The airline bailout passed last week requires carriers taking the money not to furlough employees through September, and to maintain air service to all of the cities they serve. However that’s going to mean ghost flights, that don’t make cost sense (or environmental sense).
So they’ve already come up with a way around it that will be broached with the Trump administration. It basically calls for waiving anti-trust rules so that airlines could codeshare with each other, and have those codeshares count as retaining service. According to CNBC,
How would service consolidation work? Take the route from New York City to St. Louis, Missouri. Right now, American, Delta and Southwest all fly the route from LaGuardia Airport to St. Louis Lambert International Airport. If the route were temporarily consolidated, all airlines would continue selling tickets on the route, but the carriers would agree to put all the passengers on one plane.
…If the Transportation Deparment agrees to temporarily consolidate service to dozens of cities under one airline, it would allow airlines to further cut costs without totally shutting the industry.
It’s a creative idea, and one that only works I think provided load factors remain exceptionally low even on the consolidated service so that passengers can still social distance in the cabins. I can imagine though that some cities might get down to just a single flight a day on one carrier under this sort of arrangement.
It would basically mean the end of the frequent flyer programs. Imagine Delta customers suddenly flying United. When things return to normal, could Delta really risk those customers never coming back? The same for American. Why would American want to expose its customers to better airlines? Not to mention the logistics of this even possible. Even something as simple as getting a bag from one airline to another is a challenge with airlines in partner relationships. Could you imagine something say in Chicago where suddenly hit somebody has to go from the main terminal to a random terminal that Delta is using? And they only have 25 minutes to do it with a checked bag?
I think what happens is we see further consolidations. Maybe Alaska and JetBlue? Or Hawaiian and Alaska? Spirit, Sun Country and Frontier.
Capitalism was nice while it lasted.
It doesn’t make a difference. At the end of the day, the airlines won’t be able to operate and pay their employees through September. The airlines took the money now because they had no financial choice. But they won’t be able to live up to that commitment. So they will do one of two things, either not fulfill their commitment and lay-off employees or liquidate.
@ Gary — This is insane.
That is a stupid idea that flies in the face of the bailout. That means that they will still lay off people while keeping the Government bailout. And YOU think it’s ‘creative’?
Makes.a whole lot of sense to me, given the times.
This report is not accurate. Both domestic and international flights have been suspended by all the US carriers, yet codesharing plays no roll in that action.
The traffic goes to whichever carrier decides to operate in the city pair. No approvals required at the federal level.
The US DOT has no role in the transaction. These are decisions by the individual carriers.
Why are people insistent on calling this a bailout? The government all but forced the airlines customer base to disappear overnight. These companies were profitable until last month. You can complain about stock buy backs all you want, but do you really expect any company to keep enough cash on hand to fully sustain operations at normal levels for months on end with almost no revenue?
Airlines are easy to hate on, I get it. But this situation is no fault of their own.
Brian, airlines were not the only victim. When everyone gets a bailout, no one gets a bailout…
Out of the box thinking in a time of crisis makes good business, economic and environmental scene. Glad to see the airlines working together. This will ensure their survival long term.
@Brian
It’s not my fault that the airlines are too big to fail. But my taxes are going to them regardless.
If the airlines want to lobby for (and accept) taxpayer dollars from humans that they normally try to treat as cattle, then YES THERE WILL BE STRINGS.
Don’t want strings? Simple: Don’t accept the cash.
I wonder how the no-seat-assignments policy of WN will work with the other two airlines.
Consolidating flights isn’t much good if fuel costs are low and you can’t furlough employees
Is it me, or do previous posters, not understand plans? For cities that don’t have much traffic to begin with, one airline will operate the flight. For example to EWR to LAX. Only United will operate the flights, Delta and AA will sell seats on the UA flights. EWR to ORD, maybe goes to AA, so UA and Delta sell those seats but the flight is only operated by AA. EWR to SLC, only Delta operates it and and AA and UA sell seats on the Delta flights. It makes a lot of sense. There are flights operating today with a dozen passengers, there is no need for extra flights by every carrier. You think things are bad now? Wait another month, this virus will practically shut down everything! Having at least some way for necessity travel is the plan.