COVID-19 cases are surging in the USA, antibodies are now thought to only last 2-4 months, and the efficacy of a potential vaccination doubtful. Let’s imagine a world in which things do not get better. What will this pandemic mean for U.S. airline survival?
My Airline Pandemic Survival Predictions For A Worst-Case Scenario
I hate to be grim on a Friday afternoon, but let’s be honest. It is increasingly looking like COVID-19 is here to stay. And since we, the USA, botched the initial response, we are stuck with a problem of rolling economic calamity or rolling death counts and economic calamity. Whatever happens in November will not change that overnight.
Some scientists are linking COVID-19 to brain damage. Let’s imagine a more virulent strain this winter that impacts more people. Hospitals fill up. Death counts pile up. A subset of the population, mostly younger healthier people, is able to fight on with it. Business travel dies. Leisure travel remains restricted with limited air bubbles and a huge overall backwards step in our ability to freely travel between nations even internally within the United States.
Then what? What if 60-90% reduction in airline demand becomes the new norm, not a temporary problem?
Well, news this week suggests a path forward in which the strong become stronger and the weak band together or die. I think five major airlines would survive:
- Delta – the strongest airline in the USA today will survive as a stand-alone airline
- American + Alaska + JetBlue (the new American) – American would solidify its partnership with JetBlue and Alaska to offer a more comprehensive route map across the USA.
- United – United is already the strongest international carrier and will become the primary international airline of the USA, serving six continents in a much more limited capacity than it did pre-pandemic. Domestic flights would be whittled down.
- Allegiant + Frontier + Spirit + Sun Country (The new Spirit Frontier) – a combined ultra-low-cost airline that would offer cheap fares on point-to-point routes across the country appealing to leisure travelers
- Southwest – also a strong airline, Southwest would survive as a stand-alone airline and preserve much of its current route map.
I’m not including Hawaiian Airlines in this list, but expect it would survive under subsidies from the Hawaiian government.
If things get even worse we could see the nationalization of carriers, a return to regulated routes and pricing, and a divvying up of route maps to keep each airline shielded from the sort of intense competition that has marked air travel in the preceding decade.
CONCLUSION
Far-fetched? Sure. From all accounts, Europe and Asia have settled into a new rhythm in which life is returning to a normalcy that is not quite the same, but hardly as dystopian as I imagine. I sincerely hoping this is all just a bad dream that will eventually pass. But if the situation continues to deteriorate and the virus rears its ugly head in a powerful new form, we’ll revisit the predictions again and see how right (or wrong) I was. I’m hoping I’m way off, but it isn’t unreasonable at this point to start thinking about worst-case scenarios.
How do you think airlines would stack up if the situation deteriorates further?
The prior primarily international focused airlines in the US has failed (Pan Am, TWA) why would a diminished domestic network be viable for UA. That playbook has run into trouble time and time again for UA and its predecesors.
And it may this time around too, just a speculation. United would still keep a respectable domestic network, just not nearly as comprehensive as it was before the pandemic.
@ Matthew — If United becomes the primary international US airline, that will be sad. Thank goodness for foreign carriers. I hope to never fly United on an international flight again. I will never understand why you love United so much.
Not disagreeing, but seems like United, if it was to pursue an international strategy, would be a more natural partner for Alaska / Jetblue.
Potentially. Could be United/Jet Blue and Alaska/American, but I think we could see the merger of AA-B6-AS into one carrier about the size of AA today.
That’s a silly read. You list just about every U.S. airline as a survivor!
Not really. Many fold into one another.
While nationalization is the last resort (but if the Dems sweep the House, Senate and presidency it would be very imaginable, i.e. socialism/Marxism) there is no doubt in my mind that consolidations will occur in 2021, perhaps even by the end of this year. After the next round of mergers there won’t be much left to merge. The ultimate would be one national carrier out of the Communist era Interflug, Cubana and Aeroflot. Take your pick: economy seat or economy seat.
I doubt we’ll get that far, but in a truly dystopian world, there would be government-backed national carrier, just like so many other nations.
Where to start? First off, Socialism and Marxism are not the same any more than Nationalism and Nazism are the same. Denmark is Socialist; China is (sort of) Marxist. Next up, if the US wanted a flag carrier, we had one ready made in Pan Am but we passed. If we didn’t name one then, we sure won’t do so now. As to consolidations, there has already been way too much before now so I’m not sold on the prospect of major additional mergers, with the possible exceptions of Alaska/JetBlue or any two out of Allegiant/Spirit/Frontier, and even those would be tough to push through. Finally, this one airline concept simply will not and pretty much can not happen in a remotely free market the size of ours. Ironically, a Nationalist agenda is much more of a threat to a plurality of airlines than a more socialist society like Germany or Norway, since a Nationalist agenda would more likely call for a single super strong airline for the entire country.
Denmark is not socialist. It is a highly-taxed capitalist/mixed economy. Marxism and socialism are highly congruent. The most prominent instances of state socialism have been based on Marxism and all were abject failures except for a few that have made significant capitalist reforms. And, yes, the Nazis were socialist (almost all socialists are indistinguishable from fascists).
https://en.wikipedia.org/wiki/List_of_socialist_states
Despite your use of Wikipedia as a valid source, Denmark actually is a Socialist country due to the safety nets provided by the government. I get to hear about it whenever I speak to my family there. They provide free education, health care, and a decent basic standard of living for everyone. That’s pretty much the definition of socialism.
As to the Nazis, they HATED the political left, so I’m not sure that you have any traction there. The closest thing they did was to try to provide some basic health and economic standards to the working populace because the other side was pushing for it as well. Socialists differ from Fascists in that Socialists believe in free enterprise and private ownership while Fascists believe in an authoritarian government that does not necessarily believe in either public or private ownership as long as the mega strong government has control.
Demark is not a socialist nation. This is a biggest misconception many people have. Denmark in fact is a highly capitalist nation with really big social safety nets. A socialist nation in fact is a command economy that Denmark in fact is not a socialist definition. A basic econ class would actually teach you that.
Nice to see the MAGA trolls are finally realizing what’s about to happen to their Dear Leader on November 3rd.
(btw, QAnon said Antifa will replace the CIA AND the FBI, did you hear?!?!)
UA-NYC, why do you have so much confidence that Trump will lose? On the contrary, the silent majority is larger than ever. We just can’t vocalize that in polls and elsewhere, due to crazy people like you. Hillary was supposed to win by 96% — NYT. Memories. See you on 11/3. Your comments will not age well.
The pre-election polls do not call Vladimir Putin. I understand he has many votes.
Ah yes the Russian collusion hoax that you will never let die. Pollsters do oversample Dems in every single poll though. In addition, neither me nor any of my conservative friends have ever been polled. We can revisit this one we have the election results.
You just gotta stop taking those The Onion articles seriously, bud. 96%. And they say satire is dead.
I meant to say she had a 96% chance of winning. My mistake. But here’s the NYT poll. How quickly everyone forgets.
https://pbs.twimg.com/media/DrF5IOqUUAASpMB.jpg
I wouldn’t be writing-off the truculent toad just yet. No doubt he has some unusually filthy tricks to pull out of his squalid re-election bag.
As for the list, this would be just about the best possible outcome for consumers. The situation in the US , at least in respect of the future of airlines, is far better than almost every other part of the world…
2016, Clinton had a 1 point poll of polls lead over Trump…it’s now in the 9-10 point range, touched by only a few Presidents ever in their campaigns (Clinton, Reagan).
Trump’s popularity has nosedived since March…wonder why.
Swing states are turning badly against Trump…he’s going to lose the whole upper midwest (WI/PA/MI) that drove him to victory, and even formerly or trending safe red states (GA/TX/FL) are tossups or leaning Biden.
Fundraising gap trending towards Biden and growing.
Suburban women (key demo) heavily leaning towards Biden
Non-college educated white males (frankly the core Trump demo) gap has also narrowed.
End of the day? What has Trump done – no wall, tax cut that did virtually nothing, racism & attacks on foreigners that are red meat to an increasing dwindling base.
2016 is long gone – Trump had a nice couple years riding a historic bull market (Thanks Obama!), but now true normal, competent adults are needed again.
Ha! You’ll see. Going to be fun talking to you on November 4th and watching you shake your head in disbelief. The polls are NOT accurate.
Many, many people who support Trump will not tell a pollster that for fear that some lunatic will throw a Molotov cocktail through their window at 2 am. Which is why the polls should be taken with a grain of salt.
Enjoy being on the wrong side of history!
UA — the polls explained:
https://funkyimg.com/view/36mCg
we are actually on the right side of history. Please feel free to leave your contact info so we can send you a consolation note on 11/4.
I’ll bet my life on you losing.
Bookmarked, to return on 11/4. Looking forward to it.
Yeah, you stole it. Good luck with the dementia patient.
How did the orange man get into this conversation? I thought this comment section is about airlines not about the orange man.
Please stop playing into the media hype of fearmongering. It’s just a flu and it’s not here to stay.
It doesn’t cost anything really to run an airline. They’ll all survive and keep the profits to themselves.
J.D., are you for real? I am not fearmongering, just reading the news and observing that my life has again been suspended by the latest California lockdown. I’m watching future airline sales plummet once again and watching the world around us close to residents of the United Sates. It really does cost something to run an airline…
Maybe you should head to Parler
JD when this got started and they shut the airlines pretty much down, Delta, for one was burning $50 Million per day. Seems like something
Nate as a long time Alaska FF and MM’er ( hard to accomplish with AS) I and many many others were not happy with the AA news, while Delta stuck it to us openly none of us trust AA let alone Parker. One World is also a disappointment for many of us that fly AS. Both bad decisions for Alaska and not happy to see Matthew tack survival on Alaska tied to American, tell me Matthew are you saying that Alaskas survival is dependent on American if so gross mis calculation. American needs partner for its own survival not the other way around.
with respect to your lead in you have seven airlines it appears they all survive
RE: Alaska dependent upon American
Not at all, at least in the current climate. I do think it will not be a takeover, but a merger among (somewhat) equals if Alaska and American decided to get hitched.
Based on relative market capitalizations a JBLU/ALK/AAL merger is pretty complicated. ALK and JBLU between them have market caps around that of AAL. And it’s not like the Feds are going to let airlines use CARES or CARES 2 money buy out shareholders.
It will pass in a couple year. No one knows how long antibodies last, but two to four months is just a guess. Also, many diseases induce antibody response that abate, but the immunity remains (this is true with Hep B vaccine series for example). And vaccines get retrospective upgrades (yellow fever vaccine was thought good for only 10 years, now thought good for a lifetime). U don’t have to be this grim!!!
I sure hope so!
Totally agree. Great meals and service on Braniff International.
I always enjoy your airline articles and in-depth speculation in how the industry will evolve during the current pandemic crisis.
As a former United Airlines employee that just recently retired, I feel the future looks somewhat bright due to an excellent CEO at the helm leading UA. He has a vast wealth of knowledge/skill and expertise to help direct UA during these very uncertain, turbulent times. I agree with your assessment of UA being the international leader due to the vast foreign routes from the largest cities of America.
Dude, wow, you are a bit of a downer on this one. Brush yourself off and pour yourself a little bit of optimism?
While I don’t disagree that the airline industry is ripe for more consolidation I don’t think we have to compare this to some dystopian future. And we all know that what ends up happening is not an end game, but a start to a new era. Another start-up airline will emerge (Breeze has announced 2021), many more opportunities will abound for others as well.
Where there is chaos there is opportunity. Not to be crass and say this is a good thing, it’s horrid what’s going on, but, damn it, this country (despite our current leadership) was built on the ability to rise to a moment. November will be the start of that and forging a new and better way. We are not judged as much by a moment, but how we fight back. We WILL fight back from this.
I love your optimism Stuart. I wish I shared it!
You can. It’s free!
@Matthew, you should read up on “T Cell immunity.” Antibodies may decline pretty fast, but most recovered COVID-19 patients seem to produce a “T Cell response” — killer T Cells — when confronted with the virus. Some people who never had COVID-19 also produce this response, perhaps because of “cross immunity,” which means past exposure to another coronavirus (e.g. common cold). There’s a lot of reason to be optimistic.
Will do. Thanks James!
My feeling about U.S. carriers is that they are fairly dismal, and are ALL replaceable. None of them stand-out as exemplary air carriers. If every single American airline went bust I’d only feel bad about the employees. I honestly can’t remember the last time I flew a U.S. airline and thought that it in any way measured-up to the overseas carriers I usually fly with.
And as far as United becoming the “primary international airline of the USA”, all I can say is, Please God, NO.
While flying in the 90’s for Northwest Airlines I once voiced a complaint to Hector Adler, Vice-President of Inflight Services (who got his start in the aviation industry after WWII as a steward aboard Pan Am’s FLYING BOATS out of Miami, and therefore had seen a thing or two). My complaint had to do with some cheap-looking service procedure aboard our international flights. Hector smiled patiently and said to me “Kenneth, never forget that Northwest Airlines is a domestic airline, which just happens to have some international routes.” And he was absolutely right! That was IT! Management’s mentality was strictly St. Paul, Minnesota.
It’s the same with United. They are a U.S. domestic airline. Which happens to have international routes. And that has been made abundantly clear to me each time I’ve flown them abroad.
No, if today’s U.S. airlines all closed-up shop, post COVID, I wouldn’t shed a tear. Once TWA, Braniff and Piedmont disappeared (my three U.S. faves), I stopped caring about American carriers.
No love for Pan Am?
Nope.
No love for Pan Am.
I flew them many, many times. Starting in 1971. In the Caribbean. To Asia. Within Asia. To and from Europe. Within Germany. Out of Tehran. Into Baghdad. And after the (suicidal) merger with National Airlines, around the States as well. Aboard 707’s, 727’s, 747’s, 747SP’s, DC10’s, L-1011’s and A300’s. The dull, grey-blue aircraft interiors were often worn and dirty. Meals ran the gamut from just okay to inedible. Cabin crews were often aloof and frequently officious. Delays – particularly out of the notorious JFK Worldport – were standard.
Because Pan American was a U.S. flag airline my company tended to put employees onboard, which is how I learned to dislike them; as did the majority of my colleagues.
When Pan Am folded I was truly sorry. But mostly because my roommate – who was also my best friend – was a long-time Pan Am steward. Sadly, the once glorious Pan American World Airways was, at the end, a shadow of what it had once been. Even at the time of my first PAA flight – a quick 707 hop from Kingston to Montego Bay – the carrier was already very poorly run.
There’s a lot of nostalgia about Pan Am now. But the reality of the carrier during its last few decades of life was a far cry from the glory days before, and just after, World War II. The 747 was a crushing financial burden for Pan Am. They ordered way too many of the jumbos and in the 70’s simply couldn’t fill them. Lockerbie was the tragic final nail in the coffin. Just as flight #800 was for the dying TWA.
I loved TWA too! My first TA flight back in the 70s.
United isn’t the strongest international airline, American had the largest share of the international market last year. United may lead long haul, but not by that much. It leads in Trans-pacific flights, but Delta isn’t far behind, is behind Delta in Trans-Atlantic flights and behind American in South-American flights (and soon to be behind Delta as well after the LATAM tie up). Furthermore, United is the most vulnerable financially. If any airline isn’t surviving the pandemic, it’s United. Also I can’t see why all the ULCC’s would merge. Their business has come back much quicker than the legacy airlines’ due to their reliance on leisure travel vs business travel. I don’t see a need for these companies to merge.
American’s Latin America network made it stronger, but they have been retreating.
It seems to me AA is much more vulnerable financially than UA.
Still, I could see a situation in which United goes out of business (which would happen before a AA-UA or UA-DL merger).
UA could also merge with B6, be the killer New York airline with hubs at JFK and EWR, and grow in BOS.
This is all rampant speculation, but I’ve written about a JetBlue – United merger before:
https://liveandletsfly.com/jetblue-united-merger/
I do think it’s inevitable that AS will merge w/B6…always thought those two combined plus Virgin would become the 5th US major
Don’t think they also tie up w/AA though…
With more than 50% of aircraft sitting idle it’s possible that a major could go out of business and the others could pick up the slack. The most likely to fail would be the carrier with the weakest financials which appears to be AA.
I suppose it is possible that AA could go out of business, but before that happens I think a AS/AA/B6 merger could create a new powerhouse and it would not be Doug and Co. running it. Think about the best from JetBlue and Alaska running a new American, with a new labor contract. Three totally different cultures, but I could see it happening.
Been thinking about this post and wondering, if you are going out on a limb like this with some pretty extreme predictions, why not go big…that is that out of desperation and a response to the current of nationalism, that restrictions on foreign carriers limits of ownership are lifted out of desperation. True global airlines are formed. United and Lufthansa Group form as one. American and British Airways. Delta and Air France Group. Heck, let’s throw in some Asian carriers as well to form massive global entities. Five major global airlines that dominate 90% of air travel. Juan Trippe would rise from the dead for that.
Of course this is not going to happen. But you are talking dystopian scenarios. So, why not?
An interesting thought indeed.
Around 1977, Northwest Airlines said there would eventually only be 6 airlines. That day may come in 2023.
When I saw the headlines, I tried to assess myself without looking at the article who those 5 might be. I came up with something similar to Matthew’s. It’s a 6 airline list, like NWA predicted and are like Matthew’s 5 + Hawaiian.
Hawaiian (smaller)
Delta + United’s international routes (some taken away by the FAA)
The New America West called American (American + Alaska + JetBlue)
Southwest
Frontier + Spirit
Allegiant (Sun Country dead)
Other possibility is that United dies and Southwest decides to buy or take over its 787 leases and some international route authority.
Yet another possibility is Frontier and Sun Country dies. Spirit and Allegiant remain separate making it 7 airlines.
It’s seem correct except i see southwest and the other lcc being as one airline. So there would only be four. Delta american united and southwest.
I’m surprised you think it’ll be five airlines left standing when life usually happens in threes.
The potential for brain damage as a long-term consequence is frightening. Especially for the covid-denying clowns who are already halfway brain dead. yikes!
Also frightening is the idea that my favorite domestic carrier (Alaska) gets absorbed into my very least favorite airline (AAL). I wish AAL would call itself something else, it’s name is a stain on our nation. Maybe Abhorrent Airlines?
PanDem(ic) Airlines, perhaps?
My dystopian view is a confirmation that Boeing has been fully captured by the woke PC crowd. They will not be able to ever again successfully execute a new model aircraft development program. We may have already seen the last new model from Boeing–the 787. Better think twice about shutting down 747 production, because no one wants the 737MAX in the current environment. That will leave them with only one civilian aircraft in production (787) and no prospects of anything new ever again.
I was pretty loyal to United due to living in both San Francisco and later the Washington DC area. Now I live near Seattle, where United has a minor presence requiring connections to get most places (even though 90 years ago they pioneered West Coast travel) and Delta and Alaska rule. So I got cards for both of them to go along with the card I have for United. If Alaska and American merge, though, that will be it for me. Plus, Delta is tending toward Airbus aircraft which I prefer (though jcil’s comment above, if it happens, may change Alaska’s Boeing loyalties – plus if they merge with Jet Blue they’ll inherit a lot more Airbuses). It would also be interesting if the airlines went back to the pre-1978 regulated era – then they would have to compete on service rather than fares, and meals and seat pitch may both improve (and come back for economy). Travel then was actually pretty enjoyable.
I discussed this with my circle of business traveler colleagues and they all agree – at this moment in time United is nearing irrelevance. I know only a few people who have booked flights on United within the past few years and even then, it was only because they were traveling to destinations where United affiliates held the EAS contract. I’ve heard this sentiment elsewhere. If I were Scott Kirby, I would be concerned. My opinion, I foresee United seeking bankruptcy, being broken up, and sold piece by piece.