Completely disagree and evidence to the contrary abounds. You don’t have the head of Delta saying a piece of business travel is gone forever and you don’t have Lufthansa closing their flight academy telling recruits to look at other career options because they won’t be needed for a “very long time” if that’s not their view. Two high profile examples among dozens of others. Lufthansa is even questioning IATA’s 2024 outlook which should speak volumes.
It’s more laughable to think the opposite when a mountain of evidence is ominously dead ahead. It may take a few years to prove who’s right but I’m siding with the head of Delta and Lufthansa’s opinions, among others.
The debate is more how long until 2019 levels.
In 2018, we hit 3.7 billion in the middle class:https://www.nextbigfuture.com/2018/09/w ... icher.html
Saying we won't hit 2019 levels if air travel is the same as not having a huge chunk of the global population enter the middle class or progress up the ladder.
I'm bearish, not that bearish. It will be years until pilots are needed following Boeing's chart from the CMO, so Lufthansa is being honest. Delta didn't offer a timeline, but I agree, some fraction of business traffic is lost. But growth happens.
There will be some time to recover, but never? That is saying South America, Africa, and a good part of Asia do not grow.
I will remain bearish, but not this bearish.
I think it is important to differ the regions. EU and US Business-Travel will recover slow and might never return to the level before. There were so many unnecessary trips done just because. 75% of my business travel was not necessary and is definitely going to stay digital. And the companies we consult do the same. Company intern we cut travel budget by 90%. Top Execs will still meet but we in the middle management have to meet virtual. And I prefer it. So much time lost to get to London or Berlin. Now I can work untill 11am then have a meeting and then work from 2pm again. Before this was a whole day lost as the only productive time was actually 50min on the aircraft and even that is not practical especially when half the information is confidential and should not be seen by the guy sitting literally on top of me in Y.
On the other side, Asia, especially SE Asia and India will still see a massive growth. China too. Africa will grow, faster with stable governments. South America I personally can not make an assessment as we do not work in that region (yet).
I hope our competitors avoid business travel. We've quantified the productivity hit of the virtual workforce and reduction in business travel. We go off topic, but most business saw the top workers more productive, overall less productive:https://m.washingtontimes.com/news/2020 ... er-but-ca/
So while growth will favor many of the regions you noted, I can quantify the productivity hit for my employer in reduced travel:
1. Our regulators must fly out for long periods of time. This disrupts their productivity as they are more worried about kids and stuff.
2. Sales are tougher without travel. We will use travel as a competitive advantage, once the Aerospace market is worth the travel.
3. It really helps bringing back retired Engineering specialists. We notice the mentoring isn't even 25% efficient with remote support. We have learned flying these people in for a two week period is worth every penny. We've started bringing them in. Even paying for multi day drives. Now we've learned they can support remotely a good chunk of the time, but not the current schedule.
I agree the short trips aren't worth it. We will have a new rythem for consultants. Many are not happy we've already implimented. Most I won't share as two of our competitors are being stupid; Napoleon advised to never interupt your opponent when they are making a mistake... so I shall not.
So I think part of Boeing's CMO snap back is accurate. Yet I still think the current broadcast production schedules are going to use up too much cash.
In effect, we are debating the wise level to reduce near term production levels. Variables that must be considered:.
1. Cash burn
2 Critical skill retention
3 Debt covenants
4. Vendor survival
a. Is bankruptcy the lowest cost option for certain vendors?
b. Sub-vendors, if one critical item, say a tape or an adhesive is lost, that can be brutal to industry economics.
5. The predicted production ramp during/after the recovery.
a. Return 2019 production rates are already a minimum 3 years into the future if demand somehow returned.
b. Aerospace needs to keep investing to reduce production costs (3D printing and other automation, including at vendors).
Winter is coming.