Were airlines sacrificed for the Nation ?

Discuss topics relating to airlines.

Moderators: North Shore, ahramin, sky's the limit, sepia, Sulako

Gilles Hudicourt
Rank 10
Rank 10
Posts: 2203
Joined: Thu Mar 22, 2012 5:51 am
Location: YUL

Were airlines sacrificed for the Nation ?

Post by Gilles Hudicourt »

When the COVID-19 pandemic began to spread outside of China, different levels of government in many countries began to to issue warnings to avoid travelling. Planes slowly began to lose passenger loads, and airlines were swarmed with massive cancellations. Advanced sales dropped to zero. But airlines were still expected to continue flying to cater to those that had to to fly, and even to those who decided to fly despite the warnings. Airlines cannot just cancel a flight because it is not profitable.
It is only on March 13 that the Canadian Transportation Agency issued a determination, relieving airlines of some of their obligations. But not all.

https://www.otc-cta.gc.ca/eng/ruling/a-2020-42

As the instructions on travel became more and more restrictive and precise, airlines still continued to fly nearly empty aircraft, at least in one direction, to allow people to go home. But it took forever for governments to actually ban flying altogether by issuing Orders prohibiting travelling.

All these flights were done in the interest of Canada and of the Canadian public, as emergency measures in the midst of a national crisis.

Are airline expected to bear alone the financial brunt of this crisis ?

It would have been more economical for all the airlines to park all their aircraft as soon as the first calls not to travel were made by the Prime Minister and lay all workers off. Everyone would have been left stranded were they were and the governments would have been left in charge of organizing airlifts to bring their citizens home. Airlines would been in a better position to reimburse those passengers whose return journey had been cancelled.

I know there is talk of helping airlines get through the grounding of their fleets. But what about the billions that was spent flying people home at great expense ?
---------- ADS -----------
 
Last edited by Gilles Hudicourt on Wed Apr 01, 2020 7:26 am, edited 1 time in total.
User avatar
AirFrame
Rank 10
Rank 10
Posts: 2165
Joined: Sun Oct 11, 2009 10:27 pm
Location: Sidney, BC
Contact:

Re: Were airlines sacrificed for the Nation ?

Post by AirFrame »

Gilles Hudicourt wrote: Wed Apr 01, 2020 6:02 amAre airline expected to bear alone the financial brunt of this crisis ?
It's the epitome of entitlement to assume airlines are "alone" bearing the financial brunt of this crisis. People from the mail room to business owners across all industries are being hit hard financially by this.
---------- ADS -----------
 
Gilles Hudicourt
Rank 10
Rank 10
Posts: 2203
Joined: Thu Mar 22, 2012 5:51 am
Location: YUL

Re: Were airlines sacrificed for the Nation ?

Post by Gilles Hudicourt »

AirFrame wrote: Wed Apr 01, 2020 6:41 am It's the epitome of entitlement to assume airlines are "alone" bearing the financial brunt of this crisis. People from the mail room to business owners across all industries are being hit hard financially by this.
Being hit by shutting down is not the same as being forced to continue running at great loss, when shutting down would have made more financial sense.

Name me another industry which was forced to continue operating at great loss rather than being allowed to just shut down ?
---------- ADS -----------
 
digits_
Rank 10
Rank 10
Posts: 2988
Joined: Mon Feb 14, 2011 2:26 am

Re: Were airlines sacrificed for the Nation ?

Post by digits_ »

What makes you say they were forced to operate? If anything that ruling you linked to protects airlines.
---------- ADS -----------
 
As an AvCanada discussion grows longer:
-the probability of 'entitlement' being mentioned, approaches 1
-one will be accused of using bad airmanship
rudder
Rank 10
Rank 10
Posts: 2173
Joined: Wed Mar 08, 2006 12:10 pm

Re: Were airlines sacrificed for the Nation ?

Post by rudder »

“Billions spent....”?

That is a little melodramatic.

Having said that, there would appear to be a quid pro quo with YOW over both operating rescue flights and - for AC - maintaining economic bridge routes. The cost of operating requested flights after March 13th is in the millions. However, airline overhead - for AC - is in the billions if measured over time.

Is the industry in serious trouble? Yes. Not only in the instant, but quite likely over time. No more V-shaped recovery. More likely U-shaped. And that is the best case scenario.

US carriers are already planning for a smaller footprint for operations even after the crisis is over. Why? Because the world has changed. The market has changed. Travel demand has changed. And government handouts are not going to be condition free nor are they going to go on forever.

YOW will have to offer some type of financial bridge assistance to CDN air carriers. But it will also be incumbent upon carriers to both mitigate costs and to plan for a different marketplace after the pandemic restrictions are lifted. Support for employees and air service to communities is one thing. Support for shareholders is another.

AC has thus far convinced the market that it has sufficient bridge liquidity. And I am guessing that AC is loathe to add debt even if it is low interest/zero interest courtesy of YOW. Debt is debt. And cash flows going forward (2021 and beyond) will not come close to what was planned just 90 days ago.

YOW cannot be seen to be picking winners and losers. Whatever is offered will have to be omnibus. But it won’t be everything that some carriers want.
---------- ADS -----------
 
Gilles Hudicourt
Rank 10
Rank 10
Posts: 2203
Joined: Thu Mar 22, 2012 5:51 am
Location: YUL

Re: Were airlines sacrificed for the Nation ?

Post by Gilles Hudicourt »

rudder wrote: Wed Apr 01, 2020 6:59 am “Billions spent....”?
By airlines, worldwide. This was not about Canada alone........
---------- ADS -----------
 
Gilles Hudicourt
Rank 10
Rank 10
Posts: 2203
Joined: Thu Mar 22, 2012 5:51 am
Location: YUL

Re: Were airlines sacrificed for the Nation ?

Post by Gilles Hudicourt »

digits_ wrote: Wed Apr 01, 2020 6:58 am What makes you say they were forced to operate? If anything that ruling you linked to protects airlines.
Are you claiming airlines in Canada could have grounded their fleets after March 13th ?

I think Porter was the first 705 to ground its aircraft. It did so on March 20th. Could Air Canada, Westjet, Air Transat, Sunwing have done the same ?

Was it a commercial decision that they continued Flying people home despite the losses ?
---------- ADS -----------
 
digits_
Rank 10
Rank 10
Posts: 2988
Joined: Mon Feb 14, 2011 2:26 am

Re: Were airlines sacrificed for the Nation ?

Post by digits_ »

Gilles Hudicourt wrote: Wed Apr 01, 2020 7:32 am
digits_ wrote: Wed Apr 01, 2020 6:58 am What makes you say they were forced to operate? If anything that ruling you linked to protects airlines.
Are you claiming airlines in Canada could have grounded their fleets after March 13th ?

I think Porter was the first 705 to ground its aircraft. It did so on March 20th. Could Air Canada, Westjet, Air Transat, Sunwing have done the same ?

Was it a commercial decision that they continued Flying people home despite the losses ?
Yes to all, however the could have been sued for damages by stranded passengers with valid tickets. At that time, the outcome would have been unsure what/if any damages would have been assigned in court. I assume that was a big part in deciding to return all pax with tickets from the sun destinations while flying down there empty.
---------- ADS -----------
 
As an AvCanada discussion grows longer:
-the probability of 'entitlement' being mentioned, approaches 1
-one will be accused of using bad airmanship
Gilles Hudicourt
Rank 10
Rank 10
Posts: 2203
Joined: Thu Mar 22, 2012 5:51 am
Location: YUL

Re: Were airlines sacrificed for the Nation ?

Post by Gilles Hudicourt »

"The impact of all this is just devastating. People aren't flying at all or capacity is at 10, 15 per cent. Nobody can sustain that for very much longer, that's for sure," John McKenna, president of the Air Transport Association of Canada, told CBC News.
Canada's airline, tourism sectors facing 'catastrophic' decline due to COVID-19 pandemic

Airline lobby group warns that, without aid, companies will fold and thousands more will be laid off
https://www.cbc.ca/news/politics/airlin ... -1.5516678
---------- ADS -----------
 
Last edited by Gilles Hudicourt on Wed Apr 01, 2020 7:52 am, edited 2 times in total.
Gilles Hudicourt
Rank 10
Rank 10
Posts: 2203
Joined: Thu Mar 22, 2012 5:51 am
Location: YUL

Re: Were airlines sacrificed for the Nation ?

Post by Gilles Hudicourt »

digits_ wrote: Wed Apr 01, 2020 7:39 am I assume that was a big part in deciding to return all pax with tickets from the sun destinations while flying down there empty.
Sun destinations ? My last flight was to Madrid on March 29th. We went there with 4 passengers, came back with about 150, out of 375 seats.....
---------- ADS -----------
 
digits_
Rank 10
Rank 10
Posts: 2988
Joined: Mon Feb 14, 2011 2:26 am

Re: Were airlines sacrificed for the Nation ?

Post by digits_ »

Gilles Hudicourt wrote: Wed Apr 01, 2020 7:44 am
digits_ wrote: Wed Apr 01, 2020 7:39 am I assume that was a big part in deciding to return all pax with tickets from the sun destinations while flying down there empty.
Sun destinations ? My last flight was to Madrid on March 29th. We went there with 4 passengers, came back with about 150, out of 375 seats.....
Okay. What is your point here? Do you have any source or proof that the government is forcing airlines to operate? You're the one making these claims, so it's up to you to at least support your claims with something.

That the industry is damaged by a decline in travellers is not really news, and nobody is disputing that.
---------- ADS -----------
 
As an AvCanada discussion grows longer:
-the probability of 'entitlement' being mentioned, approaches 1
-one will be accused of using bad airmanship
rudder
Rank 10
Rank 10
Posts: 2173
Joined: Wed Mar 08, 2006 12:10 pm

Re: Were airlines sacrificed for the Nation ?

Post by rudder »

Gilles,

Here is an honest question question - what is Groupe Transat prepared to do to downsize its entire business to allow for market realities? I am talking about September and beyond. I would ask the same question of SWG. And yes, I am aware that in the instant that current flying operations for both are zero. But TRZ and SWG are vertically integrated travel companies. This about more than just flights.

Is there a belief that status quo (pre-COVID) is the realistic outcome? And that the taxpayer will pay for it?

Every airline on the planet is now reworking the business plan looking beyond the COVID crisis. Not one of them believe that return to normal is realistic.

Federal assistance will be a bridge. But that is just a bridge to a restructured industry. Hopefully it will be this side of CCAA. But that is not assured.
---------- ADS -----------
 
Gilles Hudicourt
Rank 10
Rank 10
Posts: 2203
Joined: Thu Mar 22, 2012 5:51 am
Location: YUL

Re: Were airlines sacrificed for the Nation ?

Post by Gilles Hudicourt »

digits_ wrote: Wed Apr 01, 2020 7:54 am Okay. What is your point here? Do you have any source or proof that the government is forcing airlines to operate? You're the one making

The PM of Canada and some Premiers were telling people in Canada to stop travelling and telling those overseas to come home. It was an order from the Government in a moment of national crisis. But who made this possible ?

The airlines. At their expense. That is my point.
---------- ADS -----------
 
digits_
Rank 10
Rank 10
Posts: 2988
Joined: Mon Feb 14, 2011 2:26 am

Re: Were airlines sacrificed for the Nation ?

Post by digits_ »

Gilles Hudicourt wrote: Wed Apr 01, 2020 8:30 am
digits_ wrote: Wed Apr 01, 2020 7:54 am Okay. What is your point here? Do you have any source or proof that the government is forcing airlines to operate? You're the one making

The PM of Canada and some Premiers were telling people in Canada to stop travelling and telling those overseas to come home. It was an order from the Government in a moment of national crisis. But who made this possible ?

The airlines. At their expense. That is my point.
If all airlines decided to quit flying, except for one, then that one airline would have made a killing, and the pax would probably have tried to get money back from all the other airlines.

It was only an expense because there were too many planes for a little bit of people. I haven't seen any indication airlines couldn't have just said "screw this, we stop flying". After all, that is what they did anyways, 2 weeks later.

I don't think it would be good marketing for airlines to stop flying at the first sign of trouble. It wasn't clear how long this thing would last. If the government from a lot of different countries recommend/force their citizens to come home, you might actually expect a rise in bookings and travel, untill everyone has made it home.
---------- ADS -----------
 
As an AvCanada discussion grows longer:
-the probability of 'entitlement' being mentioned, approaches 1
-one will be accused of using bad airmanship
Gilles Hudicourt
Rank 10
Rank 10
Posts: 2203
Joined: Thu Mar 22, 2012 5:51 am
Location: YUL

Re: Were airlines sacrificed for the Nation ?

Post by Gilles Hudicourt »

rudder wrote: Wed Apr 01, 2020 8:07 am Gilles,

Here is an honest question question - what is Groupe Transat prepared to do to downsize its entire business to allow for market realities? I am talking about September and beyond. I would ask the same question of SWG. And yes, I am aware that in the instant that current flying operations for both are zero. But TRZ and SWG are vertically integrated travel companies. This about more than just flights.

Is there a belief that status quo (pre-COVID) is the realistic outcome? And that the taxpayer will pay for it?

Every airline on the planet is now reworking the business plan looking beyond the COVID crisis. Not one of them believe that return to normal is realistic.

Federal assistance will be a bridge. But that is just a bridge to a restructured industry. Hopefully it will be this side of CCAA. But that is not assured.
TRZ is the stock for Transat AT, the Tour Operator owner of the Airline. The Airline is TSC or TS.

That being said, I have no idea. And the Head Office people probably do not know any more than I do at this stage. It’s like the Boeing Max Saga. How many times has Boeing announced a date for 737 MAX resumption of operations ? Five, six dates ? One can make reliable predictions when all, or at least most of the variables are known. In this case, they are not. When will the crisis subside ? How will the public feel about travelling when it does ? Will they be able to afford it ? Will countries which have recovered suffer a second wave of COVID-19 ? Scientists aren’t even certain for now that those who were already infected develop an immunity from COVID-19 after they recover.....

I think most people with decision powers will play it by ear and keep a eye on advance sales in order to make plans, while setting tentative restart dates. They will set target dates and tentative schedules for an eventual restart of operations which might end up looking a lot like those of the Max.......while their bank accounts will continue to melt....


I also know that the cost of firing the operations back up, when it does occur, will be more costly than shutting it down....
---------- ADS -----------
 
AuxBatOn
Rank 11
Rank 11
Posts: 3216
Joined: Wed Jan 16, 2008 6:13 pm
Location: North America, sometimes

Re: Were airlines sacrificed for the Nation ?

Post by AuxBatOn »

Supply-demand. Nobody forced the airlines to continue operating. They decided on their own.
---------- ADS -----------
 
Going for the deck at corner
rudder
Rank 10
Rank 10
Posts: 2173
Joined: Wed Mar 08, 2006 12:10 pm

Re: Were airlines sacrificed for the Nation ?

Post by rudder »

AuxBatOn wrote: Wed Apr 01, 2020 10:18 am Supply-demand. Nobody forced the airlines to continue operating. They decided on their own.
Hmmm. Not so sure in all cases.

AC is maintaining an ‘economic air bridge’. I doubt that is a term created in the AC board room. Sounds more like a phrase that would be used by either the Minister of Transport or the Prime Minister.

Having said that, AC has already dialed back both frequency and gauge on some previously announced minimum service routes.

Loads are light. Perhaps the cheaper alternative would be 100% grounding. But that does not seem to be the direction that YOW wants to go..... yet.
---------- ADS -----------
 
GATRKGA
Rank 3
Rank 3
Posts: 156
Joined: Fri Aug 04, 2017 1:24 pm

Re: Were airlines sacrificed for the Nation ?

Post by GATRKGA »

rudder wrote: Wed Apr 01, 2020 6:59 am “Billions spent....”?

That is a little melodramatic.

Having said that, there would appear to be a quid pro quo with YOW over both operating rescue flights and - for AC - maintaining economic bridge routes. The cost of operating requested flights after March 13th is in the millions. However, airline overhead - for AC - is in the billions if measured over time.

Is the industry in serious trouble? Yes. Not only in the instant, but quite likely over time. No more V-shaped recovery. More likely U-shaped. And that is the best case scenario.

US carriers are already planning for a smaller footprint for operations even after the crisis is over. Why? Because the world has changed. The market has changed. Travel demand has changed. And government handouts are not going to be condition free nor are they going to go on forever.

YOW will have to offer some type of financial bridge assistance to CDN air carriers. But it will also be incumbent upon carriers to both mitigate costs and to plan for a different marketplace after the pandemic restrictions are lifted. Support for employees and air service to communities is one thing. Support for shareholders is another.

AC has thus far convinced the market that it has sufficient bridge liquidity. And I am guessing that AC is loathe to add debt even if it is low interest/zero interest courtesy of YOW. Debt is debt. And cash flows going forward (2021 and beyond) will not come close to what was planned just 90 days ago.

YOW cannot be seen to be picking winners and losers. Whatever is offered will have to be omnibus. But it won’t be everything that some carriers want.
Rudder, do you think the market for air travel will decrease after this pandemic is over with? I don't mean short term, I am asking long term.

Seems like many businesses will see this opportunity to reduce overhead costs by not having offices anymore, sponsoring work-from-home programs, and reducing the need to travel in general. Once business travel comes to a halt, what purpose does aviation really serve anymore? Just vacation flying? That won't be nearly as widespread to sustain an airline industry as business travel is. Perhaps I am wrong, but I thought the whole purpose aviation boomed in the last 12 years was because of the businesses keeping it up by constantly traveling.

Is there a possibility the aviation industry will see it's decline long term and never recover?

I am curious about your logical point of view.

Thanks.
---------- ADS -----------
 
rudder
Rank 10
Rank 10
Posts: 2173
Joined: Wed Mar 08, 2006 12:10 pm

Re: Were airlines sacrificed for the Nation ?

Post by rudder »

GATRKGA wrote: Wed Apr 01, 2020 3:03 pm
Rudder, do you think the market for air travel will decrease after this pandemic is over with? I don't mean short term, I am asking long term.

Seems like many businesses will see this opportunity to reduce overhead costs by not having offices anymore, sponsoring work-from-home programs, and reducing the need to travel in general. Once business travel comes to a halt, what purpose does aviation really serve anymore? Just vacation flying? That won't be nearly as widespread to sustain an airline industry as business travel is. Perhaps I am wrong, but I thought the whole purpose aviation boomed in the last 12 years was because of the businesses keeping it up by constantly traveling.

Is there a possibility the aviation industry will see it's decline long term and never recover?

I am curious about your logical point of view.

Thanks.
I don’t know more than anyone else. I am just watching how airlines are responding.

The US has (had?) the world’s strongest economy. It is also the single largest aviation market in the world.

Now, the 3 largest US carriers are saying internally and externally that they will be smaller on the other side of the crisis.

That is the future. How much smaller remains to be determined. No global airline will be immune to reduced demand.

Only silver lining for those that survive might be reduced supply if some carriers fail or abandon previously served markets.
---------- ADS -----------
 
GATRKGA
Rank 3
Rank 3
Posts: 156
Joined: Fri Aug 04, 2017 1:24 pm

Re: Were airlines sacrificed for the Nation ?

Post by GATRKGA »

rudder wrote: Wed Apr 01, 2020 3:14 pm
GATRKGA wrote: Wed Apr 01, 2020 3:03 pm
Rudder, do you think the market for air travel will decrease after this pandemic is over with? I don't mean short term, I am asking long term.

Seems like many businesses will see this opportunity to reduce overhead costs by not having offices anymore, sponsoring work-from-home programs, and reducing the need to travel in general. Once business travel comes to a halt, what purpose does aviation really serve anymore? Just vacation flying? That won't be nearly as widespread to sustain an airline industry as business travel is. Perhaps I am wrong, but I thought the whole purpose aviation boomed in the last 12 years was because of the businesses keeping it up by constantly traveling.

Is there a possibility the aviation industry will see it's decline long term and never recover?

I am curious about your logical point of view.

Thanks.
I don’t know more than anyone else. I am just watching how airlines are responding.

The US has (had?) the world’s strongest economy. It is also the single largest aviation market in the world.

Now, the 3 largest US carriers are saying internally and externally that they will be smaller on the other side of the crisis.

That is the future. How much smaller remains to be determined. No global airline will be immune to reduced demand.

Only silver lining for those that survive might be reduced supply if some carriers fail or abandon previously served markets.
Unlike 9/11 and Sars, pilot's may have to exercise their back up plan because of the major surplus this will leave eh? I gotta tell you, I don't think I've ever seen anything this bad, where 10k+ hour guys with lots of quality time and type ratings are out of work and aren't even getting a single call from anyone... shows you how much experience really accounts for if you don't have a seniority number. In which some cases a seniority number means nothing either right now.
---------- ADS -----------
 
Post Reply

Return to “General Airline Industry Comments”