U.S. Airline Aid Absent from Senate Republican Proposal
KEY QUOTES:
"A U.S. Senate Republican coronavirus spending proposal set to be introduced on Tuesday will not include any new government assistance for U.S. airlines or airports, two congressional aides told Reuters."
"It also excludes $10 billion in assistance for airports that was part of the earlier bill, the sources said."
"Airlines are preparing to furlough tens of thousands of workers on Oct. 1 without an extension of aid, prompting a series of union actions to pressure lawmakers."
"The members of two large unions representing flight attendants are planning to march outside the U.S. Capitol on Wednesday to call for additional relief for the aviation sector, which has been hit hard by the coronavirus pandemic."
David Shepardson, Tracy Rucinski | Reuters
Airlines Fighting for Survival | Trade Groups Extend Recovery Timeline, Again
KEY QUOTES:
“The number of people boarding flights operated by U.S. airlines — while up from the bottom in April — remains down 70% year-over-year, and carriers continue to lose millions of dollars daily even after taking a scalpel to costs.”
“Right now, we’re fighting for survival. No bones about it,” trade group Airlines for America (A4A) president and CEO Nicholas Calio said during a media briefing on Thursday.”
“American Airlines is sitting on only enough cash to get it to next May while Southwest Airlines could fly through August 2022.”
“People talk about a V-shaped recovery — the airline industry has never seen a V-shaped recovery,” Calio said. “We believe, if things go well, it will be 2024 before demand is where it was.”
“A4A’s forecast matches that of the International Air Transport Association (IATA), which also anticipates a four-year return to pre-pandemic global flying levels.”
Edward Russell | The Points Guy
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Will American Become The World’s Largest ULCC? | New Perks for Cheap Seats
KEY QUOTES:
“U.S. passenger numbers are still down about 70% from last year’s levels, and business travel is expected to take years to recover.”
“American Airlines Group Inc. introduced its cheapest fare class in 2017 to coax a few travelers away from budget carriers. These days, such no-frills tickets are becoming a mainstay of the company’s efforts to fill its planes.”
“As many as 85% of passengers bought so-called Basic Economy fares during a brief uptick in travel in June, Chief Revenue Officer Vasu Raja said.”
“We envision Basic Economy as being much different than what we designed it as,” Raja said in an interview. “We anticipate using it quite directly as a means of getting customers who really weren’t travelers before to come to market, as an entry product into the airline, to the travel experience.”
“Starting Oct. 1, however, American is making the deal more attractive. Passengers with the lowest-cost tickets will be allowed to pay extra for cabin upgrades, more legroom, same-day flight changes, and priority boarding.”
“These are companies seeking to capture whatever revenue is on the table, and the revenue that’s on the table right now is low fare,” said Samuel Engel, head of the aviation group at consultant ICF. “By giving those customers multiple options to buy up, you have a better chance of capturing a little incremental revenue.”
“At American, Basic Economy will get another boost as the carrier allows elite members of its loyalty program who opt for the low fares to keep all their perks, such as free checked bags and priority boarding and security screening.”
“This segment is real -- younger people who are not afraid of Covid-19,” said Z. John Zhang, a marketing professor at the University of Pennsylvania’s Wharton School who focuses on pricing and competitive strategies. “They want to experience the world and they have a laptop.”
Mary Schlangenstein | Bloomberg
Southwest CEO Bearish on Business Travel | A Decade to Recover?
KEY POINTS:
“Oh, gosh, the effect has been catastrophic. There’s no other way to think about it. It’s truly a pandemic in the greatest sense of the word. The effect on travel and tourism and services in general, it’s just been catastrophic. I don’t think it’s shocking that we are where we are.”
“We know a lot more seven months in than we knew one week in. I believe we’re going to have to muddle through this until we get a vaccine until we functionally reach herd immunity.”
“What I would predict now is that I don’t see that changing significantly from here until we get a vaccine. We’ll see some lift at that point and until behaviors change. People are going to have to be confident that we’ve reached herd immunity. Until we get to that point, I wouldn’t expect us to see a significant improvement in our traffic. That will be sometime in 2021 at best.”
“I’m certainly not bullish that business travel is going to bounce right back. In fact, I would argue that relative to a normal recession and recovery scenario, this will be twice as long. I wouldn’t be surprised to see business travel languish for a decade before it gets back to 2019 levels.”
“We’ve had a catastrophic reduction in customers flying — off 65% versus a year ago. And so what we need to remedy our business problem is more customers. At this point in time, there’s no way to get more depth in the market.”
“We’ve got 100 airplanes that aren’t flying. Even with the early retirement or voluntary leave program, we still have an overstaffing situation. So we’re not fully utilizing our employees. The company has been built for capacity that is double what we’re doing.”
DallasNews.com
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Jobs: Already Down An Entire Legacy | Oscar Says The Industry Payroll Needs to Shrink By Half
KEY POINTS:
“The US airline industry needs to shrink its labor costs by as much as 50% to survive -- and even then it's possible some carriers don't make it through the crisis, United Airlines Executive Chairman Oscar Munoz told CNN Business.”
"The stark reality of what we're facing is dire," Munoz said.
"This is, by far, orders of magnitude larger than anything we've ever seen." Munoz said.
"We used to make a decent amount of money for an airline just a few months ago," Munoz said. "We tell our employees that we are going to be a smaller airline for some time and we hope to get back to the place where we were. But we think that's quite a bit a ways out."
"You've seen some airlines, in essence, fold. I suspect you may see more the longer this thing goes on," Munoz said. "If this would stretch an inordinate amount of time, all of us would be affected to some degree."
“The International Air Transportation Association (IATA) predicted in late July that global air travel won't recover from the pandemic until 2024, a year later than the body's previous projection.”
"It's tough to pinpoint anything because we don't know the basic determinant: When will things return to normal? When will a vaccine come?" Munoz said. "Until...that vaccine that comes in, uncertainty is going to rule the day."
Matt Egan | CNN
Weekly TSA Numbers | The “Autumn of Discontent” Approaches
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Additional Resources
You’re getting furloughed, now what? How to Answer "Will You Resign Your Seniority Number"? Why Applying for Jobs Online Won't Work How Does the Coronavirus Compare to 9/11? How to Survive Disruptive Change Are Furloughs Coming? What Should Pilots Do In These Uncertain Times?