Your Questions and
Someone Else's Answers
THURSDAY, SEPTEMBER 24, 2020 -- I love getting questions from members. But sometimes there are better sources for answers than your hard-working, doesn't-know-it-all columnist.

So let's consider some of your most frequently asked questions and get the answers from the putative experts.

Let's turn to the TSA for the answer for this one. As you may know, the TSA tracks the number of people passing through airport checkpoints nationwide each day. It has been a remarkably accurate indicator of actual flying volume.

If you consider the pandemic-era "high" of 968,673 travelers on Friday, September 4, (about 44 percent of 2019 volume) as a point from which to slow down, it's been all downhill this month. Only one other day (Labor Day, September 7) reached 900,000 people at airport checkpoints. Daily volume has swung from about 26 to 33 percent. And no one thinks it'll improve anytime soon.

Let's just say that the U.S. carriers have been examining their future bookings and they apparently make the dreary TSA numbers look like Ren and Stimpy. (You know, "happy, happy, joy, joy.")

"There's no reason to believe that things are going to improve anytime soon," says Gary Kelly, the chief executive of Southwest Airlines. As he explained to CNBC this week, "Believe it or not, that's where the industry is, 1970s levels of traffic."

That is telling commentary since Southwest had been the most bullish of the U.S. airlines about the immediate future. At one point this spring, Southwest even planned to restore all of its 2019 schedule by the end of the year.

A sense of real desperation has been emanating from United Airlines, which has pulled down the most flying and been the most conservative about a revival. Even that bearish approach has proven too rosy, according to United chief executive Scott Kirby.

"It's an apocalyptic environment for airlines and aviation right now," he explained at a conference this week. "Chasing market share just seems like a way to burn cash."

Um, yeah, about that ... The talking-head experts and the analysts have predicted 2024 as the year that the airlines would fully recover. If it sounds like that date was basically pulled from a hat, I swear it was not. It's based on an analysis and prediction made by IATA, the global airline industry trade group.

But that prediction could be wildly optimistic. Please consider this data point from Transportation Department rule-making a while back: In 2011, a decade after 9/11, mainline U.S. carriers were flying 16 percent less capacity than they were operating in the summer of 2001. If it took more than a decade to recover from 9/11, consider how much worse the pandemic has been economically.

Airlines make the most noise--they are still lobbying loudly for another bailout before the CARES Act aid runs out on September 30--so they tend to dominate the discussion. Still, there's very little evidence that the rest of travel is performing better than the airlines.

The hotel industry is one example. After U.S. hotels fell to about 22 percent occupancy nationwide in early spring, guestrooms began to slowly fill again. By mid-August, the nationwide occupancy rate had edged back to 50 percent, the industry's putative breakeven point. But it's been unhappy news the last month. According to STR, the industry's statistician, occupancy rates for the week ending September 19 were 48.6 percent, down about 32 percent from last year. Canada is doing much worse. Its national occupancy rate was just 37 percent.

These are all top-line numbers, though. As an investment, hotels are doing even more poorly. As many as 8,000 hotels could close, according to the AHLA, the industry trade group. Perhaps as many will default on their many mortgages.

"We know there is a tsunami outside. We know it's going to hit the beach. We just don't know when," Donald Wise, a commercial real estate expert told the Los Angeles Times last week.

There are few flights and fewer passengers at airport. No one is shopping or dining at airports. Car rentals are virtually nonexistent and Uber/Lyft rides to the airport are plummeting. You do the math.

But if you don't want to do the calculations, consider what the Airports Council International says. The hit will be $97 billion in 2020, not surprising when you understand that airports often take upwards of 20 percent of retail and restaurant sales. The landing fees that airlines pay have naturally plunged and all the other rents and fees that airports collect--from club lounges, from car rental firms and ground operators and others--are also mostly gone. Given that reality, $97 billion doesn't seem like too much.

A new study published in a CDC journal makes for very chilling reading. "In-flight transmission that probably originated from one symptomatic passenger caused a large cluster of cases," the study of a flight from London to Hanoi concluded.