View Full Version : Trump urges Congress to provide $25 billion bailout for U.S. airlines

7th Oct 2020, 13:16
Reuters are running a story that.... U.S. President Donald Trump said late on Tuesday Congress should quickly extend $25 billion in new payroll assistance to U.S. passenger airlines furloughing thousands of workers as air travel remains down sharply amid the coronavirus pandemic.

Trump’s new demand came hours after he announced his administration would abandon talks with congressional Democrats over proposals to spend at least $1.6 trillion in additional coronavirus relief funds, a move that appeared to scuttle a new $25 billion bailout for U.S. passenger airlines to keep tens of thousands of workers on the job for another six months.

But Trump later issued a call on Twitter, urging Congress to “IMMEDIATELY Approve 25 Billion Dollars for Airline Payroll Support.... I will sign now!” he wrote, saying Congress could tap unused funds from prior coronavirus relief to fund airlines and a separate program for small business.

American Airlines AAL.O and United Airlines UAL.O last week began laying off 32,000 workers, but had said they would reverse course if lawmakers reach a deal on a new government program to fund payroll costs.

A prior $25 billion airline payroll support program of mostly cash grants approved by Congress in March expired on Sept. 30.

House Speaker Nancy Pelosi last Friday expressed support for a standalone bill to keep airline workers on the job if a broader package could not be reached.

A Pelosi spokesman did not respond to a request for comment late Tuesday.

Congress is expected to return to session on Oct. 19 and lawmakers may make a new attempt to pass a standalone measure to provide the $25 billion sought by airlines but the prospects are uncertain, even though the airline relief enjoys strong support in both the House and Senate.

One remaining issue is how Congress would pay for the new funding, a senior congressional aide told Reuters Tuesday.American Airlines closed about 4.5% lower after Trump's tweet on ending talks, while shares of United Airlines UAL.O closed 3.6% lower. Southwest Airlines LUV.N stock fell 2.4% and Delta Air Lines DAL.N shares closed 2.9% lower.

Airlines for America, the trade group representing major U.S. airlines, noted “thousands of airline workers across the country have already lost their jobs – and more furloughs are expected in the coming weeks.” But the group added “there is a glimmer of hope that our leaders in Washington will act and save these jobs before it’s too late.”

The U.S. Travel Association said “with millions of Americans suffering, it is woefully shortsighted to end relief negotiations” and added that “without immediate aid, 50% of all travel-supported jobs will be lost by December — an additional loss of 1.3 million jobs.”

U.S. airlines are collectively burning about $5 billion of cash a month as passenger traffic has stalled at around 30% of 2019 levels. After tapping capital markets, they say they have enough liquidity to last them at least 12 months at that rate.

Between voluntary and involuntary furloughs, major U.S. airlines’ workforce will shrink by at least 25% in October.

Industry experts expect a slight improvement in domestic demand over the winter holidays from current levels, but it will remain far below last year’s volumes. Meanwhile, higher-margin business and international travel remain severely depressed.

Chief executives acknowledge that pre-pandemic air travel demand is unlikely to return for years, and still unknown is how the pandemic, which has forced drastic changes in habits, will impact travel behavior.

American Airlines will end service to 11 smaller airports on Wednesday after Congress failed to approve additional aid.

7th Oct 2020, 15:02
Mostly political blackmail prior to the election. damn if you do, damn if you don't.

Clearly if nothing else happens the coming weeks the airlines are out on a limb and have no idea what is going to happen in our lame duck session. If Biden wins but yet can't do a thing to help the economy between now and Jan (maybe longer if nobody wins the election).

Looks like the airlines are going to have to pick a winner to survive until Jan. Course that is all US carriers and not the Europeans. I really don't see how the US airlines are going to survive between now and Jan with a lame duck session.coming

ATC Watcher
7th Oct 2020, 15:09
American Airlines will end service to 11 smaller airports on Wednesday after Congress failed to approve additional aid

Strange times. where the USA the republican's advocates of the free market now in power , are slowly following state run communist economic principles . Reminds me of the East Germany DDR times .where maintaining people working was the goal even if the cost was more of what they produced.
Just being sarcastic. I wish my fellow Americans well in these strange and difficult times....

West Coast
7th Oct 2020, 15:56
A large check followed by another large check, that’ll take the airlines (where I’m employed) to early into 2021 at which time they’ll be back with their hand out looking for a third round of stimulus payouts. It has to stop, the market must be allowed to shape the outcome, not the government propping up those airlines that didn’t use the last decade of profitability wisely.

7th Oct 2020, 17:49
West Coast - the problem is I'm not sure any of the airlines (cargo excepted) could survive this without help - a lot of help.

7th Oct 2020, 18:02
I'm not so sure that wise minds could foresee the knee jerk reaction of a government who blindly bans travel without regard to the irreparable harm it is doing to an economy.

West Coast
7th Oct 2020, 18:10

It’s not financially sustainable (or ethically responsible to taxpayers) to maintain pre-Covid capacity when there clearly isn’t the need. The capacity of the airlines should contract/expand to reflect the market’s needs. Shrinking to profitability is painful but it’s legitimate and offers a sustainable business plan.

The last PPP covered roughly half a year, the next, likely the same. That still leaves a big gap to reach pre-Covid passenger count timelines projected by the airlines. In six more months we’ll be right back here arguing the merits of another handout.

West Coast
7th Oct 2020, 19:39
A “tiny proportion” is around 30% of where the US part 121 industry was pre-Covid. That means they have excess capacity of somewhere around 70%. The return to pre Covid levels is up to four years down the road by some airlines estimates. To maintain that capacity minus the need is unethical and unfair to the stronger airlines.

It’s time to cull the herd, my airline may very well be one of the ones to go.

7th Oct 2020, 19:44
Contour flyer,

Supply and demand has been a way of life for the airlines for some time, more efficient aircraft and SLF preferring direct routings ended the hub and spoke model. This is just another iteration, albeit in a fore-shortened timeframe.
Ignoring Covid19 briefly, aviation was contracting before Covid19, how many airlines have gone under in the last 5 years?

$25B is a huge sum, especially as it is effectively a stop gap measure; Given the extent of the pandemic and the likelihood that the market is unlikely to start recovering in the near future, is this the best use for this sum?
Aviation, along with other industries is not going to bounce back to pre-Covid19 volumes in the short term, therefore, it makes no sense to maintain readiness for a market that is unlikely to be there for some time.

Food airfreight isn't going to contract substantially, people are used to having seasonal produce available all year round; Airfreight is actually doing well, lower oil prices and increased demand (PPE,etc).

Aviation isn't the only industry whose employees have been severely impacted by the Covid19, better to use the money wisely in welfare for all those impacted and job (re)-creation when appropriate.

7th Oct 2020, 21:35
The risk is if too much of the industry fails, it could lose critical mass and completely collapse. Not just the airlines, but the entire support structure. The airline industry is critical infrastructure - even a partial collapse could have catastrophic cascading consequences to other parts of the economy.
No, the airline industry is not alone, but it'll be a whole lot harder to recreate a viable airline industry than to - for example - open new restaurants to replace all those that went under due to the lockdown.

West Coast
7th Oct 2020, 22:29
Too much money for what if scenarios. The major airlines have options available to best ensure survival, they don’t want to, I get it.
It’s easier to get a bail out from the government than make the tough decisions that need to be made.

8th Oct 2020, 00:15
That's a neat end-of-discussion answer. :)

To keep this on subject, please suggest some of these tough decisions (not related to executive salary bonus)

Also suggest some options to best ensure survival so we can see how much trickle down effect they might have on our livelihoods

8th Oct 2020, 01:22
I think many still don’t get the magnitude of the crisis commercial flying is facing. At the point we are at right now, nothing I say again nothing any airline could come come up with in terms of money saving measures would make it survive.
The only difference will be made by governments aid and heavy credit lines.

The reason is simply that the airlines are not built or meant to sustain something like this, never mind the 300+ aircraft airlines who have always only made money by expanding. The margins are simply too thin, you don’t need to be a phd in economy to see that another 6 months of this are not sustainable for most.

West Coast
8th Oct 2020, 02:51

What are the options?
- The passenger count comes roaring back to historical norms and the situation self corrects.
- The government bails out the airlines again with an expectation it becomes the norm over the following years as the bloated capabilities remain
- The airlines shrink. You’re a pretty smart fella, you know what the answers are. I suspect you’re just wanting me to go on record, that’s fair.

Furloughs, force majeure, abrogating Vendor/OEM/leasing company contracts... I’m sure those are the most contentious topics on anyone’s list of potential moves.

Big Pistons Forever
8th Oct 2020, 03:51
The inconvenient facts

1] Airlines are a cyclic industry. This will be the 4 th time the industry has cratered in my career.

2) The airlines have enjoyed unprecedented levels of profitability in the 2013 to 2019 time period

3) Prudent airline executives would have used some of the profit to build up a rainy day fund for the next downturn, instead they pissed it away to juice the stock price and therefore the exec bonuses, including borrowing money to buy back stock :ugh:

4) The end result is the same old, same old...Capitalized profits, Socialized losses. Tax payers pay for the short term thinking and utter lack of vision of the entire airline senior management, all of whom will retire with 7 or 8 figure pay outs.

8th Oct 2020, 10:12
A good summary there.
Whilst air transport is critical, so are many other industries.
points 3 and 4 there hit the nail on the head.

LGW Vulture
8th Oct 2020, 10:39
To be fair, they know the industry is so cyclical - therefore they obviously feel compelled to cash in when the opportunity presents itself.

8th Oct 2020, 15:07
Best way to restore the economy and all affected industries is to take responsible steps to reduce the transmission rate, bring viable vaccines to bear and provide stimulus payments to consumers. Keep small businesses alive. Corporate well-fare is just a way to minimize the drop in share prices and minimize losses to the wealthy.

ATC Watcher
8th Oct 2020, 15:28
Big Pistons , your points 3 and 4 are hitting where it hurts .
As to aviation being a critical infrastructure , absolutely, but commercial airlines ? The core transport activity between some city pairs perhaps, but , for example are 80% of RYR routes critical for Ireland/? Are 20 flights a day between say London an Paris part of a critical infrastructure of any of the 2 countries involved ?

8th Oct 2020, 18:11
Why does this thread remind me of railroads?

Same problems?

Ah but what will take over when air travel goes bust for the plodders. Damned oceans get in the way of cars busses and trains.

The airline business model isn't the total culprit nor is it their customers, it is being brought to it's knees by governments and not the freedom to choose an adjustment

Tartiflette Fan
8th Oct 2020, 20:09

You're ignoring the fact that a big percentage of ordinary people have their savings/pensions invested in - or dependent on - stock-market returns.

Jet II
8th Oct 2020, 20:48
Ah but what will take over when air travel goes bust for the plodders. Damned oceans get in the way of cars busses and trains.

But will air travel go bust - or will we see what happend in the past, the legacy airlines collapse, someone with an eye for a gap in the market comes along and buys their redundant kit, starts an airline and fills that gap in the market.

Air travel will continue - OK it might not have the same paint on the aircraft, but if there is a demand then that demand will be met.

Check Airman
8th Oct 2020, 21:19
Ignoring Covid19 briefly, aviation was contracting before Covid19, how many airlines have gone under in the last 5 years?

I’m aware that some European airlines were in trouble before covid, but the US industry was certainly not shrinking. Crews and support staff were being hired every day. It was a buyer’s market. Airlines couldn’t get enough people to fill classes.

We were actually expecting a new airline to begin operation this Autumn.

9th Oct 2020, 06:46
Acknowledged, although profitability wasn't at an all time high.

Not being parochial here, it is a global issue, however globally there are enough folk to ramp the aviation industry back up in line with passenger traffic, god knows there's enough hardware out there.

Getting back to the matter in hand, is another $25billion going to be any more than a (very) expensive sticking plaster?

Peter H
9th Oct 2020, 11:00
SLF question: What is needed to keep the airports open and minimally staffed (e.g. ATC, emergency services, ground handling)?

WillowRun 6-3
9th Oct 2020, 11:16
It was a few years ago when this SLF was lucky enough to hear a presentation by the late Donald Bunker, the undisputed "king" of the law of aircraft finance in the world (literally wrote the multi-volume book). He had been incentivized to leave a high-level Montreal practice for a Gulf state and a boutique practice with close ties to one of those carriers.

Mr. Bunker, in offering observations about some of the regrettable problems facing the industry even then (let's say, circa autumn 2014), listed a number of factors. Of relevance here is that senior managements were not able properly to respond to the terrorist attacks of September 11th. "But those were so unpredictable", someone commented.

The response: management is supposed to include leadership, at least at the upper level. And proper leadership knows "something" is going to happen, even it it does not know what that contingency will turn out to be. In simpler terms, there was a lack of preparedness in a generalized sense. There isn't a font device I can use here to describe how evocatively the very expert Mr. Bunker emphasized the word "something" but if there was a special font it probably would be called "there is the unknown but don't be afraid of it, be ready and prepared".

How many times have the good folks in the industry, as well as in the constellation of international and intergovernmental organizations poured out forecasts of doubling of traffic over such-and-such number of near-future years? Of glorious reductions in air traffic in order to shave a few (possibly miniscule) percentage points off of total carbon emissions? Lots of hot air of international organizations as well as domestic lobbying and interest groups have knocked their own socks off with rosy scenarios equated to what the future will, we are sure, will hold. And then there's the CAPSCA group, which was tasked with making sure civil aviation worldwide did its proper part in containing any epidemic before it could reach pandemic levels. Yeah, good job there.

The pigeons come home to . . . no, too cliched. The old thing about karma . . . . no, too suggestive or vulgar. Hows about, "aviation in its simplest sense is man[kind] against the elements." (From Airport, the novel, by Arthur Hailey, perhaps paraphrased a tad; the musings of Lincoln International Airport general manager, Mel Bakersfeld, played in Hollywood's adaptation by the great Burt Lancaster.) This time, the elements, said now to include humans' vulnerability to disease, have won. The only bailout the industry deserves, and the only bailout that will help in reality, is to remember that it is people who operate the entire works, and as important as short-term payroll support certainly can be, the industry had better get its head out of the sand. Otherwise I'll be sure to find a nice, airport-sounding name for my next service animal to bring onboard the aircraft, maybe a four-headed autonomous pangolin bred with a certain species of bat.

ATC Watcher
9th Oct 2020, 12:47
SLF question: What is needed to keep the airports open and minimally staffed (e.g. ATC, emergency services, ground handling)?
You mean moneywise ? no idea, but an interesting question .
The quick answer :
(Major) Airports and ATC are part of a State critical infrastructure, like motorways, fire services ,rail and canals..etc... The price tag to do regular needed maintenance and staffing to function , with average traffic is known and cost say X Billions. In the old days prior deregulation , that used to be budgeted by the State and staff were civil servants or employees of companies owned by the State.
What changed is the deregulation that brought a tremendous raise of traffic and that required to expand drastically services, e.g. airports and staff..., cost 3 to 4 X billions and someone had a good idea to have the airlines pay for all that , not only for the extra bits, no, for the whole thing through charges, . As a result Airports and ATC became privatized, and sometime , like in the UK , owned by the same airlines. Everybody believed the Gurus claiming a constant raise of traffic and , the notion that traffic would decrease over a long period of time was disregarded on purpose ( I still have the quotes ..)
Now they are caught with their pants down , and the only solution they found is to pour Billions to maintain the airlines afloat at all cost to prevent the system go from collapsing on them .
This is where we are at the door of winter 2020. Nobody has the miracle solution and everyone is scared of what 2021 will look like.

ATC Watcher
9th Oct 2020, 12:56
Willow Run : the constellation of international and intergovernmental organizations poured out forecasts of doubling of traffic over such-and-such number of near-future years?
Oh yes but you forgot the most important influencers : Boeing and Airbus , whose very similar forecast the last 10-15 years spread the word. Everyone else, including Airports and ATC took those numbers for granted and reproduced them in their own forecast ...and planned their infrastructure and staff on those numbers ..Except those numbers were only based on airlines expansion plans. Vicious circles feeding one another.

WillowRun 6-3
9th Oct 2020, 14:50
ATC Watcher: yes, forgot those airframers - you're positively right, around and around the rosy scenario did spin. Still the dire situation with overtones of despair triggers that old engineering aphorism, careful enough statement of the problem implies the solution. Does that help here . . . .? Consider these. Split the crisis in the worldwide airline sector into two main and one smaller parts.

The first part is what ordinarily would be identified as "excess capacity." Since this is just a rumour and I have no fear of committing news, some liberties will be taken. Ballpark the degree to which the crisis can be categorized as "excess capacity" as upwards of 40 percent, not quite half of the situation. Deal with that part of the crisis the way any similar deep recession caused by far more routine economy problems would be dealt with. Seems like it's all pretty standard (seniority lists, retirement of older less efficient aircraft, some consolidation, some so-called 'creative destruction'.) The liberty taken here is that such nominal moves will seem insurmountable due to pandemic factors at the least - but give an SLF a chance to sketch out a whole piece.

Second major part is, recognize the change that has been wrought upon, for lack of a better term, the market/enterprise -- the basic set of reasons why people travel by air in the first place. We've all seen essays about how the move to virtual meetings and so on not only is here to stay, but is a big improvement (maybe yes, maybe not so much). Certainly the "demand side" of the market/enterprise will stay depressed for some time, on account of the rise of Hey-Professor-Unmute-Yourself-world. And it also is depressed because of unacceptable risk of infection, or the perception of that risk, or uncertainty about these (or some combining of those factors). Addressing this second major part . . .

(A), repurpose some of the excess capacity and furloughed personnel. We've seen cargo ops become more intense, I think, and (again, taking liberties) if the office-world is getting forcibly evicted and relocated, then won't folks need to retool their homes to a good extent? And in the early part of the pandemic spring this awful 2020, weren't cargo flight ops heavier for shipments of medical supplies? (actually I think that's factual). SLF as I am and better get ready to duck but even Hailey's novel has an uplifting description of air freight; surely the massive amounts of air carrier people, equipment and expertise can arrive at economically viable and socially useful "stuff" to transport by air. Heck, even in my own legal career I've advised clients who were shipping component parts for pretty routine light fixtures by air, and also more recently customized aftermarket automobile items especially fancy wheels.

(B) Innovate and reallocate. With all this air carrier stuff sitting idle, even after conventional cargo has been boosted up (liberty taken) surely the stunning bright lights of the world who have commanded a vast restructuring of essentially all activity (see, Green New Deal, also see, overall carbon emission reduction plans) can find entirely new kinds of transport-by-air activities that will help even their lofty if also unrealistic goals. You like shopping at [insert trade name of popular larger-quantity warehouse-style food and household store], you say? Spec out the construction material and gear for 10 of those stores to be built in, say, some environ of Mexico City where there is, to borrow the buzz-phrase, food insecurity. Transport by air the construction equipment, materials, crew, engineers, and so forth. Replicate dozens of times around that country and then....etc. (Pilot projects would be needed first of course, and all kinds of stuff would need to be worked out country by country, location by location - but airlines as a sector, they operate in the whole entire world, correct??)

(c) Create a well-defined set of conditions for a 14-day "guarantee period". You enter the 14-day with a quick-response Covid test, and if negative you stay in that defined set of conditions for all 14 days and then get a second quick test before being authorized to travel. This creates certainty that the person, individually, presents little if any risk. And only those people would be permitted to operate, or travel on, the flights. More than ordinary "quarantine" because there would need to be a list of defined conditions to be observed to assure that the end of the 14 day period test is valid, or as valid as it gets.

The smaller part of the problem - with regard to airlines as a sector - is the massive problem of the pandemic still unsolved in the rest of world economies and countries. Time will tell what relation so-called "wet" wildlife markets, virology labs, lack of candor and information, and other factors may have had to the bursting-upon-the-scene emergence of the virus. In the meantime, though, focusing on metrics devised before this unconventionally novel virus emerged won't help much. It could be that it's just a darn shame, and the airline sector must suffer, and suffer deeply, until the virus is conquered, as long as that might take given uncertainties and gaps in knowledge about what it is and how it spreads and how it harms human anatomy and physiology. But - what Wayne Gretzy used to say: you miss 100 percent of the shots you don't take. If the airline sector sits back and waits for medical science and health care policy to climb this mountain, well, it will be a long and difficult carry,

Not least, and in case a bit more optimism could be appreciated, have a look at the "Wise Persons" group report on the future of Eurocontrol and SESAR-JU, and a related report on the role of Artificial Intelligence in future ATM in Europe. It was pre-pandemic of course. But it's halftime, the refs have made some terrible calls, the team is way down both on the Scoreboard and in demeanor, and somebody has to point to something to create hope. Like, you miss one hundred percent of the flights you don't board.

9th Oct 2020, 16:00

You're ignoring the fact that a big percentage of ordinary people have their savings/pensions invested in - or dependent on - stock-market returns.

I wouldn't say I'm ignoring it, I am investor myself and depend on my investments for retirement. I choose to diversify and in particular avoid aircraft manufacturing and airline stocks. A personal choice available to all. As they say, the best way to make a small fortune in aviation is to start with a large fortune.

Seriously, I believe giving stimulus relief to consumers is the quickest way to help our people. People, (temporarily out of work for how long?), need the ability to buy necessities, pay rent, and so forth, and now, even to cover medical costs. Airline relief is hardly the short term need and such relief will not filter out to most people, it will filter out only to a fraction. Airline in recent years have had record profits, and what good did that do for most people? Amazing how airlines tend to have the "short term" in mind. Well, we get to pay ever increasing "fees' for the basics of airline travel, tighter seating and everything else that makes airline travel a P.I.T.A.

12th Oct 2020, 04:44
The American government's relentless persistence of insulating companies and employees from an acute recession with mindless deficit spending is impractical reality.

Already before the pandemic, whopping $1.3T tax cuts, idiotic increase of defense spending ($700B budget - larger than the COMBINED defense spending of China, Saudi Arabia, Russia, UK, India, France & Japan), and forever near-zero interest rates has spawned zombie companies and kept dead-beat mortgage holders on their feet.

Post pandemic the Fed has engaged in unlimited Quantitative Easing, purchasing U.S. Treasuries and mortgage-backed securities. Meanwhile, the national debt exceeds GDP.


12th Oct 2020, 12:27

All correct as stated. but we do also consider a tipping point where too much hands off causes a staircase fall of all behind you. The problem is way bigger then the average citizen thinks in their everyday life.

We can't afford to cripple an economy just because it seems like it's only the other guy that gets hurt

12th Oct 2020, 17:07
You wouldn’t have an economy in such terrible shape if they actually let the free market function. The reason these massive bubbles form and explode is because of their interventions. The system broke in 2008 and they kicked the can down the road. Well, we are now meeting that can and there is no more road left.

The airlines would not be so leveraged where it not for such low interest rates, courtesy of governments addicted to money printing. Do you honestly think that some government bureaucrat that created this mess will know how to get us out of it? Or that they even want to? Elected officials, actually doing what is hard and unpopular, that will likely end their bloated government salary and political career? Ha!

Hands off is the only way it should be. Intervening in moral hazard and creative destruction is central control which distorts the free market and capitalism. I thought we had enough examples of central control ending badly with millions dead, but for some reason, the lemmings continue towards that same old cliff.

As long as we continue to let popularity contest winners grow governments un-checked
into bloated, self-serving institutions, we are gonna keep finding ourselves in the same predicament.

12th Oct 2020, 18:01

I like the idea of hands off, but does that also equate to not banning traffic between points? We just might need some sort of balance between the two

12th Oct 2020, 18:36
The main problem is that the US authorities consistently bail out the shareholders (and usually management too).
e.g. the US taxpayer only makes money on the spring Delta bailout if Delta shares went from $24 at the time of the bailout to $560.
If they created any amount of moral hazard (temporary nationalisation, recall of prior exec bonuses, cancelation of share options plans, and all of these do already happen in some segments of US business) then the airlines might save a bit more for a rainy day.
If you really believe that airlines are critical infrastructure then they should have government mandated minimum capital ratios like banks do.
But anyway, this is all wishful thinking, because the decision makers in Congress are all massive equity holders, so the above will never happen.

12th Oct 2020, 21:01

It was surely a lack of regulation that allowed lending to spiral out of control and cause the 2008 crash. Leveraging takeover, new borrowing, asset break-up deals are all dysfunctional elements of a free market that has nout to do with the government. The only thing the government did was not nearly enough to head off an inevitable bust. Did Greenspan act on his mentioned disquiet over several years? Nope. It was big time pyramid growth and everyone was loving it.

Go back to the crash of 1929. Was that the government fiscal or monetary policy that caused it? Nope. Was it government programmes that fired the engine again? Sure was.

Will private investers and the seriously rich be restarting the economies with their money and at their own risk? Nope.

Will it be government intervention, done well or badly, which will rescue the day, just as in the 30s post WW2, post 2008 and in the next few years? You bet. Or you better had.

Maybe you have to let some greedy, poor employers and poor service providers fall, but leave the industry to the free market and we are all finished.

There is no logical reason to think that there will be realigning of the market in a healthy way if you allow it to collapse. We all know that it is Ryan Air or Wizz or any other number of other shitty low cost carriers which will emerge, Are they good for the industry?

13th Oct 2020, 10:08
You can’t get angry at wizz or Ryanair for what they are. A market gets the airline it deserves. Only when government intervenes does the market get distorted. Low cost carriers are merely filling a need ignored by other providers. It is not one or the other. Obviously, they’ve demonstrated there is room in the airline market for choice, and we should celebrate that.

The crash of 29 became a depression due to government intervention. Roosevelt created tons of socialist programs that we suffer from to this day. All that government intervention is what turned a recession into a depression. Big difference. Look up the crash at the beginning of the 20s. It self corrected in 1.5 years and was followed by very prosperous years due to the hands-off approach by the government.

2008 is another example of government intervention. Why do you think banks where so loose with lending? Artificial interest rates, set by the Fed muppets, and not by the markets. And when the banking system collapsed, how many banks where allowed to fail? Certainly not enough. And who purchased all those worthless mortgage backed securities? The government’s very own Fannie and Freddy. Which is why those banks took such major risks, they knew the Fed would bail them out. Not very free market if you ask me.

Since then, the government went and did the exact same thing with student debt, auto loans, and credit card debt. As well as re-inflated the home debt bubble to double the size it was in 2008 when it burst. All four of these bubbles are now sitting in the 1.5ish trillion range.

Like i said previously, we have run out of road. If dropping money from helicopters worked, then why not do it all the time? If QE worked, then why are we still QE-ing 12 years later? Why are major economies at negative interest rates (Japan, Europe) Why is the US at 0% interest rates? Do you pay 0% on your credit card? CC rates are not controlled, and are an indicator of the true value of renting money. And it is where all interest rates will need to go when the final buzzer sounds.

13th Oct 2020, 10:11

Why? The system balances itself if left alone. Let the customer chose. Same way you chose a restaurant, or a smart phone, or your car mechanic. As long as government doesn’t intervene to bail out the losers and suppress the competition, the free market is the fairest and best option for all. Creative destruction is a critical part of free markets.

13th Oct 2020, 16:56
We continue to agree, but are thinking on two different roads,

The unexpected reaction is a government which enters into the business model and shuts off the money flow between the airline and its customers ergo in my world a degree of mitigation is warranted