What happens if your business model disappears
Historic airline economic model combined large and growing overall demand, the ability to optimize total revenue by managing the mix of high and low fare passengers (including the ability to shift low fare demand to times when there was little high fare demand and the ability to achieve 80%+ load factors year round to cover historically high fixed & corporate costs) and the ability to carefully tailor costs and capacity to readily predictable demand.
This no longer works and is unlikely to work through to 2022 especially as stakeholders are misaligned. But it appears no one appreciates this.
Owners should be completely wiped out especially as they have deliberately pilfered the coffers (in dividends and share buybacks) but are now intent on demanding subsidies from other stakeholders to preserve their Ownership.
Government subsidies are tied to maintaining employment and services despite a complete disappearance of demand.
Passengers are unable or unwilling to fly for maybe two years and it’s unlikely high margin passengers will return in sufficient volume to return the industry to break even. Even under relaxed social distancing seat capacity is reduced by one third and prices will need to increase by more than 50% to BREAKEVEN.
Heres the prior to Covid breakeven
Thus a major review of costs and prices will need to be done for the industry to even consider survivability.
This will not end well, please watch Hubert Horan outline the challenge facing the airlines when their business model disappears.