Originally Posted by Astro14
If passenger traffic doesn't return to previous levels, airlines won't fly as many flights. Airlines have to operate at about 80% load factor to make a profit.
If the traffic isn't there, then they have to cut flights, reduce service, until they get to that load factor. That's why I think that many airlines will be smaller coming out of this, post 30 September. The bookings won't be there.
If the middle seat is removed from service, by legislation or lack of bookings, that will be a major disruptor. The the airlines will cut service until they can charge enough on the remaining seats to cover the cost of operating that flight. It's simple economics. Tickets prices will skyrocket as capacity is cut. Service to many smaller cities will cease. It's not good for anyone. Delta and Jet Blue have already sought to stop their obligated/subsidized service to many smaller cities because the planes are empty.
If you're wishing that the airlines re-organize, or take a cut financially, that's an emotional, because it's going to be realized as greatly reduced service and much higher prices as capacity leaves the market. Some airlines are already gone. They are regionals, with low costs, and served small cities. Those cities will suffer a loss of service. It's already clear that some long haul airlines, like Norwegian, will have to leave markets, and that will reduce capacity on those routes. The remaining seats are going to be priced higher up the yield curve....
Take even more seats out, and the airlines will simply be pricing fewer seats and each one will be much more expensive.
You can't pay the lease on a $300 million 777, and pay for the gas, gate lease, employees, and landing fees unless you make a certain amount of revenue with that airplane. Lower capacity will be the response to lower consumer demand. And you'll have higher prices. Bankruptcy can't squeeze the operating cost to zero.
All what you said it is fine, and it will happen. Middle seat solution is just garbage idea. Management, policy makers etc. do not know what to do, so they are throwing these wild ideas. According to latest poll wast majority of Americans are not in favor of reopening country at this point. That means they are tuned in, and fallow facts. If this thing is still around, or second wave comes in, again, airlines can sell seats for $20 to Frankfurt, it ain't gonna sell.
Now, there s so much pressure on states to open that we might have majority of population with antibodies , and we might kill bunch of people in the meantime, but comes fall, it might be different.
As for financial situations at airlines, they should be saved, but with strings attached primarily when it comes to work force and and moratorium on stock buybacks.
