Monday Insight – February 15, 2021

Why The Air Travel Recovery May Be Slower Than Expected

The Dogma in Washington is now in full swing. Facts not withstanding, real-world outcomes are to be ignored.

Now that the necessary, professional and courtesy ring kissing is over in regard to the new regime, reality has to be dealt with.

Let’s start with this – there’s some positive news out there.

Airlines are adding new markets… Allegiant, American, Delta, United, et al. Leisure destinations as well as new hub spokes to secondary markets. And the vast majority of these were planned and initiated entirely internally at the carriers. No 40-page market studies supplied from the outside. No leakage analyses. Just internal research. Point: the industry is alive and aggressive.

But just below the surface there are some dynamics that are less encouraging.

More Employees Than The Industry Can Absorb. All this notwithstanding, the airline industry is again faced with the need to furlough tens of thousands of excess staff unless another bailout comes from inside the Beltway. Network airlines are generally not heading back to pre-2020 fleets – in size or in mix. AA, DL and UA have all made clear that 50-seat airliners are heading for the knacker. All have indicated that they will evolve into smaller route systems than before. More airline cooperative structures, such as the AA/B6 arrangement, will be likely… not commonplace, but in key regions.

But, in addition to more federal money coming to keep people paid, there’s likely to be a passel of federal interference in the airline industry.

Higher Jet-A Prices. To start with, all that new fuel efficiency coming on line with new 737 Max, A320neo and A220 airliners is going to be eaten up by higher fuel costs. Let’s get our heads straight. The new occupants in D.C. are hell-bent on restricting petroleum production. This unnecessary Dogma will tighten supplies and jack up the cost of all fuels.

Political Game Playing With Traffic. Leisure is shifting to be the segment coming back strongly. Florida is the major lynch pin in this growth. Just this past week, the new inhabitants in Washington have grandly proposed major flight restrictions to Florida destinations. Naturally, it’s couched in dire terms outlining how it has to do with the spread of CCP-Covid.

Sure. Nothing political. This is just one way that the game can be played.

Higher Taxes. How jacking up taxes will help the economy is a question that isn’t asked nor answered within the new Dogma. But even when clouded with babble about it’s just on big corporations and the rich, the argument holds about as much water as a broken screen door.

But along with this, take it to your bookie that there will also be a range of other taxes beyond income and capital gains. Air transportation is evil – just ask the stars of the movement, like that Swedish teenager Greta what’s-her-name, who has no background beyond posing for the cameras looking like a kid that just ate a bad Kosher dill. Any use of moving stuff by other than wind or electricity (which, y’all know, is free and cheap and non-polluting to produce, just take a look at a battery factory) is really, really bad.

Pesky Common Sense Not Welcome. Absolute power – or nearly so – corrupts absolutely. And in this new regime, there isn’t much tolerance for those who question the Dogma.

That means, unfortunately, there likely will be a lot less common-sense traction on the part of the industry organizations such as A4A, ACI and AAAE in dealing with the new seat warmers who will be dictating aviation and air travel policies. The fear is real – these new federal bureaucrats are going to try to have their way with the nefarious ecological killers that use fossil fuel. And that’s not just airlines, it’s the basic consumer who is so misguided as to think that taking an air trip is anything but a mortal danger to polar bear habitats.

How long this situation will go is uncertain. The one thing that is going to be critical is for the airport and airline and aviation industries to fully understand what’s coming down from Washington, and prepare accordingly.

Facts and figures and truth can demolish the Dogma. Be ready.

Log on To Aviation Unscripted. We’ll be covering this on our latest Aviation Unscripted video, which will be posted later today.

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