by Bloomberg shows turning off the $25 billion cash tap provided airlines early in the pandemic downturn will have far-reaching effects. Hope for a replacement program has evaporated as Washington becomes consumed with the debate over filling an open seat on the Supreme Court and that means the first rounds of layoffs and furloughs will likely start this week.
Although there were signs of a resurgence in airline travel in the summer, it never really took hold and the number of passengers flying has stayed stubbornly at less than a million a day. That’s a small fraction of the kind of traffic the industry needs to be sustainable and as the possibility of more lockdowns and restrictions loom into the fall, traffic numbers are unlikely to go up. As the airlines run out of cash and options to keep operating, the impact will spread through the rest of the industry as demand for maintenance, materials and eventually aircraft dries up, according to Bloomberg.
How long should (can) the government continue to pay people to be available for jobs that no longer exist? Three more months? Six more months? Another year?
What if the airline industry never returns to pre-pandemic conditions?
It seems like all indications are that it will take 2-3 *years* for the airlines to return to pre-pandemic conditions. I have little doubt that they will eventually get there (or at least most of the way there), just as pre-9/11 travel did mostly return. But clearly it’s not the government’s job to support the airline industry for that long. I’d be willing to go half-way and give them half of what they want, so they can ease out of things. But ultimately the government can’t and shouldn’t continue to support them as long as necessary.
You have to run the numbers and see it as return on investment, taking into account economic damage, it’s not like support is expensive and not supporting is “free”.
People are not traveling via airlines because of all the silly restrictions airline companies are putting in place. It doesn’t help that various states are still illegally restricting travel between states. Who wants to ride on an airplane with a mask on only to be stopped at arrival by airport or government officials wanting to know every detail of your trip including destination and purpose. My company’s business is really picking up. These two months, September and October, the amount of charter flying I have and am scheduled for has almost doubled. The only exception are trips to Teterboro and other NYC airports, not that I am shedding any tears about that. The biggest destination seems to be Florida for now. Even the drop zone I used to fly for has called. Once again I feel for the employees who may lose their jobs over this, having been through several furloughs myself. But I have no sympathy for the airline companies and their upper management. Let them figure out how to do business now.
I’m glad you were able to get a position that caters to the 1% Matt. It sounds like you harbor some bitterness toward the airlines you imply you once flew for, though. The airlines won’t let passengers fly without a mask because their consultants told them that nobody with any sense is going to get into an aluminium tube for three hours with 100 people they never saw before without some reason to believe that they won’t catch a disease that could easily be fatal to their parents or grandparents. The airline industry is going to be devastated by this pandemic and it won’t get any better until a vaccine is found AND is proven effective. In the meantime the airlines are going to have to go it on their own.
Never flew for the airlines. The worst part of my job is having to deal with the airlines when having to position to the airplane I fly or to get home. With the lousy way airline passengers are treated, it serves as an example on how not to treat my company’s clients.
Matt, consider yourself lucky. Many of us have had our lives impacted with COVID-19 and in my case, that idiotic Californian AB5 which has put so many of us out of jobs.
Flying for business or personal reasons is not an option for many in the US. You are one of the lucky ones who gets to fly. I used to fly about once a month. I have not been invited to fly once this year.
And yes, I will, I will be leaving California. It’s a zoo here or maybe a circus. Don’t know what’s better.
The airlines are essential, but assistance cannot go on forever.. As difficult as this is.. The airlines have burned through the piles of cash on hand, buying back stocks, and rewarding gains to executives and share holders.. The real question is; “ Should we provide additional government assistance for airlines, after they squandered their rainy day funds“..?
That’s part of the problem. If the airlines are that “essential “, they should have never been deregulated in the first place.
I never understand why smaller businesses tend to be better prepared for rough days than these multi-billion a day industries that get on their knees as soon as the weather turns rough.
After records high profits for the past two years and giving us flying less, I have a hard time finding sympathy for their officers’ careers. I do have sympathy for the mechanics, those making our flights safe, pilots and crew, but not those who got to the bank with million-dollar salaries at the end of the year.
Help them for a few months to find contingencies and apply industry-wide salary cuts is one thing, but keeping the cash flow going while many of us are impacted and cannot fly cannot be an option.
If the airlines want more money from the taxpayer, run them like a utility, perhaps re-activate the CAB, kiss off Alfred Kahn and his deregulation theory and put the pilot workforce on the GS pay scale. Perhaps GS 11 and 14 for F/O and Captain. Oops, looks like the government is having lay-offs also.
Despite enduring a nearly five year furlough in the early eighties guys and gals, use this moment to revisit your spending habits in the future and observe the squirrel.
Government-run airlines? Heaven forfend.
Yars, I’m being cynical of course! However I did get my start in that industry well before deregulation and don’t remember the negatives of air travel then as we witness now. UAL pilots have now agreed to substantially lower their monthly guarantee which helps the folks on the lower rungs of the ladder to hold on. Yet their CEO is still on his kneepads for more bailout. I agree with Tom O, less stock buy backs, more rainy day funds. However corporate memory as well as individual memory is in short supply.