Greetings from Thailand!
2020 continues to clip by at quite an astonishing pace, though perhaps this feeling is is driven by the degree of 'sameness' that one gets from waking up in the same place every day for such an extended period of time.
It will probably not surprise you that my team and I scour the news and analysis daily as we try and spot the signs that indicate when we can safely resume travelling again. This past week I did a bit of a deep dive into the situation facing the airlines, as a followup to the piece we did some months ago on whether or not the airlines should be bailed out.
I suspect you will be not surprised for the second time in this newsletter to hear that the situation the airlines are facing is dire, to say the least, and some analysts are predicting dramatic consolidation and even full-on collapse of the industry.
I certainly do not consider myself an expert on airlines (perhaps on airline food...I've definitely sampled enough of it), but as a businessman looking at the fundamentals of the industry, the picture is grim. There was a vein of optimism in the spring that a V-shaped recovery would take place in the fall, but there are no signs of that to found.
Instead, what we have are airlines looking at revenues that are down 85% or more, more layoffs coming, and still no light on the horizon. In huge businesses like airlines, such a dramatic loss in revenue cannot be easily offset by a similar reduction in costs, which gets right to the heart of the problem - bankruptcy is next in that sequence of events.
Now all that said, I prefer not to indulge the negative emotions that arise from this sort of analysis - the situation is unprecedented (side note: is that THE word of 2020?) and the need for air travel at some basic level will absolutely remain. I've shared my thoughts on what this could look like for travellers in the video below.
In much more positive news, in the week ahead we have another edition of our Future Travel Forum series, this time taking a look at what's possible in Southeast Asia when things get going again. It's a part of the world most Canadians are not too familiar with, but one that I can't say enough good things about.
Join us via the link in your newsletter and let's chat about this remarkable region!
Things mentioned in the video: Should we bail out the airlines?