I suppose we should have seen this one coming. With much of the nation on lockdown and travel to and from other countries being largely curtailed, far fewer people are flying. Also, trapping yourself in a closed cabin, tightly packed in with a hundred other people, any one of whom might be an asymptomatic carrier of the virus, isn’t anybody’s idea of a good time even if you need to get to some domestic destination. As a result, numerous flights are being canceled every day and the ones that do take off are frequently only half full. The result? Industry experts are warning that all the major airlines could be facing bankruptcy in the next couple of months. (Daily Caller)
The Center for Aviation (CAPA), a market intelligence company, warned Sunday that most airlines will be bankrupt by the end of May because of various travel restrictions imposed around the world as the novel coronavirus spreads.
Numerous countries have taken steps to shut down because of the virus. The U.S. has banned travel from Europe, and countries such as Denmark, Italy and Spain have either completely or largely shut down their borders.
“As the impact of the coronavirus and multiple government travel reactions sweep through our world, many airlines have probably already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants,” CAPA wrote in its Sunday report.
The title of this post is at least partly sarcastic. I understand that there will be very real-world repercussions for regular working people if all of our major airlines go underwater financially. U.S. airlines employ roughly ten million people, including many lower-skill middle-class jobs. United Airlines has already warned its staff that layoffs will likely be coming in the near future. That would put a huge hole in our employment picture and impact countless families around the country.
With all of that said, however, it’s difficult for me not to feel at least a little bit vindictive. The major airlines have been punishing their customers for years now with constantly decreasing levels of service, increasingly tiny seats, disappearing legroom and overbooked flights. They obviously engage in price-fixing, though it’s almost impossible to prove in court these days. The airlines give us plenty of excuses to hate them, so pardon me if I’m a tad shy on sympathy at the moment.
Also, this is only a temporary condition. One way or another, the coronavirus epidemic will pass. At that point, demand for air travel will return to normal and where a demand exists, the free market will generate the supply to meet it. The airplanes will still be out there, waiting to return to service. Pilots will still need jobs. The airports will have to serve customers and most of the displaced workers will be back on the payrolls.
It’s not as if the airlines are in some sort of unique situation, by the way. That’s why I’m annoyed at all this talk of a suggested bailout for the airlines. Restaurants and bars all over the nation are in danger of closing. One of the veterinarians where we live just laid off half of their staff. Where’s their bailout? For Pete’s sake, even the New York Times is saying you shouldn’t be feeling too sorry for the airlines. Any time you can find the Gray Lady and me agreeing on something, it’s probably not all that crazy.
These are the rules of the free market. The most capable airlines will survive and make their way back to profitability. Who knows? Perhaps some competitiveness will return to the industry as a result and the service won’t be so awful. In the meantime, they’ll have to tighten their belts just like everyone else. And if the President wants to push for a bailout he’ll be getting an earful from me about it.