Americans complain that their politics is leaning left and they’ve got Democrats who think socialism is good. Nothing says socialism like the CARES Act, which expired this week. It artificially supported tens of thousands of unviable airline jobs, in an industry that is essentially on its knees. The very definition of bad socialism.
This week American let 19,000 staff go, United 13,000 and the other airlines combined another 18,000 between them. Without government funding the airlines couldn’t keep paying the salaries and the end has come.
While the Democratic House of Representatives has passed additional funding, fiscal conservatives in the Republican Senate just wouldn’t pass the bill, part of a wide ranging package that would cost up to another $2.6 trillion dollars. The Airlines wanted just under 1% of that at around $25 billion, but even that is a vast amount of money for most people to comprehend.
Instead the airlines have had to let people go, and thats desperately sad for everyone. It’s just as sad for the millions in the US facing eviction, or having their electricity and water cut off because they have no income. Those numbers are now in their millions. 28 million Americans are claiming unemployment benefits, but it’s aviation that seems to the most favoured so far, so its been very lucky.
Now it too must face reality. Covid 19 has wiped out air travel as it used to be and they have to downsize – there isn’t going to be a miraculous return to the past. It’s going to be a long slow process and things will be little better this time next year unless a vaccine is widely available and people are willing to be vaccinated.
In many ways I look at airline bailouts in the US with hugely cynical eyes. The very airlines who cried and screamed about subsidised Emirates and Qatar and Etihad, none of which have received anything like this much money in such a short time frame, are now upset the government won’t come to their rescue again.
I’d argue that they actually don’t need rescuing. Delta didn’t take any money. Its financial strength and the skill of its staff and managers has kept it out of the fray. American Airlines was always bloated and poorly managed, it had long been thought of as the weakest, despite its size. United is a lot smaller, but despite some bad steps along the way, it was heading towards stability that has kept it from going under – and it’s in far better shape than American.
By not getting any more money – and I hope they don’t get it, the airlines have to face the reality of their situation. For months they have lived in this cloud cuckoo land that this would all magically, in a Trumpesque wave of the hand, ‘just disappear’. They seemed to think that it would all just magically flip back to 2019 and off we would go, and the CARES Act let them keep on thinking it, and failing to see, or plan for the inevitable realities.
If you compare the US airlines approach to that of Lufthansa, and even British Airways.
British Airways took no bailout money and didn’t ask for any. It brutally did to its staff what had to be done, but it didn’t have to do it the way it did. It was a despicable process, badly handled, especially after it was happy to get the government to pay 80% of the salaries in the process.
Lufthansa did what it had to do, using the bailout money to scale back, work out how to do so, kept everyone informed and involved and did its utmost to mitigate the damage to itself and to its staff.
Lufthansa and Air France both took substantial sums and they face some highly charged demands from their governments on environmental change as part of the deal.
None of that was demanded of the US Airlines. They may have grounded aircraft but they just carried on pretty much as they always had until the money ran out, then blamed the government for not doing enough.
The tragedy and the disaster lies in the fact thousands of people lost their jobs, their income and their healthcare in the US. The tragedy is that the airlines have done nothing to make themselves any better, they’re not looking at a long term future or what that might be. Nobody knows, but at least in Europe the bailouts saved some jobs, the airlines, and also made them face up to environmental responsibilities they have done little more than pay lip service to in the past.
Boeing is another example of where America’s short-termism, always wondering about the next quarters results and not the next three or five or ten years, has left it almost knocked for six, floundering. Even President Trump in his interviews with Bob Woodward, expresses his astonishment at how bad Boeing has become.
Airbus meanwhile, is struggling, but its got vision, direction and a determination to move forward that seems extraordinarily lacking in Boeing.
Whoever the next President of the United States is, they have an economic mess to clean up the likes of which haven’t been seen since the 1930’s. The airlines have enough aircraft and potentially enough staff to call back if they have the chance to expand to fit the recovery. If it’s managed well, they will survive, but not as they were. It’s painful, its human cost is high, but if there is going to be an aviation industry it’s a price that has to be paid.