Cheap Money Boosts Aircraft Sales
Another interesting aviation paradox. Cheap money to finance the late model used airplane, with a significant percentage of loans going to those who have the means to pay cash, more likely are an older demographic, and yet are harder and almost prohibitively expensive to insure. Or, if a younger demographic, less flight experience resulting in higher insurance rates.
All wrapped into an overall insurance 2020 package of wildfire losses, Covid-19 pandemic related national aircraft storage issues and aviation commercial company cash flow woes to pay for flying and non-flying airplanes, hurricane/wind/flood/storm damage in the remainder of the country not burning, and throw in a few city riots, Boeing MAX liability litigation, stir vigorously, for a insurance stew of incredible flavor. Not a good or palatable flavor though. This will take years to dig out from, if we can ever dig out from all this carnage, insurance or otherwise. The new insurance normal I am afraid.
The airline industry has always had highs and lows. While Covid-19 is a unique situation, furloughs are part of the risk people take when working for an airline. I’ve been furloughed twice, I survived both times and went on to a 30-year career in the industry. I know pilots that have been sitting at home since March, while collecting 14-15k per month paid by taxpayers. Some of them are not current anymore. I know operation employees that are working as few as 4 days a month at full pay. If the airlines want to keep paying employees for not working let them, but don’t ask taxpayers to pay for it.
Donald A. R.
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.
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”…?
Poll: Should The Airlines Get More Financial Support?
- As a soon to be furloughed airline pilot I’m undecided…I need my job but bailouts are going to necessitate higher taxes, which I really don’t want.
- Yes. But not to continue to operate at currently unsustainable conditions. Right size to the current market, not an expected one.
- Aid in the form of loans with market interest rates.
- Yes, but only with rules that prevent any more money going to upper management.
- Up to a point, then supply and demand have to balance out.
- Interest-free loans for 3-6 months more only.
- No, stop pushing the fear and people will fly again.
- Yes, only to reorganize using a better business model. Perhaps greatly increasing the quality of service. Increasing prices might serve in the short term. Even re-regulation should be on the table.
- Only if they bust all unions.
- If the government is restricting their business, then they should be compensated.
- Yes. It’s not just the airline employees but the millions (?) of businesses down the supply chain.
- Maybe only half of what they’re requesting, if only to ease themselves down to their current market level.
- Yes, enough to get them through 2020 only.
- No! Government should get out of the way, and stay out of the way. COVID terrorism must end!
- Asset-backed loans.
- Yes – IF they retain their workers. (I’m not in the industry.)
- We bailed them out last time and they introduced the era of fees for everything, making billions. Free market baby. Good luck.
- Yes, with government taking equity in exchange.
- Yes, but loans with interest.
- Only with a well-defined taxation to pay for it. Then the citizens will be forced to determine if the cost is worth it.
- Yes, because the rail lines are continuously getting subsidized.