Tuesday, May 19, 2020

Why Airlines Will Come Roaring Back After The Coronavirus Crisis

Once the COVID-19 pandemic is contained, the airline industry will come roaring back, but it will not be in the form of business as usual. In the beginning, low prices will be used as an incentive in the hope that people who have been cooped up in their homes for the past two months will want to get away and have a summer vacation.
Before we get into why we think that the airlines will come roaring back once the coronavirus crisis has ended, we need to remember that some carriers were already in trouble before COVID-19 hit.
Monarch, Thomas Cook, and Flybe all went bust while airlines like Alitalia, Air India, and South African Airways continue to limp along thanks to government support.
That government support that poorly managed, overstaffed airlines rely on now has profitable carriers asking for bailouts because the coronavirus decimated their business. Under the pretext of too big to fail, just like the banks during the 2008 financial crisis, several airlines are turning to their national governments for aid.
Over the past ten years or so, the airline industry has been growing exponentially with many airlines retiring older planes for new, more fuel-efficient models, but what they have not been doing is saving cash for a rainy day.
As things stand, the big three American carriers are being bailed out while over in Europe Air-France-KLM, and Lufthansa is in talks to see how much money they can get from their respective governments. No doubt this money will come, but there will be strings attached.
19/05/20 Mark Finlay/Simple Flying

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