Hubert Horan: The Airline Industry Collapse Part 4 – Total Paralysis Continues

By Hubert Horan, who has 40 years of experience in the management and regulation of transportation companies (primarily airlines). Horan currently has no financial links with any airlines or other industry participants

Readers who had not seen the previous posts outlining the aviation crisis, or would find a summation of the critical issues useful, should take a look at my video interview with Izabella Kaminska of the Financial Times on Friday the 11th.

Here is the FT Link—there’s no paywall but it may ask you to register (and registering for access to FT Alphaville is very worthwhile)–The-airline-sector-is-in-denial-about-its-imminent-collapse/

Here is an alternative Youtube link to the video interview (about 40 minutes)

Towards the end of the interview, Izabella noted that my main arguments were “depressing” and asked me to provide a bit of optimism by outlining potential solutions to the industry crisis. This might be a good place to clarify which parts of the crisis will be difficult and painful and which parts are legitimately “depressing.”

This series has laid out data showing that the current crisis is staggering worse than any previous crisis in aviation history. A previous downturn that reduced traffic 6% put 75% of US industry capacity into bankruptcy. The current crisis has cut traffic by 75% and revenue by 85%.  The critical corporate and international markets have completely collapsed, every carrier is hemorrhaging cash, and almost none of the major carriers can be considered viable going concerns.

Since the collapse is greater and more widespread than anything the industry has ever faced, it logically follows that the actions needed to halt the collapse and restore sustainable operations will be more difficult and painful than anything the industry has ever required in the past.

More importantly, of collapse of this magnitude fundamentally changes the nature of the problem, and changes how any solution would need to be structured. Past airline crisis were limited to fairly narrow industry segments (a couple carriers had foolishly overexpanded, supply and demand had gotten out of whack in a specific country or market), were known to be temporary and had not disrupted basic industry economics (recessions pass, and don’t structurally change the demand for travel) and there was still a large set of competitors and investors that could help restructure (or replace) the companies that could no longer meet their financial obligations.

The current airline crisis is global, supply and demand are wildly out of balance everywhere, and the pandemic is likely to permanently reduce industry demand (due to videoconference, reduced global trade, and structurally higher fares). Competitors cannot step in to fix local problems; nobody wants to buy anyone’s excess aircraft and the number of competing airlines had already been radically reduced.

The current collapse is a crisis for overall economic welfare. The industry’s ability to sustainably produce benefits for society as a whole (facilitating huge amounts of economic activity, employment, trade, etc.) is fundamentally broken. As the past months have demonstrated, multi-billion dollar cash drains will not magically go away by themselves. Allowing desperate airline investors to pursue their short-term self interest will not maximize long-run welfare benefits for other stakeholders or the rest of society.

“Solving” the industry crisis requires an organization fully empowered to manage an industry-wide restructuring focused on restoring the value airlines provide for society as a whole. It would need to have clear legal authority to terminate prior economic interests (jobs, financial obligations, supplier contracts, local service levels, ownership and control positions) inconsistent with the requirements of a dramatically downsized industry. They would need to have clear legal authority to maximize long-term industry-wide competitiveness and efficiency, even when this conflicted with the short-term interests of specific companies or investors. They would need transparent legal guidelines that ensured the many parties (employees, suppliers, lessors) received compensation on an equitable basis.

The details of such a restructuring process would be difficult and painful, but a variety of plausible approaches could be laid out. What’s “depressing” is that the political obstacles to any type of industry-wide approach focused on restoring the overall economic benefits of airlines seem insurmountable.

As this series has pointed out, the industry, capital markets and the business press have willfully ignored the actual magnitude of the collapse and remain wedded to absurd narratives that falsely assumed rapid, robust demand recovery. The industry and government officials who are actually dealing with the crisis have been myopically focused on narrow objectives (e.g. protecting the financial interests of select investors, minimizing direct government payments to workers). These parties have no interest in restoring and protecting society’s interest in efficient and competitive airline service, and do not appear to consider broader economic interests as legitimate or relevant. In the US, it is not clear that the competence to oversee an industry-wide restructuring focused on overall economic welfare exists anywhere in the Federal government.

After five months absolutely no one from the industry, capital markets or government has put forward any proposals suggesting they understand the crisis or have any idea how it might be solved. Their favored approach seems to consist of nothing more than a determination to protect the industry’s pre-pandemic competitive and ownership status quo. The “rapid demand recovery/industry fundamentals haven’t been affected” narrative was designed to protect the status quo, and the need to protect the status quo explains why the narrative remains strong even though it was completely, totally wrong.[1]

If the current process was serving purposes other than status quo preservation, the narrative would have been abandoned in April, when the evidence that it was wrong became overwhelming. As will be discussed below, the conflict between this evidence and status quo preservation has continued to paralyze efforts to minimize cash drains, pursue temporary governmental relief, and begin a badly needed public discussion about the ugly future of the industry.

This approach is designed to give current airline owners control over any restructuring that might occur, even though they would be totally wiped out under any legally administered reorganization process. It would allow them to impose most of the cost and pain of restructuring onto workers and suppliers. It would allow restructuring to emphasize mergers and collusive pricing arrangements that would shift significant burdens onto consumers. This approach is designed to ensure that long-term industry-wide competitiveness and efficiency cannot be maximized, and to ensure that the burdens of needed changes are not distributed on a transparent and equitable basis.

Thus, to finally answer Izabella’s question, yes, it would be entirely possible to lay out “solutions” for the industry crisis, but that would serve little purpose given the huge obstacles to getting any such solutions implemented. The critical problem isn’t figuring how to restructure an industry where supply and demand are totally out of whack, or how to prevent airlines from collapsing during that restructuring process. The critical problem is how to overcome the political power that gives incumbent airline owners and senior management nearly totally control of the current process, has totally delegitimized society’s broader interest in competitive and efficient airline service, and has paralyzed efforts to keep the industry from falling into the abyss.

Continuing Paralysis Over Crippling Cash Flow Drains

There has not only been no meaningful signs of demand recovery in the last six weeks, but previous hopes that schedules could be expanded in the fall seem to have been dashed. But none of the large carriers announced any major new actions to reduce the ongoing cash drains. Gary Kelly, CEO of Southwest, told a reporter that business would need to double in order to reach cash breakeven.[2]

Observers should keep in mind that while LCCs like Southwest (and Easyjet and Ryanair in Europe) are suffering enormous losses, they are in a much better position than the Legacy international carriers, who would need an even bigger traffic increase to reach cash breakeven. These LCCs focus on short-haul and leisure markets that have declined the least, and their network and cost structures allow them to adopt more readily to sudden demand reductions. These short term advantages are purely fortuitous, but they explain why they are the only airlines that capital markets perceive to have legitimate going-concern value.[3]

Led by United, the US carriers announced last month that they were eliminating the change fees widely despised by their passengers. This should be seen as a short-term PR move, and not a permanent shift to a more customer-friendly approach. It only applied to domestic tickets, and almost all of the domestic tickets currently being sold had already been exempted from change fees. [4]

Continuing Paralysis Over Job Cuts and Federal Subsidies

There has been ongoing media coverage of the possibility of extending the airline payroll protection subsidies that will expire at the end of this month. But none of this coverage offers any coherent explanation of how this could be achieved.

It is not clear how the partisan divide over new coronavirus economic relief efforts could be overcome this year. The “skinny” Republican proposal that was defeated in the Senate last week included very little direct support to any workers and no assistance to airlines whatsoever, despite vaguely supportive statements from President Trump. The House Democratic proposal is much larger, but there has been no public explanation of what new airline subsidies would involve.

The unions representing staff at the big 4 carriers have been fighting for more taxpayer money. Despite seemingly supportive statements it isn’t clear whether the airlines actually want new subsidies. The original March CARES Act subsidies prohibited layoffs and required airlines to continue to serve every US city previously served, on the (obviously incorrect) assumption that a major revenue recovery would be well underway when the subsidies expired in October. As a result, the CARES subsidy worsened the airline cash drain by forcing them to fly lots of nearly empty planes, and to pay staff who could not be properly utilized.

Airline executives appear caught between the proverbial rock and hard place. Openly stating the need for layoffs large enough to match vastly reduced operations would cause their pilots and mechanics to openly rebel and would signal Wall Street that they were on the edge of bankruptcy. Warnings to date about October layoffs cited smaller numbers that appeared designed to limit near-term industrial unrest (and Wall Street concerns) while pushing needed costs cuts into next year. Management needs to publicly support the union demands but new subsidies would certainly mandate a lot more employment and service than the airlines think they can afford, and make it more difficult to reduce negative cash flow. If subsidies aren’t extended, management may be able to tell staff that they tried but couldn’t overcome the mess in Washington. But election uncertainty may make it difficult to pursue the October layoffs initially planned.

Continuing Paralysis Over Unpleasant Realities About the Future of the Industry

Public discussion of the airline crisis has totally ignored the inevitable reality that future airfares will be much higher than consumers (and politicians) have contemplated.

The historic airline economic equation combined large and growing overall demand, the ability to optimize total revenue by managing the mix of high and low fare passengers (including the ability to shift low fare demand to times when there was little high fare demand and the ability to achieve 80% load factors year round) and the ability to carefully tailor costs and capacity to readily predictable demand.

The pandemic obliterated most high-fare (corporate/international) demand; the cost of a specific flight hasn’t fallen but it earns much less revenue, and airlines can’t reduce fixed and corporate costs in line with reduced revenue. All of the data and models historically used to manage revenue, capacity and costs are now largely useless. Higher unit costs require higher fares. Greater uncertainty about costs and revenues requires even higher fares.

In the very short-term fares will remain low because filling the abundant excess seat capacity will (very marginally) improve cash flow, but the losses and aggregate cash drains that result are obviously unsustainable. The major restructuring needed to pull the industry back from the abyss will require huge capacity cuts and much higher fares. The capacity cuts will not only reduce costs but will recreate some of the scarcity (via high load factors) needed to support higher business fares.

These higher fares and schedule cuts (and the massive layoffs and supplier cutbacks that will accompany them) will (needless to say) be incredibly unpopular, and will lead to further demand declines, and then to further price hikes and capacity cuts.

These problems will get worse if (as is likely) capacity cuts take the form of reduced competition and increased price collusion. Under a managed, industry-wide restructuring process balanced competition can be preserved but (given the political issues discussed above) no one is working to protect consumers or industry efficiency. If one large airline collapses, thousands of markets will be reduced to duopolies and monopolies, and a carrier may try to exploit the chaos in order to achieve a permanent market share dominance.

All of this is just airline economics 101. But absolutely no one in the industry, government, capital markets or media is willing to face up to this inevitable reality.


[1] Hubert Horan: The Airline Industry Collapse Part 3 – Recovery Expectations Were Always Dreadfully Wrong, Naked Capitalism August 4, 2020

[2] Kyle Arnold, “Southwest Airlines needs ‘business to double in order to break even,’ CEO says” Dallas Morning News, August 28, 2020

[3] Ben Goldstein, “S&P Global Sees Just Three Investment-Grade Airlines Left” Aviation Week, August 12, 2020

[4] Brett Snyder, “United Ditches Domestic Change Fees” Cranky Flyer, August 31, 2020.

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  1. Anon II, First of the Name


    I have never analyzed the airline industry, so this is likely a naive question, but would the surplus of aircraft and the inevitable rising costs of flying commercial lead to a significant increase in wealthy people and corporations flying private/corporate/time share jets? If so, does that increase the death spiral on the commercial side, as it makes it even harder for the commercial airliners to balance high and low price tickets?

    Again, this entire industry is new to me, so my questions may be non-sensical (or the answers may be extremely obvious)

    1. PlutoniumKun

      I think there is significant movement in the business jet industry hoping to capitalise on this. However, there simply isn’t enough capacity in that industry to make a really big dent in overall demand. You could of course see surplus 737’s and so on being converted to private/business use, but these are so expensive to run I doubt even cheap purchase costs would make it attractive to all but the super rich, most of whom already have their jets. Its also possible I think that a lot of the commercial leasing companies could see this as a side business for expansion. But again, its such a small portion of the overall industry that even if it were to double in size, its not going to be all that significant.

      1. Anon II, First of the Name

        Thanks for the response.

        This is one of the more interesting new (to me) topics I have thought about for the last few weeks

        If they end up giving away planes for free, I wonder where they go. To the scrap yard? To the third world? to coporations?

        It’s rare to see such a sudden end to demand when supplies are so high. I won’t invest on anything in this spae because I haven’t learned about it, but it is a nice mental excercise…

      2. RMO

        Running costs of a 737/A320 or larger airliner as a private aircraft would be so high as to severely limit any demand for them. The 737 Boeing Business Jet has sold only a little over 200 since it came into being and the 2008 recession killed off pretty much all use of them as corporate aircraft. Most of the BBJ production is used for state VIP transport.

    2. Glen

      Most of the ultra rich that could afford to own and operate private jets have been doing so for years especially since 9/11. This is limited to extremely wealth people. They are “off the radar”, and I honestly doubt that travel has/will change much for them CV or no CV. Money talks, they travel.

      Airlines had been supported by business travel, and that has dropped way off, and may be gone for good as working from home becomes more the norm. This would seriously impact airlines.

      We may look back at 2020, and mark it as the end of cheap air travel.

      1. 1 Kings

        Yeah. So does this mean that airlines can charge $50 or $100 a bag to help their bottom line? Cause that would be great.

  2. Henry Moon Pie

    Travel and airlines are like a lot of things in our society. They’re essential to this jury-rigged, delicate economy’s continued functioning but not so beneficial both toward human society at large and more broadly the Earth and its non-human creatures.

    Who knows? Future generations may look back on the Coronavirus as a double-edged sword that spread terrible death around the world but whose effects, like crippling long-range travel and all the environment-destroying activities associated with it, were beneficial in the long run.

    1. Chas

      Good point about their being environmental benefits to the decline of the airline industry. And maybe now passenger trains will become more popular.

  3. Bob

    Will an offshoot of this airline crisis be the total destruction of passenger rail service ?

    And might this be the time to short the large aircraft manufacturers ?

    1. PlutoniumKun

      I’m not sure why you think it will destroy passenger rail service? Rail travel everywhere is in trouble thanks to Covid concerns and the shrinkage in travel, but I don’t see how its problems are connected to the airlines problems. You could argue that in the longer term an increase in air ticket costs would make many medium to long distance rail journeys more viable, especially in Europe and parts of Asia.

    2. Anon II, First of the Name

      I don’t know this space, but I would be careful with your implicit assumptions.

      There is no way the US or EU will let Boeing/Airbus go out of business, for example, out of national security reasons if nothing else.

      In other words, the bet you would be making involves:
      1) No more demand for *future* commercial jet orders–possibly a good bet
      2) Other demand (e.g. defense side) not compensating somehow–possibly a good bet
      3) Goverment not interfering with the ownership structure (for example, they could intervene by simply nationalizing or letting the companies operate under bankruptcy).– to me, this is a coin toss, ad I am not sure if even the governments know how they will respond to this.

      Just my opinion–I know nothing about airlines or aerospace. In general, though, if you have to ask the question, you probably don’t know enough to make an intelligent bet either.

      Of course, the Tesla longs don’t know enoguh to bet intelligently, and they have done very well, so ymmv

  4. PlutoniumKun

    From what I can see, the airline industry and related industries have been keeping remarkably quiet over the summer, only doing backroom deals to raise cash and pressure governments into releasing restrictions on travel. There seems widespread denial about the fundamental changes to travel patterns that now seem inevitable. I’ve seen lots of articles on the lines of ‘things will be back to normal by 2023…’

    In Europe, Asia and the Middle East, I would guess there would be a lot of political pressure to maintain ‘national’ carriers, including those that have long ago been privatised. Governments have been quiet about this, but I think it will come on the agenda inevitably in 2021 as the entire infrastructure of business that relies on air travel will panic if they see continuous shrinkage in capacity.

    If, as Horan asserts, there will inevitably be a serious increase in prices for long haul, whether this could lead to an opportunity for one or more major investors. In a hypothetical situation in 2 years time, where both discount and national carriers have been seriously slimmed down but still laden with debt, you could well imagine an Uber type operation seeing thousands of cheap surplus aircraft (and cheap fuel) as an opportunity to overwhelm and monopolise the industry with a huge injection of capacity to drive down the price of travel unsustainably. I wonder if governments, desperate for a return to ‘normality’ in travel, would have the willingness to stand up to an UberAir operation.

  5. John Beech

    How astonishing one of two industries where the US remains dominant is being destroyed . . . without a shot being fired. Could it possibly go better for a foe?

    1. PlutoniumKun

      I don’t think there are any ‘winners’ out of this*, although maybe Airbus could be less badly damaged. The smaller competitors to Boeing/Airbus – Sukhoi, Mitsubishi, Comac, Embraer – are all in deep trouble, if not essentially dead in the water. Add in the vast associated infrastructure of businesses associated with cheap travel (important in pretty much all advanced and not-so advanced countries), and its hard to see anyone feeling particularly happy about seeing Boeing go down the toilet. Even Airbus won’t be happy, as the duopoly suited it just fine.

      *apart from the climate.

    2. Ian Ollmann

      It needs to go. Air transportation, especially for business, was extremely wasteful of time and resources, and takes people away from their families. It is a major contributor to greenhouse gasses. Unlike electric utilities and ground transportation, the air majors have done nothing to eliminate their reliance on fossil fuels, nor have airbus and Boeing and the like. When it comes to greenhouse gasses, you can’t fix the jet engine in software. Add on its aggressive disregard of infectious disease and active hostility to passenger comfort, and the industry was headed in completely the wrong direction. If you ask me, this is an industry that should be a lot rarer and a lot more expensive. The first two places to start with strong carbon taxes are air travel and oceangoing shipping.

      1. Arizona Slim

        I’m old enough to remember when the well-to-do were referred to as the Jet Set. As in, they could afford to go places on jet airplanes.

        The rest of us? Well, we drove to nearby vacation destinations, set up the tent, and camped for a week or two.

        1. MichaelSF

          Oldish person here (67). Holiday trips to see the grandparents required a 600 mile drive each way, so those tended to be 1-2 week vacations. My father would fly occasionally for business, but we never, either individually or as a family, flew someplace for a holiday. But by the late 1970s it was no big deal for me to fly from LA to SF for the weekend (free wine and peanuts on the hour flight with PSA).

    3. cnchal

      The other industry being Wall Street frauds?

      What I find astonishing is that the plan is to put thousands of these flying kludges in the air and use them for the next several decades. When the next one goes down, will Boeing executives finally be held to account for their criminality? Track record says, no, they will get away with murder and bonuses, again.

  6. Chris

    This is also a very good analysis outline for what every industry is confronting: lack of competence, wishful thinking, status quo-focus, et al.

  7. Jack

    Parallel to this discussion is the question of what is going to happen to the infrastructure that supports air travel, mainly the airports? Many large cities have, or are building, huge investments to airport infrastructure. One example not too far from me is Charlotte, NC. They just started a $600 million expansion last year, to be paid from passenger fees and airport bonds. Charlotte had 50 million passengers travel through its airport last year. TSA reports passenger traffic is running just 32% from last year. I would venture to say the airport is going to have a massive cash flow problem.

    1. dbk

      I think we have to take it as given that there will be a similar knock-on effect for airline infrastructure, including airports. More examples: Chicago O’Hare is building an $8.5 billion expansion – a new international terminal, whoops. Germany purchased 14 Greek airports and they’re finishing the doubling of the size of the SKG airport, whoops. My hometown in IL (pop. 100,000) inaugurated an “international” terminal a couple years ago which may never be used, whoops. It’s quite hard to think how airport infrastructure can be downsized and/or re-purposed, given how specialized it is.

      This head-in-the-sand mentality (wilful ignorance) on the part of all the major stakeholders – companies themselves, governments, regulators, the finance industry and financial press – reminds me of what I anticipate as a coming abyss in the wider economy. Today I read that 239,000 families are housing-insecure in NYC alone, and come Jan. 1, 2021, they could theoretically all become homeless – NYC hasn’t even begun planning for a massive new demand on homeless services / shelters – they can’t meet current demand.

      And what about states and municipalities, which are estimated to need more than $500 billion through Dec 2020 just to satisfy ongoing liquidity requirements (there was a reason why the HEROES Act included $1.3 trillion for states and munis)? States can’t declare bankruptcy, so what will they do, slash their budgets by 20%-30% across the board? As for cities, we’re looking at mass bankruptcies afaict.

      This absolute unwillingness to contemplate the massive shifts in our economy that COVID-19 will require seems to me a more general phenomenon among the PMC, and it’s going to prove disastrous.

      This has been a terrific series, thanks ever so much.

  8. edmondo

    “This should be seen as a short-term PR move, and not a permanent shift to a more customer-friendly approach.”

    Ha. This is probably the only time I have seen the words “customer-friendly” and “airlines” in the same sentence in 40 years. Has anyone figured out that that is part of the problem?

  9. Mikerw0

    I think what is underplayed in this excellent discussion is the most important power player –> Wall Street.

    This industry is overly levered and enjoyed the “benefits” of financialization in the form of EETCs and ABS. Also, the airlines, and Boeing and Airbus, get backdoor support in the form of low cost financing from banks and leasing companies.

    The last ten years was a one-off super credit cycle. The growth, now overdone, of the big Mideast hubs (QATAR, Etihad, Emirates) and Asia-Pacific traffic feeding off of China fueled growth in planes. As this was perceived to be a safe asset class credit structures proliferated and were purchased as being safe by insurers and pension funds (they were “backed” by collateral that always held its appraised value). Once again, investors bought risks they didn’t know, or think, existed.

    The assessment that the industry is likely too big by at least a full 1/3 is likely conservative. Reports abound of planes being retired or returned. In the short-run the finance industry is kicking the can down the road. Having looked inside most ABS I can confidently say they will almost all default.

    All prior restructuring in the industry has been done during a period of basic supply demand for planes. This is not the case today. Shrinking in profitability for a company that has both high operating and financial leverage is nigh impossible.

    This will all have the net effect of increasing the cost of capital to the industry. What a mess.

  10. Paul Harvey 0swald

    Like Anon II, I’m getting out over my skis here. But what of the airports? Aren’t they sustained by the airline fees? (I suppose the mall/zoo/art museum/theme park atmosphere contributes some, but that revenue also depends on the airlines.) If the destinations are cut, where does that leave the numerous regional airports? Doesn’t look good for, say, the Chicago Rockford International Airport (RFD), my home airport for a number of years. Running only a couple of passenger flights a day — but maybe it is sustained by cargo traffic. (Speaking of which, maybe Amazon will pick up those abandoned 737s on the cheap?) Doomed regional airports? Another factor contributing to the air traffic death spiral?

    1. WobblyTelomeres

      Perhaps if the 737s Max get refitted as cargo carriers, some care and consideration can be spent on a more optimal positioning of the center of gravity.

      1. marku52

        It’s not really a problem with the CoG, it’s a problem with the CoL getting out of whack at higher angles of attack (the bigger engines)

  11. Mel

    capacity cuts => fare increases => demand destruction => capacity cuts

    I’ve wondered for a while how it ever made sense from a housekeeping/energy-use point-of-view to lift everything five miles in the air before setting it down where we wanted it. Admitted it’s not totally simple: such energy as is stored in the climb can be used to power the glide back down, but is that enough to make it all practical?

    1. chuck roast

      You touched on it. Hubert talked about it, but did not name the name….demand destruction. Permanent, at least semi-permanent demand destruction. Important people need to stand up and say this…demand destruction…market demolition.

      btw..she is an awful interviewer…she doesn’t listen well and has no focus.

    2. RMO

      Mel: The short answer is that going up high is what makes it practical – especially for jet aircraft as their fuel efficiency becomes better as altitude increases.

  12. chuck roast

    At the 31 minute mark Hubert mentions that all the expertise that the transportation regulatory agencies once possessed regarding freight rail restructuring post-Penn Central is gone. That kind of smarts will be needed when a similar mass restructuring of the airline industry becomes brighter than a thousand suns. The regulatory agencies have expertise only in servicing the corporate needs in the various sectors. Yep, everything is CalPERS.

  13. CPJ

    Will DHS’ TSA be demolished or repurposed? The US has, to my knowledge, never, ever “rightsized” their intelligence and national security apparatus. I can’t imagine either party willingly giving up security theater for fear of looking “weak on terrorism”, plus the only government sponsored programs on the chopping block are those that are socially useful, e.g. SS, Medicare, USPS, etc.

  14. Alex Cox

    Why do we need an “efficient and competitive airline service?”

    I appreciate the efficiency part. But the airlines have long acted as a cartel, arranging flights and hiking prices for their mutual convenience. Before the crisis, every day several large planes flew from LAX to London Heathrow — a couple of United flights, a couple of Americans, two Virgin 747s, an Air New Zealand 747, and for a while Air France flew that route too. There was certainly competition… but efficiency? Not really.

    For efficiency’s sake, LAX-LHR travel could be limited to one daily double-decker A360 (or two, if things really “open up”). Who cares what the logo on the tailplane is?

    The federal government was obliged to create Amtrak because the railroad companies had given up on passenger rail. Since none of the airlines can run at a profit, isn’t the only solution one national(ized) carrier?

      1. Alfred

        The statement struck me as surprising, too, but FWIW there is this:,700-fly-in-and-out-of-Wuhan,-once-the-coronavirus-epicenter – which leads off with “Domestic air travel in central China’s Wuhan, once the epicenter of the global coronavirus outbreak, has returned to pre-pandemic levels, authorities say.” I note the emphasis on “domestic” flights, which squares with one of the points made by Mr. Horan.

  15. Tomonthebeach

    Who is Boeing and Airbus building airplanes for? What about their viability even with NASA and DOD contracts?

  16. Sue inSoCal

    I don’t know much about the airline industry either, but this man was refreshingly realistic about the industry‘s crash due to Covid. I’ve, I suppose foolishly, always kept hoping for realistic rail travel in this country, despite our total addiction to jet travel. The air travel industry, post 9/11, has turned into a nightmare for consumers (“supersaver tickets” – 3 hour flights that take 8 hours or more for the “discount.” Contemplate that if you are infirm or disabled. What I know talking to others is that we’ve become tired of price fixing, airport TSA chaos and death by a million fees. I agree: No more magical thinking of airline bailouts while people are starving. I wish.

  17. John

    People generally don’t know what they don’t want to know and they really don’t want to know it when there is nothing but a black hole ahead. I really liked taking kids to China, but that is in the past.

    On a related matter, the normal of January 2020 is over. Corona viruses do not necessarily magically disappear and the most ubiquitous one, the common cold, can be palliated but not cured. There may be a vaccine in the future. Maybe there is short term immunity, but COVID may be with us for the foreseeable future. The one certainty is that it is here now; it kills about 5,000 per day with no sign that that is going to change. It is economically devastating and the worst effects have yet to strike full force. There are ways to make the changes coming more palatable, but the methods required are bad tasting medicine as Mr Horan stated speaking only of the airlines.

  18. Richard H Caldwell

    What a great opportunity to hit “reset” on a climate-destroying industry! We know that air travel is an incorrigibly huge contributor to climate destruction. What better time to acknowledge and act on that truth than now, today? Will it be a painful adjustment—of course it will! It will be hugely painful. But the likely pain pales in comparison with the much larger pain that not siezing this moment to scale air travel back by 95+% will cause. The time for wishful thinking is over.

  19. OpenThePodBayDoorsHAL

    No mentions so far of the tourism industry. It employs/employed 50 million people worldwide. I’m thinking that’s over now.

    So we discuss the effects on investors and business travelers. Meantime the UN tells us that an additional 120M people are “at imminent risk of starvation” due to the lockdowns. I’m thinking this is a very big contributor to that.

  20. VietnamVet

    This is the first article that truly looks at the future without denial and blinders of increasing quarterly profits. Air travel, let alone the other socializing businesses, will not recovery until people feel free to go out in public. But it is so much broader than distribution of a for-profit vaccine that may or may not control the virus. Six towns in Oregon were destroy last week. West Coast cities have toxic air quality, the worse in the world. The only way to address the Pandemic, the Depression and Climate Change is with a functional government. Except democracy has been destroyed. Planning to benefit society has no place in a world ruled by markets. Only monopolies will be the winners. People are losers in the current world. There is no way out unless the Constitution, the rule of law, and democracy are restored.

  21. Fritz

    Low cost carriers (LCCs) also use regional airports, which in turn are in dire straits….hence I do not think LCCs are that much better off than flag carriers, all of them now sit in the same sandpit, but who is going to slip under first…? (especially with the flag carriers getting the gov buyouts, like Lufthansa)

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