In the U.S. airlines have continued to fly even in the face of very limited demand, because that has been a condition of government bailouts. While there are far fewer flights – for instance down 80% or more in May, though American will operate about 40% of its flights in July – the CARES Act requires airlines to continue to fly to almost all of the places they flew before the pandemic (just less frequently).
The CARES Act also requires airlines to keep employees on their payroll through the end of September, without reducing rates of pay. Airlines have saved money, keeping more of the bailout funds, by limiting the number of hours employees work (or requiring unpaid days off) and by enticing people to take exit packages, with the threat of being fired effective October 1 if they don’t.
China is actually taking a similar – although more extreme – approach with its aviation industry. Airlines in China, where not owned by the government directly, are frequently owned by government-backed investment funds.
Although air travel in China was still down almost 70% in April, Chinese airlines are “running around 90% as much domestic capacity as they did a year ago and plan to step up to 96% next week.”
Loads remain poor, however. Airlines are deliberately rebuilding capacity in advance of demand, in part to make use of otherwise idle employees, industry managers said.
Chinese airlines, as state entities, cannot furlough workers because that would admit failure of the Communist Party. And at the province level, declines in employment would reduce political prospects for local leaders.
Update: Reader Steven Z. points to this article in Chinese which offers data consistent with what I’ve written about how much travel has returned to China but suggests that so far 57% – 66% of capacity has returned, suggesting a lower starting point for any ramp up in flying.