The news is growing ever more strident. “We’re all gonna die!” Yes, that is a true and accurate statement, but not just yet. Most of us have decades to go before that happens. Don’t let the panic scare you. The “fear porn” in the news is awful out there right now. Older people and those with existing conditions have a good reason to be afraid. But for most of us in good health, the risks are lower. There is more than enough frightening news for everyone to gorge on. As we all know, gorging is never good for you. Don’t let the news create undue anxiety, as that can be a factor to cause illness.
Please, push back from the table of panic and fear and get some perspective. This note is as much for us as it is for you. We find comfort in data. There is no emotion – just fact. Bear with us as we take you through some history. The perspective, hopefully, will give us strength.
We took the DoT T-100 Domestic Segment data back from 2000 through yearend 2019. That’s a good amount of time to see what the US airline industry has had to face before. Shocks are not new phenomena – we’ve been here before. Each time was horrible. People lost jobs. Lives got disrupted. The populace was awash in unhappiness. And, here we go again!
Load this model in your browser – it should spawn a new tab. You get to select a US airline and see how it fared in terms of passenger traffic and load factors from 2000 through 2019. We include a forecast that is based on the data through 2019. This forecast is what should have or could have happened without Covid-19. Clearly we can expect a sharp downturn in the curves for early 2020. But look out five years; don’t get stuck in the right now.
The model has a 95% confidence level. It looks forward five years, ignores the past two years and has a seasonality factor of four. The model shows that US airlines have weathered crises and come out strong. Traffic always rebounds. There is a strong chance the current slump will be a V and not a W. Here’s why.
- The industry is cutting back severely and quickly. That is necessary to preserve cash by cut operating costs This is a rational reaction based on learned experience.
- There are going to be layoffs. Thousands, perhaps tens of thousands, of industry employees in the US will be forced to stay home. It is most unfortunate, but it is also rational. Airlines cannot sustain their costs absent revenues. Moreover, and crucially, social separation is necessary. Air travel is not a socially separated environment. Airplanes and airports are great places to catch the flu or a cold, ergo, excellent to catch Covid-19. To protect employees, they need to stay away for a while.
- As Sara Nelson, President of the Association of Flight Attendants-CWA succinctly points out there is a role for government: “Provide direct-payroll subsidies to workers in the passenger airline industry. This should include flight attendants, pilots, airline ground workers, airline caterers, airport cleaners, greeters, security screeners, wheelchair attendants, and other airport service workers. Anyone who touches aviation. Absent payroll subsidies mass layoffs and furloughs are inevitable. This will have long-term consequences because nearly all aviation-related workers have to pass background checks and security and safety training requirements.service. If airlines are slow to recover”.
- That’s the bad news. Now the better news:
- China was first into this process and has, apparently, turned the corner.
- China has closed its 16 emergency hospitals as they are no longer needed.
- China’s airlines are back to adding flights and their economy will see the benefits within weeks.
- That means we have examples and learning to deploy everywhere else. China is now helping Italy to get through its crisis.
- Much ignored Taiwan is a shining star in the midst of the crisis. Lots of great learning from here, too.
- Western countries are still going to see the peak of the crisis. So it may get worse before it gets better.
- But we can learn from what works – we are not in an information vacuum. Criticizing reactions by governments doesn’t serve any purpose. YOU need to protect YOURSELF. YOU live in an era where access to information (good, credible data, and information) is accessible.
- So, don’t panic. We all have to go through this. It will be uncomfortable for most and horrible for some but it does not have to be entirely awful. Use the opportunity to help others with encouragement and don’t lose perspective.
- We’re using safe practices, working from homes, and avoiding unnecessary risks. We ARE going to make it through this crisis, and are using our common sense to minimize potential exposure. If you aren’t, you should be – it may be as simple as washing your hands better, and avoiding unnecessary close social contact. This virus is neither as deadly as first feared nor as contagious as the measles, mumps or chickenpox or even cholera. Older folks with risk factors do need to be careful, just as they should every winter season.
- If you can, help those who cannot help themselves, and remember that we will all come through this together.
Co-Founder AirInsight. My previous life includes stints at Shell South Africa, CIC Research, and PA Consulting. Got bitten by the aviation bug and ended up an Avgeek. Then the data bug got me, making me a curious Avgeek seeking data-driven logic. Also, I appreciate conversations with smart people from whom I learn so much. Summary: I am very fortunate to work with and converse with great people.