In the midst of a world wide pandemic, and with this tragic event taking place the economies of many countries are struggling to stay afloat. Of all the industries impacted, the airlines may be hit the hardest.
Just as in 2008/9 when the world governments bailed out the banks, and as a result, took stock in these companies, it seems they are looking or have done the same with the airlines. Alitalia airlines is now nationalized once again in Italy, Lufthansa is on the verge of becoming nationalized as Germany looks to keep them in the air. Australia and a few other countries are also looking to keep their air travel open post pandemic. So what are the odds that the U.S. does the same?
Fresh off the heals of delta saying they are 7000 plus pilots over staffed, the 737 Max incidents, American, United, Southwest, Etc., how long can they hold on? Would the government really let them go under? I don’t believe so. They will most likely, and already have, offered them bailout money with strings attached. Such stipulations as not laying employees off and keeping certain routes open among other things. In a way this is a form of nationalization. The major airlines are to big to fail, but also a necessary infrastructure in the country. If one or two go under, typically this would be good for the rest of the industry, as the better run companies will survive. But this could be bad for the consumer, as less options equal higher prices. For such an essential sector to the economy, the government could not let this happen. Congress has already approved money for the airlines and industry, and they want to approve more. But there is a catch, they are asking for more control and oversight for each company that accepts the money, one of the reasons Boeing did not accept. So at what point do airlines start accepting more and conceding more control to the government?
Could this be a good thing? My personal opinion is no. Historically government run or owned businesses and infrastructure is a disaster of itself. They will become bloated, lazy, and incompetent. Not to mention it will drive other airlines in to the ground as well. It is a slippery slope that we don’t want to start down. Just look at Amtrak as one example of how profits never returned after the government started propping them up. The same could happen to airlines. There profits will never return to what they were if government steps in.
Some articles on this subject
I welcome the discussion and insight on this possibility and the future of the industry!