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Evaporation of travel sector threatens airlines’ very survival

One of the business sectors hit hardest by the novel coronavirus pandemic has been air travel. Passenger volume is down a stunning 96 percent in the U.S., while airline losses have topped $300 billion worldwide. Despite canceled flights, travelers are not easily able to get their money back. Meanwhile, pilots and other staff worry for their safety. Economics correspondent Paul Solman reports.

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  • Judy Woodruff:

    One of the business sectors hardest hit by this pandemic has been air travel. Passenger volume is down a stunning 96 percent in the U.S., while airline losses have topped $300 billion worldwide.

    Our economics correspondent, Paul Solman, has our story on the consequences.

    It's part of our regular series, Making Sense.

  • Paul Solman:

    Clear skies, barren airports, sidelined jets as far as the eye can see.

  • Brian Pearce:

    I think it's going to be probably 2021 before we see a return to normalcy.

  • Paul Solman:

    Brian Pearce is chief economist of the industry's worldwide trade group.

  • Brian Pearce:

    The airline industry, not just in the U.S., but worldwide, is in a complete crisis. Markets have evaporated. Airlines need cash at the moment just to survive.

  • Paul Solman:

    And they will be getting some, a $50 billion federal bailout, the first $25 billion in grants and loans to pay employees through September 30.

    But more than 100,000 in the industry work for subcontractors, as Herbert Stewart in Philadelphia does.

  • Herbert Stewart:

    We had a massive layoff at my company here. They laid off about 600 to 1,000 employees. I will also be, as well, probably laid off. So this is going to hit me dramatically.

  • Joseph Travers:

    We're the front-line workers, and we were the first ones to go, and I think we will be the last ones to go back.

  • Paul Solman:

    Laid-off Boston skycap Joseph Travers, father of four.

  • Joseph Travers:

    My concern is, once this is all over, there's going to be millions of people out of work. So that means we're all going to be looking for — to get back to work. And there's only going to be so many jobs, because companies are losing money. They're not going to want to bring us back.

    And it's scary. It's a scary situation for any family.

  • Paul Solman:

    Also left out of the federal response to the airline crisis, the grounded public.

  • Brooke Warner:

    It's frustrating to have to be going to your gate, and your gate says canceled, and next flight is six hours away, and then you wait that six hours. Then that one's canceled.

  • Paul Solman:

    And if you're canceled?

  • Betty Colonomos:

    They're really avoiding any commitment to give a refund to anybody.

  • Paul Solman:

    Sign language interpreter Betty Colonomos had paid thousands for flights to teach five upcoming seminars. She's refunding her customers, but she can't get her money back, not even from travel insurance.

  • Betty Colonomos:

    I feel bad for the people like myself who are not getting a paycheck who need money to live. I mean, if they bail the airlines out, then they definitely should be refunding money to people.

  • Paul Solman:

    But business is dead, says economist Brian Pearce.

  • Brian Pearce:

    Demands for refunds amounts to something like $35 billion in the second quarter. It's the biggest drain on airline liquidity. Airlines are going to go out of business.

  • Paul Solman:

    Generally speaking, are you suggesting that consumers ought to show more forbearance with regard to refunds?

  • Brian Pearce:

    At the moment, the industry is just burning up so much cash, it's not going to be around.

  • Betty Colonomos:

    I don't want them to go out of business. I don't want to go out of business either. I mean, I think that's a ridiculous argument, because they have not been operating on a just break-even level. Let's face it.

  • Tim Wu:

    They have been running their businesses completely recklessly. And why is it that we're holding the bill here?

  • Paul Solman:

    The federal airline rescue is fundamentally flawed, says anti-trust expert Tim Wu.

  • Tim Wu:

    They have been running a game where they squeeze people into tiny seats, do everything they can to extract every last dollar out of everybody, to make the most profit they could, and then thrown that all into stock buybacks.

    And to realize, after all those billions being spent, they didn't keep anything for a predictable event like this.

  • Paul Solman:

    Well, they didn't know there was going to be a pandemic.

  • Tim Wu:

    Actually, they warned about it in their stock — in some of their documents, warned about the possibility of a pandemic ruining their business.

  • Paul Solman:

    But how could they have prepared for a near standstill, asks airline blogger Brett Snyder?

  • Brett Snyder:

    These were relatively healthy companies that could withstand significant downturns, just not a complete destruction of all demand. I think that's hard to say that a company should hold on to multibillions and billions of dollars of cash just in case this type of thing were to happen.

  • Paul Solman:

    Meanwhile, pilots helming the few flights still operating have their own beef with the federal government.

  • Joe Depete:

    We have over 200 reports of test positives. And we have three deaths.

  • Paul Solman:

    And four flight attendants have died; 250 have tested positive.

    Ex-Marine Joe DePete, a pilot for 33 years, now head of the Airline Pilots Association, asked for mandatory regulations from the Federal Aviation Administration last month.

  • Joe Depete:

    Cleaning and disinfecting of our airplanes, right, to make these ready for flight.

    The second was the notification to other crew members who may have exposed or someone who tested positive. The other was to use cleaning solutions and products that were recommended by the CDC to be effective.

  • Paul Solman:

    DePete says he got no immediate response at a time when, for his pilots, every day counts.

  • Joe Depete:

    To expose them to additional risks, unnecessary risks, preventable risks, to me, is unconscionable.

  • Paul Solman:

    The FAA gave us this statement in response: "The FAA is taking seriously reports of airline failures to follow this crucial health guidance. Any allegation to the contrary is inflammatory and inaccurate."

    Turbulent times, thousands of flights canceled daily, future bookings down almost 100 percent, friendlier skies perhaps a long way off.

    For the "PBS NewsHour," Paul Solman.

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