The future of Airlines and their alliances

[scaredeycat]

Covid-19 has turned the world upside down and Airlines are looking increasingly shaky. What is the likelihood that QF will survive? Will our points and status be worthless in a few weeks? Airline alliances? Is this the end of OW/*A/ST? Will governments be forced to nationalise them?

Discuss...

 

[Must...Fly!]

Could the government in Australia allow or legislate some special protection for critical transport companies? I.E. to protect liquidity, suspend lease payments, etc.

There needs to be an industry wide response to what is occurring. QF & VA need to put their swords away, because with what is happening and what will come, not even $3bn in cash for QF may be enough.

 

[moa999]

I think QF is better positioned than most.
But all airlines (and indeed many businesses ) are facing massive challenges.

If it continues possibly some form of government waivers on contract terms - eg. Cutting hours below EBA etc

Don't think it's the end of alliances, a few airlines will fail, but as we've seen many times, they will quickly be replaced

 

[esseeeayeenn]

Some news tonight.

First, Austrian Airlines is grounding its fleet and suspending operations.
I have heard Swissair has made the same decision.
One short haul and one long haul aircraft will be maintained in operational readiness by Swissair for evacuation or other emergency flights.

Second, the Italian government is taking full control of Alitalia.

Third, Virgin Atlantic is asking the Johnson government to bail out the airline industry.

 

[Mattg]

Oneworld, Star Alliance and SkyTeam have put out a joint press release asking for assistance.

Oneworld, SkyTeam & Star Alliance Jointly Ask For Support

The rival alliances of Oneworld, SkyTeam, and Star Alliance have come together, asking for support from the governments and other stakeholders. The release doesn't directly ask for government support…

loyaltylobby.com

I do think that it will cause massive problems for most airlines if international flights are more or less grounded indefinitely. These airlines will be receiving virtually no cash flow, while still having huge fixed costs that need to be paid. Some of the costs (such as wages, if staff take unpaid leave) can be frozen, but not all. Some analysts are predicting that many airlines will last not much longer than May without cash flow.

For this reason, I would be using frequent flyer points if I needed to travel in the coming weeks. Award availability has never been better and the points may or may not be worth anything in six months. We just don't know.

At the same time, I don't think many governments will sit back and watch as every airline in the world goes out of business. Some airlines won't make it, but I think eventually something will have to give.

 

[scaredeycat]

I have a sneaking suspicion that in 6 month's time I may regret not buying a few toasters...

 

[flyingfan]

Oneworld, Star Alliance and SkyTeam have put out a joint press release asking for assistance.

Oneworld, SkyTeam & Star Alliance Jointly Ask For Support

The rival alliances of Oneworld, SkyTeam, and Star Alliance have come together, asking for support from the governments and other stakeholders. The release doesn't directly ask for government support…

loyaltylobby.com

For this reason, I would be using frequent flyer points if I needed to travel in the coming weeks. Award availability has never been better and the points may or may not be worth anything in six months. We just don't know.

I'm worried about my points and being able to use them in the future, it'd be great if I could blow them on a big trip now but I'm not keen on dealing with travel restrictions etc. I've wound up with a fairly high QF balance and tried unsuccessfully to get international J seats released as P1 a few weeks ago - even if I'd gotten it then I'd be staring down the barrel of cancelling now. trippin_the_rift's words are ringing in my ears - i should be burning points and burning them annually!

Hope it's not too late but who knows now.

 

[Deleted member]

I think there will be a short (12-18 months....maybe) term effect on alliances and the world of points and status credits we inhabit, but in the longer term I can see the airlines wanting to be going about business as usual, in just the same way we do.

 

[Scarlett]

You would think it would be in the interest of the leasing companies to allow extended payment schedules or otherwise work with the airlines. If multiple airlines go bankrupt the leasing companies lose out. They lose in the short term by not getting paid, but also in the med-long term by not having their customer base.

I expect negotiations are already underway.

 

[Melburnian1]

This cash crisis may lead to airlines deferring orders for new aircraft if an order has been placed and that's an option, or extending the life of fleets where they can. Domestic Oz fleets may be a case in point.

 

[TheRealTMA]

Presumably, parked aircraft have extended lifespan because not subject to flight/pressurisation stress?

Anyone know definatively?

 

[Melburnian1]

Presumably, parked aircraft have extended lifespan because not subject to flight/pressurisation stress?..

Aren't the number of 'cycles' - take off and landings - the defining factor?

So if they're stabled, by definition they have a longer lifespan provided they're adequately maintained.

At one airfield QF is deploying 30 engineers to look after some of its parked planes. This ensures the aircraft can be in the air relatively quickly when this crisis is finished.

 

[technoir]

Aren't the number of 'cycles' - take off and landings - the defining factor?

The pressurisation - depressurisation cycle is the determining factor in airframe lifespan, not take offs and landings per se. Of course, they usually match up 1:1, so take offs - landings is a proxy measure.

https://www.atsb.gov.au/media/29959/b20050205.pdf

 

[doctau]

I think that the ratio of credits versus refunds will make quite a bit of difference, and for QF and VA how soon domestic restrictions are relaxed. More credits means the airlines get to keep the money for now, which obviously helps since it reduced the negative cashflow due to refunds. With normal rules, very little is refundable domestically and I don't think they've waived that due to wanting to keep the money.

When they come out the other side and people start using their credits it's going to be interesting. The "equal or higher fare" condition and having to pay fare difference means that when people go to redeem it, they'll almost certainly need to give the airline some more money - not a lot but some. My guess is that airlines will initially be releasing cheap fares to get people travelling again but then raise prices quite a bit as they try to extract money from people using their airline credits.

 

[jb747]

Seats will initially be rare. Rare doesn’t equate to cheap.

 

[moa999]

Seats will initially be rare. Rare doesn’t equate to cheap.

And I think going forward there is going to be a higher 'risk' factor priced in of governments shutting down airports/routes etc due to future virus fears.
This will likely raise the cost of flights and travel insurance.

On the counter - there is a big opportunity for the airlines to lock in some very cheap fuel for the coming years

 

[Foreigner]

Owners of airport infrastructure will have interesting times now that airline operations have slowed down. As landlords they’ll also have to deal with the numerous tenants experiencing business downturn

 

[hydrabyss]

Owners of airport infrastructure will have interesting times now that airline operations have slowed down. As landlords they’ll also have to deal with the numerous tenants experiencing business downturn

There's also a few car hire companies with many cars that I guess will be hard to rent for the foreseeable future as well.

 

[Himeno]

Aren't the number of 'cycles' - take off and landings - the defining factor?

So if they're stabled, by definition they have a longer lifespan provided they're adequately maintained.

At one airfield QF is deploying 30 engineers to look after some of its parked planes. This ensures the aircraft can be in the air relatively quickly when this crisis is finished.

How quickly airlines can get going again depends on how long the shutdowns last for (re crew licensing/training requirements) and what type of storage aircraft have been in.

Storage types and in storage requirement details