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lightsaber
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Pt2: Southwest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 1:06 pm

Flying Elvii started a fair topic that went non-aviation. Please limit this thread to discussion on aviation .

No politics

Just how the virus is effecting airlines.

Original OP post by FlyingElvii:
"
Very insightful and in-depth interview from the Dallas Morning News with Gary Kelly. Considering that Southwest is likely the best positioned airline to survive this (other than Allegiant, which is a different customer base and strategy), it seems very dire.
This was posted on the SWAPA board almost as soon as it came out, I am really surprised it hasn’t been talked about here.

https://www.dallasnews.com/business/air ... -continue/

Key points:
28% of Southwest employees took early retirement or voluntary leave, but they are still heavily over staffed for current flying.

Only around 100 critical staff, out of 5,000 employees, currently working in the Palace every day.

Adding cities and routes is a relatively low cost incremental opportunity, since personnel and aircraft are readily available. As long as they can cover the costs of operating a trip, that trip Is contributing cash to the Company.

Does not see traffic improving anytime soon. Expected to be down around 30% at this point, it is down twice that.

“ I wouldn’t be surprised to see business travel languish for a decade before it gets back to 2019 levels.“.

At some future point, distancing on airplanes will have end. They are doing the “Right Thing” for now though, Customer Satisfaction levels are at record high.

Very optimistic about Southwest vs. Competition. They have to match WN’s fares and policies now, but cannot match WN’s lower costs structure.


On SWAPA, there is lots of complaint about some pilots booking 150-170 hours, (Obviously Red Pay) while others are sitting at home on less than minimum pay.
(Note: If they would look at the Open Time emails from scheduling more often, they could be making that, too!)

While not completely bleak, it is certainly not a rosy picture he is painting for the future of Southwest, even less so for the others."
Winter is coming.
 
LAXdude1023
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 1:13 pm

Ill throw out the same message I did on the first thread: nobody knows how people are going to react when vaccines and treatments become available.

This idea that people are forever going to seclude and corporate travel is dead is extremely premature. Maybe people will still live in fear after a vaccine arrives. But there is a bigger chance (IMO) that once a vaccine arrives we will start the slow return to normal and more people will start flying again in larger numbers.

We dont know. The doom and gloomy as well as the overly optimistic are commenting on things we cant possible know because we dont know how people will react. This also includes timeline. Projecting the state of the industry anytime past spring 2021 is premature as well.
FOR THE LOVE OF GOD BRING BACK THE PAYWALL!!!!
 
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 1:21 pm

I agree projecting the State of the industry past Spring of 2021 isn't possible. What is possible is that I agree the industry cannot continue on the current status quo. Fixed costs, employment, and for airlines other than Southwest, the debt.

So sticking to aviation, how do we fix the problem?
Winter is coming.
 
Cubsrule
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 1:23 pm

lightsaber wrote:
I agree projecting the State of the industry past Spring of 2021 isn't possible. What is possible is that I agree the industry cannot continue on the current status quo. Fixed costs, employment, and for airlines other than Southwest, the debt.

So sticking to aviation, how do we fix the problem?


Is there any big airline that can't slog through (albeit with some financial pain) for a year or 18 months? It seems like we'll have a much better feel for things once a vaccine is in circulation and we see how effective it is and how it affects passenger behavior.

I also think seeing how the first "COVID flu season" in the northern hemisphere goes will be informative.
I can't decide whether I miss the tulip or the bowling shoe more
 
Miamiairport
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 1:25 pm

What we don't know is how virtual will impact future travel. I'm already hearing from consultant colleagues that clients are "pressuring" their firms to do more with video. Most firms have a travel plus margin built in or charge for consultant travel time so travel is part of their income model. However, if clients begin to push back on near 100%to reduce costs onsite consulting firms will need to adjust. And I heard and understand the "better experience" argument but that's going to fly in the face of more cost effective engagements.

Also, how about conferences and industry events. How many will go to video? When will large groups be allowed again. The vaccine, if in fact we get one, may not be the magic bullet that some think it is.
 
LAXdude1023
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 1:36 pm

Miamiairport wrote:
What we don't know is how virtual will impact future travel. I'm already hearing from consultant colleagues that clients are "pressuring" their firms to do more with video. Most firms have a travel plus margin built in or charge for consultant travel time so travel is part of their income model. However, if clients begin to push back on near 100%to reduce costs onsite consulting firms will need to adjust. And I heard and understand the "better experience" argument but that's going to fly in the face of more cost effective engagements.

Also, how about conferences and industry events. How many will go to video? When will large groups be allowed again. The vaccine, if in fact we get one, may not be the magic bullet that some think it is.


Again though, were speculating on things we cant possible know. Were in uncharted territory. How will people and companies who travel react to all of this? A vaccine may be a magic bullet or it might not be. We cant begin to speculate. We want answers. We want to know, but we cant.
FOR THE LOVE OF GOD BRING BACK THE PAYWALL!!!!
 
Socrates17
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 1:38 pm

The link no longer works. I found a working link, but it's behind a paywall.
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 1:39 pm

Cubsrule wrote:
lightsaber wrote:
I agree projecting the State of the industry past Spring of 2021 isn't possible. What is possible is that I agree the industry cannot continue on the current status quo. Fixed costs, employment, and for airlines other than Southwest, the debt.

So sticking to aviation, how do we fix the problem?


Is there any big airline that can't slog through (albeit with some financial pain) for a year or 18 months? It seems like we'll have a much better feel for things once a vaccine is in circulation and we see how effective it is and how it affects passenger behavior.

I also think seeing how the first "COVID flu season" in the northern hemisphere goes will be informative.


All of the US airlines can slog it out at this point, UA at the end of this month will have $18B in liquidity. AS/G4/WN/SY/e.t.c are "fine" relatively speaking.

It's less of a discussion now of if US airlines will survive, but what size they will be coming out of this. For example, we already know DL/AA will be at least marginally smaller for an extended period because of aircraft retirements, plus crew retirements.

Mergers during this period make zero sense for most airlines, as they will now have to absorb all this added debt the acquired airline took on.
Status for 2019/2020: AAdvantage Platinum, Delta Gold, Southwest A-List
 
kalvado
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 1:45 pm

Those who really need to travel will keep travelling. My friend is a service engineer for food industry, and he flew during stricktest lockdowns.
Those who have options - will consider those. Either private, virtual, or just passing on a trip due to budget constrains. How much did economy sag, and how much money was lost because of that? How would that affect spending?
Overcapacity - both at operations level and at equipment (airframe) fabrication level are a true factor. Capacity reduction must occur. It will be a pain to bring back - especially for OEMs. At the airline level, optimal scenario would be reducing the number of players - via Ch.7, there is nothing of short term value in airlines right now - and restart with new players once things pick up.
I wonder if flying empty planes are not bringing profit right now, if any other way of attracting pax. 34" legroom for all?
 
CobaltScar
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 1:46 pm

So, since previous government aid required them to keep some flying routes open they'd of rather stopped. Also since airtravel is consider essential and a matter of national security. Why don't we stop the charade and go back to the days of regulation?

How private can these companies be if they require bailouts and won't be allowed to go away?

Bring back the golden age of travel we knew and loved during regulation.
 
IndianicWorld
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 1:46 pm

Miamiairport wrote:
What we don't know is how virtual will impact future travel. I'm already hearing from consultant colleagues that clients are "pressuring" their firms to do more with video. Most firms have a travel plus margin built in or charge for consultant travel time so travel is part of their income model. However, if clients begin to push back on near 100%to reduce costs onsite consulting firms will need to adjust. And I heard and understand the "better experience" argument but that's going to fly in the face of more cost effective engagements.

Also, how about conferences and industry events. How many will go to video? When will large groups be allowed again. The vaccine, if in fact we get one, may not be the magic bullet that some think it is.


Those are all the multi-billion dollar questions that none of us can predict.

As part of any change process, this will definitely implement some significant structural change to the way we go about our lives, but to what point is too hard to pinpoint just yet.

What we do know is businesses have invested heavily in digital solutions to facilitate working from home, video conferencing and data management systems to reduce the need for tasks to be completed via traditional processes. in alignment to that Investment, the real estate savings have also been an eye opener for businesses to consider for the Post-COVID world.

We will wait and see, but those calling for opening up of the world while cases are rising to try and boost business are just delaying the chances of improved confidence anyway.

Nothing will improve by wishing it away, and the airlines will be hurting until some semblance of sustained normality can be achieved.
 
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 2:13 pm

lightsaber wrote:
I agree projecting the State of the industry past Spring of 2021 isn't possible. What is possible is that I agree the industry cannot continue on the current status quo. Fixed costs, employment, and for airlines other than Southwest, the debt.

So sticking to aviation, how do we fix the problem?

Unfortunately, that also requires predicting the future of every other industry. With 10+ million people still out of jobs they had six to eight months ago, we have a long way to go before the leisure market is back to any significant degree.
 
VenturiEffect
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 2:17 pm

In the coming years I see strong consumer preference towards nonstops due to less time in a/c and airport. That is where WN will shine vs the other majors. It is more difficult for them to castle up and defend against the ULCC’s, however. NK and I expect soon G4 hacked network/schedule pretty hard for the winter. Chasing the ULCC’s to the bottom in pricing will end this holiday season as price stimulation can only be marginally effecting revenue performance. Vasu’s “new customers” quote, while probably true, is likely only spinning for the stock price, rather than a real strategy by the majors. Willingness to pay is higher among the “must go” VFR and “hell-bent on going” leisure crowds than it is for people on the fence about COVID.
 
MIflyer12
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 2:30 pm

lightsaber wrote:
28% of Southwest employees took early retirement or voluntary leave, but they are still heavily over staffed for current flying.


I'll blame Kelly, not you, Lightsaber, but that isn't a helpful or descriptive was to describe reductions in employment. A permanent departure of a senior employee means a (relatively high wage employee - because one needed some years of service to be eligible) is off the payroll and replacement employees (when needed) will start at bottom of scale. Voluntary leave may just mean gone for a few months (minimum six for WN, IIRC) and still collecting benefits.

CEOs are smart enough to know the difference so I'll judge their intent is to obfuscate.
 
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 2:37 pm

Waterbomber2 wrote:
Every government thought that they were going to be able to sweep it under the carpet and pretend that everything is fine, to keep the Dow Jones as high as possible.
Every airline, including SWA, thought that it would be smart to keep operating as much and as long as possible.
They were massively wrong.

Because of this, in the US, almost 200.000 people lost their lives.
People see 200.000, and think "oh, that's a lot".
Are you kidding me? Count to 200.000 as fast as you can and when you're done tell me if it's "a lot".
This is taking the proportions of a genocide of the elderly, a geronticide.

What's shocking 6 months into this crisis?
They are still saying the same things, they and people like you have learned nothing.

We have the flu vaccine since about 40 years ago and yet the flu is still very much a permanent pandemic.
Scientists who are trying to convince us that a vaccine will resolve this, the same guys who were trying to convince us that we don't need masks, are either living their own illusion or are in the pockets of the pharmaceuticals.
We need to stop the destruction of our economies right now, today, by enforcing severe lockdowns. Not to "flatten the curve" but kill the curve altogether.
Everybody, every country.

Companies are going to bleed, whether you keep the economy open or lock it down.
The short pain answer is to lock everything down tightly for a few months until you have 0 new reported cases for 14-21 days, and then reopen everything with masks, social distancing, regular sweep-testing during quarterly health screenings at schools, businesses; aggressive contact tracing, until it is positively gone with 100% certainty.
If we start today, the world could be Covid-free by Christmas, long before a vaccine.

If we keep waiting for it go magically away with only masks and social distancing, or for the miracle vaccine, we will be having this same discussion around this time next year and by then this is what you will have:

Nasdaq composite : zero
S&P500 : zero
DJIA: zero
Southwest airlines stock price: 0,00$
Unemployment rate: 100%

Southwest's CEO needs to look himself in the mirror and start asking himself the right questions.


And how can you predict that outcome by Christmas?
 
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 2:38 pm

CobaltScar wrote:
So, since previous government aid required them to keep some flying routes open they'd of rather stopped. Also since airtravel is consider essential and a matter of national security. Why don't we stop the charade and go back to the days of regulation?

How private can these companies be if they require bailouts and won't be allowed to go away?

Bring back the golden age of travel we knew and loved during regulation.


If you want the doubling of average fares that was part of regulation, sure. And how much of 2019's ~900 million U.S. passengers will go away when fares double - so the industry will need to shrink radically, anyway?

If you want regulation of routes, frequency and prices, I say we regulate wages, too. There is no negotiation. A pilot means a 4-yr degree from a non-selective institution plus 1000 hours training. That's a GS-9: GS-9 is the starting grade for most employees directly out of school who have a Master's Degree or several years of experience in their field. GS-9 Yearly Pay $44,471.00 - $57,809.00

How does that work for everybody? :)
 
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 2:42 pm

VenturiEffect wrote:
In the coming years I see strong consumer preference towards nonstops due to less time in a/c and airport. That is where WN will shine vs the other majors.


No, because they don't have the fleet variety for it. Many, many U.S. domestic routes will not sustain a 143-seat 737-700 with reasonable daily frequency. Count the domestic destination sets of AA/DL/UA and compare those to WN.
 
LightningZ71
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 2:45 pm

In terms of airline operations, I think that they will all manage to find an operating model that will get them through the next 24 months or so. Its going to be very painful, and I do expect there to be some significant incidents with labor unions objecting to the pain they will be put through. I don't see financial institutions and big investors going after liquidation of any of the majors or mids in the US any time soon as it's an industry wide issue and not a mismanagement issue on a micro-scale (it can be argued that there should have been better long term planning, but, how do you plan for 90% of your business to evaporate overnight and stay gone for a year or more? That kind of cash hoarding would have been attacked by all of their investors, and in light of past experience, rightly so) resulting in a situation where any seized assets would be near worthless in the short term.

As for my expectations of having the passenger traffic return? Once there is a vaccine in wide distribution and people begin to have a reasonable feeling of being safe around others, I think that most travelers will be more willing to travel again. However, we have a very big issue across the whole populace: un and under employment. There is a lot of uncertainty in the job market still, many people have been laid off, and those that aren't currently having a job issue are apparently reluctant to engage in discretionary spending. Long story short, the leisure market is going to be slower to respond than most people believe because even if its safe to travel again, they may not want to spend the money. Business travel is going to be way down for a long time. I've seen my employer essentially announce that there will be no business related air travel unless its an absolute emergency, and even then, only the absolute minimum number of people will be sent anywhere. That's a long term policy change, not a"for the next few months" kind of thing. My associates in other companies all tell me the same thing. Conventions and in person sales calls, while presenting an opportunity to sell a service or product, are also rife with costs of their own, including the various risks associated with having company representatives traveling without direct supervision. Those risks are currently very expensive, and a lot of companies seem to have reached a conclusion that the potential reward just isn't worth it.

I think that the LCC model with smaller planes may wind up being the most lucrative going forward. Filling up wide bodies for overseas travel is going to be even more difficult for a long time. Filling up large capacity narrow bodies won't be easy either. We may be back in the era where 150 and 100 seat planes make the most sense from a cost point of view. If you can't come close to filling a 200 seat plane, but you can come closer to doing so on 150 and 100 seat planes, and you continue to offer minimal cabin services, you can make things work on light demand.

On the vaccine front, even if they offer only limited term immunity, if we can manage to get into a rhythm of giving it with the annual flu vaccine, and it proves to be effective for six months, and marginally effective for the next six, that's manageable. That would be enough to keep the infection rate low enough to allow almost everything to go back to normal. However, I still think that, from a public health point of view, masks on planes, trains, and busses may stay a lot longer.
 
rising
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 2:46 pm

Once companies start to lose clients because they invited their customer to a Zoom call, and their competitor took them to dinner, you'll see travel come back. People are social creatures. Keep your heads up.
If it doesn't make sense, it's probably not true.
 
IndianicWorld
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 2:55 pm

rising wrote:
Once companies start to lose clients because they invited their customer to a Zoom call, and their competitor took them to dinner, you'll see travel come back. People are social creatures. Keep your heads up.


People are adapting, but yes there will be a mix of different strategies to some point.

What is clear though is that businesses have found ways to use this opportunity to reset, so don’t be surprised if many perspective clients no longer feel the need for a social engagement, but instead value alternative methods that they have also likely taken onboard over this time.
 
Galore
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 3:02 pm

rising wrote:
Once companies start to lose clients because they invited their customer to a Zoom call, and their competitor took them to dinner, you'll see travel come back. People are social creatures. Keep your heads up.


At my huge company, the amount of travel that fits your description is microscopic. And it’s done by private jet anyways (my employer has several).
Almost all regular travel, which produced lots of lifetime platinum AA customers, was about product promotion (not deal closing), face-to-face with our overseas colleagues (same company) and troubleshooting.

This has come to a full stop in February 2020 and guess what? We’ve had our best quarter ever, so the lack of travel isn’t jeopardizing $$$. At the same time we saved millions in air fares, ground transportation and hotel expenses while WebEx saves everyone untold hours of otherwise wasted time and the atrocious 16 hour long haul jet lag horror.

There is NO first class airplane suite in the world that can compete with my living room and bedroom and bathroom. None.
 
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 3:02 pm

LAXdude1023 wrote:
This idea that people are forever going to seclude and corporate travel is dead is extremely premature. Maybe people will still live in fear after a vaccine arrives. But there is a bigger chance (IMO) that once a vaccine arrives we will start the slow return to normal and more people will start flying again in larger numbers.


From a medical point of view: once a vaccine arrives, there are a few ways that we could proceed. The simplest and most obvious would be to proceed through the already described phases of reopening as cases fall. There will need to be a new definition of a "case" because any vaccine is unlikely to completely abolish viral replication in the upper airway, so a PCR test might be positive, but it will keep it at a low enough level that the risk of contagion would be low. We might need to revert to viral culture as the definitive test. This veers into non-av territory, because it would require reclassification of SARS-CoV-2 from BSL-3 to BSL-2 and raises technical issues.

Another option would be to provide some kind of "vaccination ID" to people who have completed a course of a vaccine. There are legal and civil rights concerns here, but airlines and cruise lines might insist on such a program in order to permit boarding, and as private companies, they would have that right. Moreover, foreign countries might insist on proof of vaccination for travel, which is already the case for several other diseases.

I suspect that corporate travel per capita will probably never return to where it was owing to improvements in videoconferencing, but still, there is value to having large trade shows and meetings because of the networking and other interactions between attendees. At conferences I've attended, I've accomplished as much or more over coffee or cocktails than I have in formal sessions. Humans are social animals and the idea that we'll sequester forever is ludicrous.
-Doc Lightning-

"The sky calls to us. If we do not destroy ourselves, we will one day venture to the stars."
-Carl Sagan
 
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 3:17 pm

Article on the European airlines being unsustainable:
https://centreforaviation.com/analysis/ ... nes-536607

“The current situation is clearly unsustainable for European aviation and tourism. Governments are telling us we need to adapt to the reality of COVID-19. If that means getting our kids back to school, there is no reason why it should not mean being able to travel in a way that is safe, and limits transmission risks.

Many if not most of the current travel restrictions are not proportionate and not effective in combating the epidemic. At the same time, they are heavily damaging livelihoods as well as EU citizens’ fundamental right to travel freely within the EU for business, pleasure or for family reasons. They need to be reconsidered urgently.”


The above link is long. Half of it isn't worth reading, half is. I'll be blunt, a 14 day quarantine is an economic non-starter. There is no business case for corporate travel under those terms. As a US worker, my vacation is far too limited to waste 2 weeks in quarantine.

But thus link has the first solutions I think will work. Test more. Test before and after travel, if you must quarantine, make short. Two negative tests put emergency personnel back on duty (otherwise, we wouldn't have enough paramedics). Why not Fly in, take a fast test at airport. Quarantine in the hotel, take another test 20 to 36 hours later and be done with it?

The current system is destroying the economy. Yes, wear masks. This link describes how viruses often work and it really makes sense to me:

https://www.dailymail.co.uk/health/arti ... aring.html

Get flying. Get into a cruise (day 1, quarantine in cabin with room service), go to amusement parks.

And my new signature should show I take this seriously. We just need more jobs as on the current path, governments will fail.

Lightsaber
Winter is coming.
 
rising
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 4:09 pm

Galore wrote:
rising wrote:
Once companies start to lose clients because they invited their customer to a Zoom call, and their competitor took them to dinner, you'll see travel come back. People are social creatures. Keep your heads up.


This has come to a full stop in February 2020 and guess what? We’ve had our best quarter ever, so the lack of travel isn’t jeopardizing $$$. At the same time we saved millions in air fares, ground transportation and hotel expenses while WebEx saves everyone untold hours of otherwise wasted time and the atrocious 16 hour long haul jet lag horror.



It's not just about the money. If it was, travel, meetings, conventions, etc. would have come full stop back in the 90s with the advent of the internet and webinars. Or perhaps even earlier with the telephone and fax machine. And any travel that did happen, would just be based on cost. But reality is much different. There is a reason companies pay to have their team fly in Business and stay at the Marriott, instead of Economy, and at the Days Inn. And why conferences are held in expensive places like Las Vegas, and Boston, and not Lincoln, Nebraska. People want to work and buy from places who not only are a success, but project success.

Every time there is a new technology, or a crisis, everyone says this time it is different and there is suspected doom for aviation. Every time it has been wrong. That said I respect and even from time to time share the preference of being home over traveling, but I think most people choose to work in the profession they do if it involves travel, because it involves travel. We enjoy being on the move, and on this site in particular, prefer to be in the air. I am not convinced, yet, we're a minority.
If it doesn't make sense, it's probably not true.
 
bennett123
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 4:10 pm

One factor that no one has mentioned is the lurid rumours about the potential vaccines.

It is likely that many people will not want to take the vaccine, when it is available.
 
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DL747400
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 4:22 pm

Little by little, people at all levels are beginning to recognize (and are now more willing to admit, both privately and publicly) that current and anticipated airline revenues are still far less than what will be required to support existing cost structures, much less to service their still increasing mountains of debt. Something more will need to give. And it's not going to be pretty.

Beyond that, it's not too difficult to imagine that the gears are already turning around the longer-term need for a new round of reorganizations and consolidations within the airline industry. Will this be the event that necessitates the demise of foreign ownership restrictions, paving the way for true cross-border mergers? I believe there is better than a 50/50 chance that the answer is YES.

Miamiairport wrote:
Also, how about conferences and industry events. How many will go to video? When will large groups be allowed again. The vaccine, if in fact we get one, may not be the magic bullet that some think it is.


The longer we wait on a vaccine that is accepted by the majority of the population, the greater the number of companies that will seek, find and implement viable digital substitutes for large scale in-person meetings on a permanent basis.
From First to Worst: The history of Airliners.net.

All posts reflect my opinions, not those of my employer or any other company.
 
Waterbomber2
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 4:43 pm

DocLightning wrote:
LAXdude1023 wrote:
This idea that people are forever going to seclude and corporate travel is dead is extremely premature. Maybe people will still live in fear after a vaccine arrives. But there is a bigger chance (IMO) that once a vaccine arrives we will start the slow return to normal and more people will start flying again in larger numbers.


From a medical point of view: once a vaccine arrives, there are a few ways that we could proceed. The simplest and most obvious would be to proceed through the already described phases of reopening as cases fall. There will need to be a new definition of a "case" because any vaccine is unlikely to completely abolish viral replication in the upper airway, so a PCR test might be positive, but it will keep it at a low enough level that the risk of contagion would be low. We might need to revert to viral culture as the definitive test. This veers into non-av territory, because it would require reclassification of SARS-CoV-2 from BSL-3 to BSL-2 and raises technical issues.

Another option would be to provide some kind of "vaccination ID" to people who have completed a course of a vaccine. There are legal and civil rights concerns here, but airlines and cruise lines might insist on such a program in order to permit boarding, and as private companies, they would have that right. Moreover, foreign countries might insist on proof of vaccination for travel, which is already the case for several other diseases.

I suspect that corporate travel per capita will probably never return to where it was owing to improvements in videoconferencing, but still, there is value to having large trade shows and meetings because of the networking and other interactions between attendees. At conferences I've attended, I've accomplished as much or more over coffee or cocktails than I have in formal sessions. Humans are social animals and the idea that we'll sequester forever is ludicrous.


I don't think that cases will fall with a vaccine.
This is the problem with airlines, businesses and politics. They all have their attention focused on a patchwork solution.

If a vaccine is produced that is 50% effective and supposing that we live in a utopic world where everyone, 100%, agrees to take it, it's going to create a false sense of safety and people are going to stop wearing masks and social distancing and everyone is going to come out of sheltering. At that time, you're going to see an increase of cases, not a decrease. Then people are going to grow suspicious of the vaccine and go back to sheltering. Then experts are going to say they are working on more effective vaccines, 6-12 months away. Repeat year after year.
This is the best case scenario.
But if you have a 50% effective vaccine and only 50% agree to take it, you can only reduce the cases by 25%, so it's a non-starter because then the other measures like masks, social distancing and lockdowns become unenforceable.

If we want travel back by next summer, we need to lock it down for a short period of time until cases come down to zero.
People who can work from home can continue to do so.
Companies and people will then have a real outlook and companies will stop firing people because they have a reliable end date.

If airlines stop pushing for an economy that is not going to come back, and actually start pushing for defeating the virus, the day the lockdown is lifted, they can go to a full schedule. Not 30%, not 50%.
Stop dragging this crisis on by pushing for wishful things that aren't going to happen.

"We need to reopen, we need to reopen." But businesses are already open, except that no one is showing up to buy whatever they have to offer.
Is your local Starbucks closed? Is your local supermarket closed? Is your local airport closed? Most certainly they are not.
So what is it that you want to reopen more? Or are you just repeating what some fools are saying?

The US and the EU have reopened and our end of Spring lockdown has now been in vain.
The billions lost so far have all been in vain, we have nothing to show for it.
We need to stop this now, and not by brainwashing people or by hoping for a miracle solution, but by defeating the virus by the only proven method so far, and that's by keeping people home until the virus is cornered and has nowhere else to go.
 
CobaltScar
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 4:55 pm

MIflyer12 wrote:
If you want the doubling of average fares that was part of regulation, sure. And how much of 2019's ~900 million U.S. passengers will go away when fares double - so the industry will need to shrink radically, anyway?

How does that work for everybody? :)


Yes. Think how much better for the environment it would be too without 9 dollar fares burning up fossil fuels.
 
32andBelow
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 5:11 pm

lightsaber wrote:
I agree projecting the State of the industry past Spring of 2021 isn't possible. What is possible is that I agree the industry cannot continue on the current status quo. Fixed costs, employment, and for airlines other than Southwest, the debt.

So sticking to aviation, how do we fix the problem?

They could raise money like other companies. Start by reissuing all the stock the majors bought back
 
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Revelation
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 5:12 pm

Miamiairport wrote:
What we don't know is how virtual will impact future travel. I'm already hearing from consultant colleagues that clients are "pressuring" their firms to do more with video. Most firms have a travel plus margin built in or charge for consultant travel time so travel is part of their income model. However, if clients begin to push back on near 100%to reduce costs onsite consulting firms will need to adjust. And I heard and understand the "better experience" argument but that's going to fly in the face of more cost effective engagements.

Also, how about conferences and industry events. How many will go to video? When will large groups be allowed again. The vaccine, if in fact we get one, may not be the magic bullet that some think it is.

Some very interesting points here.

The change in travel spending is so huge that of course the accountants have noticed. Good luck getting the toothpaste back into the tube.

I have attended a tech conference that I would not have attended in person since the fees for attending were $1200 and by the time you add in air fare, five nights of hotels and five days of dining, the total would be twice that. The conference normally gets 400 people paying to attend, but the virtual conference got 40,000 at $50 a head. The conference's expenses were so low they made more money with the virtual conference, and they got much more exposure worldwide.

My experience was better in the virtual conference as well. I could bounce between sessions and figure out which session was most compelling without having to do the embarrassing thing of walking out. The hallway conversations became online chats, which meant you didn't have to be at the right place at the right time to be engaged in them. The presenters enjoyed the huge amount of instant feedback they got after their presentations.

rising wrote:
It's not just about the money. If it was, travel, meetings, conventions, etc. would have come full stop back in the 90s with the advent of the internet and webinars. Or perhaps even earlier with the telephone and fax machine. And any travel that did happen, would just be based on cost. But reality is much different. There is a reason companies pay to have their team fly in Business and stay at the Marriott, instead of Economy, and at the Days Inn. And why conferences are held in expensive places like Las Vegas, and Boston, and not Lincoln, Nebraska. People want to work and buy from places who not only are a success, but project success.

Every time there is a new technology, or a crisis, everyone says this time it is different and there is suspected doom for aviation. Every time it has been wrong. That said I respect and even from time to time share the preference of being home over traveling, but I think most people choose to work in the profession they do if it involves travel, because it involves travel. We enjoy being on the move, and on this site in particular, prefer to be in the air. I am not convinced, yet, we're a minority.

The big difference now is everyone has been forced to find a different way, and it is now shown to be effective, especially with regard to cost, and cost is king.

The 90s version of the Internet did not provide enough bandwidth for reliable audio conferences, never mind simultaneous video streams. Home computers of the 90s did not have the horsepower to support fully interactive audio video teleconferences. There was next to no home broadband in the 90s, now it is ubiquitous and pretty much mandatory. Even two years ago most people didn't bother to purchase the kind of cameras and headsets people need for working from home, nor did they bother to install the required apps and learn how to use them. That's all changed now.

This time is different. But this doesn't mean aviation is doomed. It does mean it needs to accept that business travel will not return to pre-covid levels. There really is a bunch of things that quarantining has shown can be done more cost-effectively via online meetings. The genie is not going back into the bottle, IMO.

Exaggerations such as aviation is doomed aren't helpful, IMO. Yes, there will still be a lot of cases where people need to travel to get certain things done effectively. What is different is there is now a different way to do many things that used to require travel, and it's cost effective, and it's now ubiquitous. Some people miss the buzz of travel, but others are sick of nights in motels away from family and friends. It's now possible for a new balance to emerge, and I'm sure it will since cost is king.
Wake up to find out that you are the eyes of the world
The heart has its beaches, its homeland and thoughts of its own
Wake now, discover that you are the song that the morning brings
The heart has its seasons, its evenings and songs of its own
 
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FLALEFTY
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 5:19 pm

I'm going to take an optimistic stance and predict that a safe and reliable vaccine will be available within the next year. However, even with a good vaccine it will take months to treat a large enough portion of the world's population for things to return to "normal". Therefore, patience and diligence will be required by all, because there are no short cuts out of this pandemic-constructed maze.

However, airlines will be facing some tough long-term planning decisions:

For the US "Big 3", they will need to grapple with multiple issues: 1) Do they have too many hubs? 2) Fleet simplification (while still dealing with the impact of the B737MAX fiasco). 3) Future relationships with their regional partners, especially as it pertains to 50-seat jet flying (do they still need this feed?). 4) Inflexible work rules that currently limit productivity. 5) How much international flying is needed and to where? 6) How do they service all that debt they took on when business was booming?

In Europe there seems to be too many ULCC's chasing the same holiday makers, who will be less likely to go on holiday in the foreseeable future. Which British/European ULCC looks to be a survivor? Also, are long-haul ULCC airlines still economically viable?

The ME3 business model, long-haul and built around mega hubs was especially crippled by the pandemic. Will they recover, or will European and Asian competitors simply overfly their mega hubs to destinations in Central Asia, Africa and the Middle East, draining off demand?

In Asia they have a similar issue to Europe when it comes to having too many ULCC's chasing what will now be a more static number of passengers. Most of these ULCC's are saddled with long-term debt from massive new aircraft purchases. Again, who makes it out of the pandemic era alive?

In South America the idea of allowing LATAM to be the mega-carrier for multiple countries has backfired when LATAM declared bankruptcy. Leases are being cancelled and planes are being returned (and crews furloughed), which means that a recovery will be much slower due to lack of lift. And then there is Avianca, which is also in bankruptcy, who is also returning planes. Who backfills this vacuum?
 
Vicenza
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 6:06 pm

CobaltScar wrote:
MIflyer12 wrote:
If you want the doubling of average fares that was part of regulation, sure. And how much of 2019's ~900 million U.S. passengers will go away when fares double - so the industry will need to shrink radically, anyway?

How does that work for everybody? :)


Yes. Think how much better for the environment it would be too without 9 dollar fares burning up fossil fuels.


Strange argument......are $1200 business fares better for the environment, how? An aircraft uses the same fuel irrespective of what fares passenger's are paying.
 
Silver1SWA
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 6:40 pm

LAXdude1023 wrote:
Ill throw out the same message I did on the first thread: nobody knows how people are going to react when vaccines and treatments become available.

This idea that people are forever going to seclude and corporate travel is dead is extremely premature. Maybe people will still live in fear after a vaccine arrives. But there is a bigger chance (IMO) that once a vaccine arrives we will start the slow return to normal and more people will start flying again in larger numbers.

We dont know. The doom and gloomy as well as the overly optimistic are commenting on things we cant possible know because we dont know how people will react. This also includes timeline. Projecting the state of the industry anytime past spring 2021 is premature as well.


Once we can safely reverse travel restrictions, quarantines, reopen hotels, theme parks, cruises, sports, concerts, conventions, trade shows, large festivals, etc, etc, etc. people will feel safe enough to fly. Everyone talks in these threads as if people just fly for the sake of flying. People need reasons to travel. They need places to go, events to attend. They need things to spend their money on beyond the price of the plane ticket. When all of those things are allowed to happen the rest will fall into place and people will take the trips that have been put off during this time.

My social media feeds are full of people posting and sharing memes about how the first thing they’re doing when this is all over is traveling. We just have to figure out what “this is all over” means and how to get there.
ALL views, opinions expressed are mine ONLY and are NOT representative of those shared by Southwest Airlines Co.
 
BNAMealer
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 7:02 pm

FLALEFTY wrote:
I'm going to take an optimistic stance and predict that a safe and reliable vaccine will be available within the next year. However, even with a good vaccine it will take months to treat a large enough portion of the world's population for things to return to "normal". Therefore, patience and diligence will be required by all, because there are no short cuts out of this pandemic-constructed maze.

However, airlines will be facing some tough long-term planning decisions:

For the US "Big 3", they will need to grapple with multiple issues: 1) Do they have too many hubs? 2) Fleet simplification (while still dealing with the impact of the B737MAX fiasco). 3) Future relationships with their regional partners, especially as it pertains to 50-seat jet flying (do they still need this feed?). 4) Inflexible work rules that currently limit productivity. 5) How much international flying is needed and to where? 6) How do they service all that debt they took on when business was booming?

In Europe there seems to be too many ULCC's chasing the same holiday makers, who will be less likely to go on holiday in the foreseeable future. Which British/European ULCC looks to be a survivor? Also, are long-haul ULCC airlines still economically viable?

The ME3 business model, long-haul and built around mega hubs was especially crippled by the pandemic. Will they recover, or will European and Asian competitors simply overfly their mega hubs to destinations in Central Asia, Africa and the Middle East, draining off demand?

In Asia they have a similar issue to Europe when it comes to having too many ULCC's chasing what will now be a more static number of passengers. Most of these ULCC's are saddled with long-term debt from massive new aircraft purchases. Again, who makes it out of the pandemic era alive?

In South America the idea of allowing LATAM to be the mega-carrier for multiple countries has backfired when LATAM declared bankruptcy. Leases are being cancelled and planes are being returned (and crews furloughed), which means that a recovery will be much slower due to lack of lift. And then there is Avianca, which is also in bankruptcy, who is also returning planes. Who backfills this vacuum?


These are valid questions. Even with a vaccine, I don't foresee a return to the same amount of business travel demand we had in 2019. There is simply no need for a lot of the kinds of business travel we had before this all started with advances in video conferencing.

I not knowledgeable on the situation outside the US, but in the US, the US3 will need to get smaller and return to focusing on their core hubs. This is not a bad thing as I believe (DL in particular) was getting too excessive with expansion into non-core markets that really didn't serve a strategic purpose (CVG, RDU, etc). Also, there will need to be fewer frequencies and more upgauging, a lot routes will not need as many frequencies as they had before. This could also lead to airlines reducing their gate count at certain airports, particularly spokes.

The next 5-10 years is going to be interesting for sure.
 
JMR747
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 7:38 pm

I know others have challenged this opinion, but most people I know will not fly if they can possibly avoid it as long as their is a requirement to wear a mask. To kickstart leisure travel it's very simple, remove the mask requirement and I and many others will start booking flights tomorrow. We have friends, particularly those with kids who have changed vacation plans over this one issue. One family with three kids were planning a vacation to the Grand Canyon and flying Houston Las Vegas. They cancelled their flights and have rented an RV, driving all the way from Houston instead. They are not the only ones doing this - the RV rental companies reported no availability labour day weekend and increasing rental bookings right through thanksgiving, a time of year they normally tail off.

We are driving Houston to Virginia (second time this year) to visit friends - in previous years we have flown United first.

The wider mask requirement is discouraging people from visiting resorts in places like Cancun, thereby also reducing demand for leisure flights.

Countries without mask requirements, no limits on restaurant occupancy, fully open schools (e.g. Netherlands & Denmark) are seeing the fastest resumption of pre-Covid life, and this return to normality is the only thing that will start to see airlines return to profitable operation. Particularly for international carriers, business travel is their greatest revenue stream and until we fully reopen this will not even start to recover. My wife's Dow 30 company has already banned all business travel until March 2021, with any exception requiring authorisation by the global President.
 
Waterbomber2
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 8:03 pm

JMR747 wrote:
I know others have challenged this opinion, but most people I know will not fly if they can possibly avoid it as long as their is a requirement to wear a mask. To kickstart leisure travel it's very simple, remove the mask requirement and I and many others will start booking flights tomorrow. We have friends, particularly those with kids who have changed vacation plans over this one issue. One family with three kids were planning a vacation to the Grand Canyon and flying Houston Las Vegas. They cancelled their flights and have rented an RV, driving all the way from Houston instead. They are not the only ones doing this - the RV rental companies reported no availability labour day weekend and increasing rental bookings right through thanksgiving, a time of year they normally tail off.

We are driving Houston to Virginia (second time this year) to visit friends - in previous years we have flown United first.

The wider mask requirement is discouraging people from visiting resorts in places like Cancun, thereby also reducing demand for leisure flights.

Countries without mask requirements, no limits on restaurant occupancy, fully open schools (e.g. Netherlands & Denmark) are seeing the fastest resumption of pre-Covid life, and this return to normality is the only thing that will start to see airlines return to profitable operation. Particularly for international carriers, business travel is their greatest revenue stream and until we fully reopen this will not even start to recover. My wife's Dow 30 company has already banned all business travel until March 2021, with any exception requiring authorisation by the global President.


Thank you for your marvelous contribution.
Where do you stand on vaccines? You don't want to wear a mask so I reckon you won't want a stranger sticking a needle in your body to inject you god knows what.
 
CRJ5000
Posts: 149
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 8:05 pm

JMR747 wrote:
I know others have challenged this opinion, but most people I know will not fly if they can possibly avoid it as long as their is a requirement to wear a mask. To kickstart leisure travel it's very simple, remove the mask requirement and I and many others will start booking flights tomorrow. We have friends, particularly those with kids who have changed vacation plans over this one issue. One family with three kids were planning a vacation to the Grand Canyon and flying Houston Las Vegas. They cancelled their flights and have rented an RV, driving all the way from Houston instead. They are not the only ones doing this - the RV rental companies reported no availability labour day weekend and increasing rental bookings right through thanksgiving, a time of year they normally tail off.

We are driving Houston to Virginia (second time this year) to visit friends - in previous years we have flown United first.

The wider mask requirement is discouraging people from visiting resorts in places like Cancun, thereby also reducing demand for leisure flights.

Countries without mask requirements, no limits on restaurant occupancy, fully open schools (e.g. Netherlands & Denmark) are seeing the fastest resumption of pre-Covid life, and this return to normality is the only thing that will start to see airlines return to profitable operation. Particularly for international carriers, business travel is their greatest revenue stream and until we fully reopen this will not even start to recover. My wife's Dow 30 company has already banned all business travel until March 2021, with any exception requiring authorisation by the global President.


What kind of people do you know that the simple requirement to put a mildly inconvenient/uncomfortable mask on for a couple hours is reason enough to drive nearly 24 hours?
I think its much more conceivable that people aren't traveling because there aren't reasons to travel - no events, limited restaurant/bars, entertainment venues closed, etc.
 
Waterbomber2
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 8:15 pm

Revelation wrote:
Miamiairport wrote:
What we don't know is how virtual will impact future travel. I'm already hearing from consultant colleagues that clients are "pressuring" their firms to do more with video. Most firms have a travel plus margin built in or charge for consultant travel time so travel is part of their income model. However, if clients begin to push back on near 100%to reduce costs onsite consulting firms will need to adjust. And I heard and understand the "better experience" argument but that's going to fly in the face of more cost effective engagements.

Also, how about conferences and industry events. How many will go to video? When will large groups be allowed again. The vaccine, if in fact we get one, may not be the magic bullet that some think it is.

Some very interesting points here.

The change in travel spending is so huge that of course the accountants have noticed. Good luck getting the toothpaste back into the tube.

I have attended a tech conference that I would not have attended in person since the fees for attending were $1200 and by the time you add in air fare, five nights of hotels and five days of dining, the total would be twice that. The conference normally gets 400 people paying to attend, but the virtual conference got 40,000 at $50 a head. The conference's expenses were so low they made more money with the virtual conference, and they got much more exposure worldwide.

My experience was better in the virtual conference as well. I could bounce between sessions and figure out which session was most compelling without having to do the embarrassing thing of walking out. The hallway conversations became online chats, which meant you didn't have to be at the right place at the right time to be engaged in them. The presenters enjoyed the huge amount of instant feedback they got after their presentations.

rising wrote:
It's not just about the money. If it was, travel, meetings, conventions, etc. would have come full stop back in the 90s with the advent of the internet and webinars. Or perhaps even earlier with the telephone and fax machine. And any travel that did happen, would just be based on cost. But reality is much different. There is a reason companies pay to have their team fly in Business and stay at the Marriott, instead of Economy, and at the Days Inn. And why conferences are held in expensive places like Las Vegas, and Boston, and not Lincoln, Nebraska. People want to work and buy from places who not only are a success, but project success.

Every time there is a new technology, or a crisis, everyone says this time it is different and there is suspected doom for aviation. Every time it has been wrong. That said I respect and even from time to time share the preference of being home over traveling, but I think most people choose to work in the profession they do if it involves travel, because it involves travel. We enjoy being on the move, and on this site in particular, prefer to be in the air. I am not convinced, yet, we're a minority.

The big difference now is everyone has been forced to find a different way, and it is now shown to be effective, especially with regard to cost, and cost is king.

The 90s version of the Internet did not provide enough bandwidth for reliable audio conferences, never mind simultaneous video streams. Home computers of the 90s did not have the horsepower to support fully interactive audio video teleconferences. There was next to no home broadband in the 90s, now it is ubiquitous and pretty much mandatory. Even two years ago most people didn't bother to purchase the kind of cameras and headsets people need for working from home, nor did they bother to install the required apps and learn how to use them. That's all changed now.

This time is different. But this doesn't mean aviation is doomed. It does mean it needs to accept that business travel will not return to pre-covid levels. There really is a bunch of things that quarantining has shown can be done more cost-effectively via online meetings. The genie is not going back into the bottle, IMO.

Exaggerations such as aviation is doomed aren't helpful, IMO. Yes, there will still be a lot of cases where people need to travel to get certain things done effectively. What is different is there is now a different way to do many things that used to require travel, and it's cost effective, and it's now ubiquitous. Some people miss the buzz of travel, but others are sick of nights in motels away from family and friends. It's now possible for a new balance to emerge, and I'm sure it will since cost is king.


Business travel will return.
In 2001, they were saying the same thing amid the dot-com bubble.
In 2008, companies used the downturn to shift many people to economy class travel, which resulted in the birth of economy plus, but airlines had no prpblem filling the front cabins after a while.

This time it won't be different.

Sure, some people are going to explore working more from home and offices will be downsized.
Some of the unnecessary flying of the past will be cut, for sure.

A lot of the business flying is actually unnecessary in this day and age. But people will still keeping getting on planes, because that's what we do.
 
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Revelation
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Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 8:51 pm

Waterbomber2 wrote:
Business travel will return.
In 2001, they were saying the same thing amid the dot-com bubble.
In 2008, companies used the downturn to shift many people to economy class travel, which resulted in the birth of economy plus, but airlines had no prpblem filling the front cabins after a while.

This time it won't be different.

Sure, some people are going to explore working more from home and offices will be downsized.
Some of the unnecessary flying of the past will be cut, for sure.

A lot of the business flying is actually unnecessary in this day and age. But people will still keeping getting on planes, because that's what we do.

Travel for business recovered after 2001 and 2008 because those were economic recessions and nothing changed the way people perform their jobs, i.e. "work culture" remained unchanged. Some people got laid off, some businesses shut down, others started up, but nothing fundamentally changed about work itself.

This is not true in 2020.

If you don't believe me, try this quote:

Bastian said he does not believe Delta's volume of business traffic will "ever get back entirely to where we were in 2019." He expects those who travel for work often to take fewer trips in the future, and inefficiencies, such as flights to Europe for brief meetings, may be replaced by video calls, which have become a much bigger part of work culture as offices have shut down during the pandemic.

Ref: https://www.bizjournals.com/atlanta/new ... ravel.html

And of course Bastian is DL's CEO, so if anything this quote is biased towards optimism in favor of air travel.

Follow the money. Companies have invested a lot to provide online meeting capabilities. Companies have closed offices and/or reduced office space. They're not going to decide to spool up more office space and restore business travel to 2019 levels. Things have changed. Even DL's CEO is willing to say this.

As above I'm not saying all business travel will be gone forever, but I am saying companies have invested a lot to provide for travel free online meetings and have seen a lot of savings, and they have taken notice. Even post-2001 and post-2008 there were travel cutbacks. The 2020 events are far more wide spread and long lasting than 2001 or 2008. Companies will be watching every penny going forward. Now we have the technology to totally avoid a lot of business flying and companies will pressure most classes of employees to use it instead of travelling. Smart airlines are already recognizing this.
Wake up to find out that you are the eyes of the world
The heart has its beaches, its homeland and thoughts of its own
Wake now, discover that you are the song that the morning brings
The heart has its seasons, its evenings and songs of its own
 
LAXdude1023
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Joined: Thu Sep 07, 2006 3:16 pm

Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 9:12 pm

Revelation wrote:
Miamiairport wrote:
What we don't know is how virtual will impact future travel. I'm already hearing from consultant colleagues that clients are "pressuring" their firms to do more with video. Most firms have a travel plus margin built in or charge for consultant travel time so travel is part of their income model. However, if clients begin to push back on near 100%to reduce costs onsite consulting firms will need to adjust. And I heard and understand the "better experience" argument but that's going to fly in the face of more cost effective engagements.

Also, how about conferences and industry events. How many will go to video? When will large groups be allowed again. The vaccine, if in fact we get one, may not be the magic bullet that some think it is.

Some very interesting points here.

The change in travel spending is so huge that of course the accountants have noticed. Good luck getting the toothpaste back into the tube.

I have attended a tech conference that I would not have attended in person since the fees for attending were $1200 and by the time you add in air fare, five nights of hotels and five days of dining, the total would be twice that. The conference normally gets 400 people paying to attend, but the virtual conference got 40,000 at $50 a head. The conference's expenses were so low they made more money with the virtual conference, and they got much more exposure worldwide.

My experience was better in the virtual conference as well. I could bounce between sessions and figure out which session was most compelling without having to do the embarrassing thing of walking out. The hallway conversations became online chats, which meant you didn't have to be at the right place at the right time to be engaged in them. The presenters enjoyed the huge amount of instant feedback they got after their presentations.

rising wrote:
It's not just about the money. If it was, travel, meetings, conventions, etc. would have come full stop back in the 90s with the advent of the internet and webinars. Or perhaps even earlier with the telephone and fax machine. And any travel that did happen, would just be based on cost. But reality is much different. There is a reason companies pay to have their team fly in Business and stay at the Marriott, instead of Economy, and at the Days Inn. And why conferences are held in expensive places like Las Vegas, and Boston, and not Lincoln, Nebraska. People want to work and buy from places who not only are a success, but project success.

Every time there is a new technology, or a crisis, everyone says this time it is different and there is suspected doom for aviation. Every time it has been wrong. That said I respect and even from time to time share the preference of being home over traveling, but I think most people choose to work in the profession they do if it involves travel, because it involves travel. We enjoy being on the move, and on this site in particular, prefer to be in the air. I am not convinced, yet, we're a minority.

The big difference now is everyone has been forced to find a different way, and it is now shown to be effective, especially with regard to cost, and cost is king.

The 90s version of the Internet did not provide enough bandwidth for reliable audio conferences, never mind simultaneous video streams. Home computers of the 90s did not have the horsepower to support fully interactive audio video teleconferences. There was next to no home broadband in the 90s, now it is ubiquitous and pretty much mandatory. Even two years ago most people didn't bother to purchase the kind of cameras and headsets people need for working from home, nor did they bother to install the required apps and learn how to use them. That's all changed now.

This time is different. But this doesn't mean aviation is doomed. It does mean it needs to accept that business travel will not return to pre-covid levels. There really is a bunch of things that quarantining has shown can be done more cost-effectively via online meetings. The genie is not going back into the bottle, IMO.

Exaggerations such as aviation is doomed aren't helpful, IMO. Yes, there will still be a lot of cases where people need to travel to get certain things done effectively. What is different is there is now a different way to do many things that used to require travel, and it's cost effective, and it's now ubiquitous. Some people miss the buzz of travel, but others are sick of nights in motels away from family and friends. It's now possible for a new balance to emerge, and I'm sure it will since cost is king.


I respectfully am completely different here. Part of that is because Im a corporate trainer by profession and adult learning is what I do.

There is nothing virtual I would pay $1200 for. If my only option was to pay that amount of money for a virtual conference or not attend, I would not attend. Very few people get just as much out of virtual events as they do in person.

Most of my training I run in a classroom setting. My employer, who doesnt have experience in training, asked me what I thought about running classes over Zoom. I told her I would quit before I would hold a 40 hour class over Zoom. People dont learn as well, people dont bond with their coworkers, and the technology is glitchy. I said that my limit for Zoom is two hours and that is all.

My wife works for an education company that actually studied how students learn virtual vs. classroom. Basically the results werent surprising. They lag signifcantly behind those that learn in person. In sales, a Zoom meeting is a good way for a sales person to call on a client and tell them, "I just barely give a s**t".

Im not in disagreement that the air industry will be smaller. Of course it will. I dont think 2019 levels are attainable soon, but I think 85% of 2019 levels can be supported quite well when a vaccine is in circulation and everyone can get one.

Im also not completely down on platforms like Zoom. They need to be used as a supplement, not a replacement, to human interaction whether that is personal or business related. In my work, Im perfectly fine running my training in class and then doing a refresher over zoom.

I dont know exactly how this will play out and none of us do. But I think people are underestimating the social nature of humans.
FOR THE LOVE OF GOD BRING BACK THE PAYWALL!!!!
 
Miamiairport
Posts: 738
Joined: Tue Apr 10, 2018 8:14 pm

Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 9:25 pm

I agree with all the comments about video, l deal with it everyday. But some suit that compares an in person trip of several thousand dollars, particularly if multiple resources must attend to a $50 Zoom call are going to think differently. I see it already in the consulting world. I see it with customers that are already indicating they want more virtual and less onsite. If my firms doesn't go along someone else will.

That's the reality. Price will champion over the a "quality experience."
 
User avatar
Revelation
Posts: 24780
Joined: Wed Feb 09, 2005 9:37 pm

Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 9:37 pm

LAXdude1023 wrote:
Im not in disagreement that the air industry will be smaller. Of course it will. I dont think 2019 levels are attainable soon, but I think 85% of 2019 levels can be supported quite well when a vaccine is in circulation and everyone can get one.

Im also not completely down on platforms like Zoom. They need to be used as a supplement, not a replacement, to human interaction whether that is personal or business related. In my work, Im perfectly fine running my training in class and then doing a refresher over zoom.

I dont know exactly how this will play out and none of us do. But I think people are underestimating the social nature of humans.

Thanks for your post, it is well stated.

For clarification, I said the in-person technical conference had a $1200 fee and I would easily incur another $1200 for plane, hotel, restaurants etc versus $50 for remote attendance and me not having any plane/hotel/restaurant coasts at all. Clearly that is a huge difference, one that can change the balance towards remote attendance. The society has already announced all future conferences will have a remote option, even after we're past the covid issue.

Conferences are different than training events, I think it's fair to say, yet I think training events can work remotely too. A lot of it depends on how motivated the learner is to get something out of the event. If they're motivated, they'll make the effort to do what it takes to learn like posting questions as needed. If they aren't, they'll goof off and get nothing out of it. In the corporate environment you'd hope there was good motivation. If not, the company has other problems to work on. Some realms such as mandated training are different, but much of that has already transitioned to slide shows with minimum time requirements and quizzes to try to boost engagement.

Even though Zoom can have its glitches, it's light years ahead of what was available in 2008 or 2001, I think everyone would admit, and now a huge number of people have been forced to learn how to use it and its competing products. All the early nonsense of people forgetting to mute their mics has been resolved in the meetings I'm attending. Now we're all used to the occasional dog barking or kid crying, it's the new norm.

I think humans are social animals, but that comes with costs and distractions. If the goal is social bonding throw a day long outing event somewhere locally rather than shipping everyone to a five day conference or training event with occasional amounts of social interaction.
Wake up to find out that you are the eyes of the world
The heart has its beaches, its homeland and thoughts of its own
Wake now, discover that you are the song that the morning brings
The heart has its seasons, its evenings and songs of its own
 
32andBelow
Posts: 5032
Joined: Mon Sep 03, 2012 2:54 am

Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 9:39 pm

Revelation wrote:
LAXdude1023 wrote:
Im not in disagreement that the air industry will be smaller. Of course it will. I dont think 2019 levels are attainable soon, but I think 85% of 2019 levels can be supported quite well when a vaccine is in circulation and everyone can get one.

Im also not completely down on platforms like Zoom. They need to be used as a supplement, not a replacement, to human interaction whether that is personal or business related. In my work, Im perfectly fine running my training in class and then doing a refresher over zoom.

I dont know exactly how this will play out and none of us do. But I think people are underestimating the social nature of humans.

Thanks for your post, it is well stated.

For clarification, I said the in-person technical conference had a $1200 fee and I would easily incur another $1200 for plane, hotel, restaurants etc versus $50 for remote attendance and me not having any plane/hotel/restaurant coasts at all. Clearly that is a huge difference, one that can change the balance towards remote attendance. The society has already announced all future conferences will have a remote option, even after we're past the covid issue.

Conferences are different than training events, I think it's fair to say, yet I think training events can work remotely too. A lot of it depends on how motivated the learner is to get something out of the event. If they're motivated, they'll make the effort to do what it takes to learn like posting questions as needed. If they aren't, they'll goof off and get nothing out of it. In the corporate environment you'd hope there was good motivation. If not, the company has other problems to work on. Some realms such as mandated training are different, but much of that has already transitioned to slide shows with minimum time requirements and quizzes to try to boost engagement.

Even though Zoom can have its glitches, it's light years ahead of what was available in 2008 or 2001, I think everyone would admit, and now a huge number of people have been forced to learn how to use it and its competing products. All the early nonsense of people forgetting to mute their mics has been resolved in the meetings I'm attending. Now we're all used to the occasional dog barking or kid crying, it's the new norm.

I think humans are social animals, but that comes with costs and distractions. If the goal is social bonding throw a day long outing event somewhere locally rather than shipping everyone to a five day conference or training event with occasional amounts of social interaction.

Sitting in zoom meetings is mind numbing and will
Lead to a development and collaboration loss at companies that let their teams become so disconnected
 
SurfandSnow
Posts: 1591
Joined: Sun Feb 01, 2009 7:09 am

Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 9:52 pm

It will be interesting to see how WN, and for that matter all airlines, move forward. Schedules and service patterns were largely dictated by business travelers before - now, VFR and leisure travelers seem to be the primary focus. Living in West Hollywood, CA I have long been a fan of flying WN to/from BUR whenever possible. The typical WN service pattern from BUR before was very high frequency service to LAS, OAK, PHX, SJC and SMF - ostensibly catering to business travelers - and very few nonstop services beyond that. Going forward, I can't help but wonder if WN might try something like BUR-RNO in lieu of one of the OAK or SJC frequencies - allowing Angeleno VFR and leisure travelers to bypass the NorCal connections to Lake Tahoe. Perhaps other popular destinations like AUS could be served nonstop too, if only at low frequency.
Flying in the middle seat of coach is much better than not flying at all!
 
Miamiairport
Posts: 738
Joined: Tue Apr 10, 2018 8:14 pm

Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 10:18 pm

At some point some of the video will go back to in person but never 100%. The genie is out of this bottle. One thing I’ve learned with 40 years in the business world is the sheer willingness of the suits to save a buck results be damn. They won’t give a fig about your “experience”, particularly if it involves multiple resources traveling and/or more expensive long haul flights. Many of you former high status flyers will find yourself dialing into Zoom not settling into a nice flat bed seat.
 
ORDPlanesTrains
Posts: 5
Joined: Wed Jul 27, 2016 4:32 pm

Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 10:22 pm

Waterbomber2 wrote:
Business travel will return.
In 2001, they were saying the same thing amid the dot-com bubble.
In 2008, companies used the downturn to shift many people to economy class travel, which resulted in the birth of economy plus, but airlines had no prpblem filling the front cabins after a while.

This time it won't be different.

Sure, some people are going to explore working more from home and offices will be downsized.
Some of the unnecessary flying of the past will be cut, for sure.

A lot of the business flying is actually unnecessary in this day and age. But people will still keeping getting on planes, because that's what we do.


Will some business travel return? Absolutely. There are a very few things left that legitimately can only be done in person. Is this time different? Completely.

As a 20+ year Road Warrior that was on a plane the Monday after flying resumed in 2001 and kept flying 50-51 weeks a year during the 2008 crisis, this time is completely different. Our company consists mainly of traveling technology consultants with offices in the US, Europe and India. We flew paid F domestically, F/J to Europe and J to India. I've been UA GS and AA CK due to spend, not influence. We all flew to every conferences and trade show we could. I was the first one to use all of the excuses to travel that others have been using: Some things can only be done in person... I need to take the client out to a nice dinner... they were all multitasking on the conference call, so we need to be in the same room... I want to be on the road, it's part of my lifestyle...

If I was completely honest with myself, what I was really doing was chasing status.

Our Global CFO said on an All Hands conference call "Remember all those times you told me you HAD to travel and it was the only way? You were wrong. We have not had a single trip in four months and we are the busiest we have ever been, the most productive we have ever been, and have never been more profitable. It will be a cold day in "heck" before you all travel like you did before this pandemic started." After talking with many other Road Warrior colleagues, they are all hearing virtually the same thing where they work. Your mileage may vary, but this seems to be the consensus, not the exception.

If having a corporate travel ban was not bad enough, in talking to most of my clients, they are prohibited from meeting me even if I did show up. No meals with vendors. No entertainment from vendors. No face to face meetings. They do not want the liability of having a vendor expose their employees to COVID.

Do I want all of this to be true? Absolutely not. It was a great lifestyle and I also have family members that work in the industry. I do not want anyone in the industry to be put out of work. However, having actually traveled through the last two "This is the end of business travel" events, this is a very different situation.
 
cledaybuck
Posts: 1740
Joined: Thu Aug 18, 2016 6:07 pm

Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 10:29 pm

SurfandSnow wrote:
It will be interesting to see how WN, and for that matter all airlines, move forward. Schedules and service patterns were largely dictated by business travelers before - now, VFR and leisure travelers seem to be the primary focus. Living in West Hollywood, CA I have long been a fan of flying WN to/from BUR whenever possible. The typical WN service pattern from BUR before was very high frequency service to LAS, OAK, PHX, SJC and SMF - ostensibly catering to business travelers - and very few nonstop services beyond that. Going forward, I can't help but wonder if WN might try something like BUR-RNO in lieu of one of the OAK or SJC frequencies - allowing Angeleno VFR and leisure travelers to bypass the NorCal connections to Lake Tahoe. Perhaps other popular destinations like AUS could be served nonstop too, if only at low frequency.

So basically, a modified G4 model?
As we celebrate mediocrity, all the boys upstairs want to see, how much you'll pay for what you used to get for free.
 
BNAMealer
Posts: 947
Joined: Sat Jul 27, 2019 8:03 pm

Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 10:34 pm

ORDPlanesTrains wrote:
Waterbomber2 wrote:
Business travel will return.
In 2001, they were saying the same thing amid the dot-com bubble.
In 2008, companies used the downturn to shift many people to economy class travel, which resulted in the birth of economy plus, but airlines had no prpblem filling the front cabins after a while.

This time it won't be different.

Sure, some people are going to explore working more from home and offices will be downsized.
Some of the unnecessary flying of the past will be cut, for sure.

A lot of the business flying is actually unnecessary in this day and age. But people will still keeping getting on planes, because that's what we do.


Will some business travel return? Absolutely. There are a very few things left that legitimately can only be done in person. Is this time different? Completely.

As a 20+ year Road Warrior that was on a plane the Monday after flying resumed in 2001 and kept flying 50-51 weeks a year during the 2008 crisis, this time is completely different. Our company consists mainly of traveling technology consultants with offices in the US, Europe and India. We flew paid F domestically, F/J to Europe and J to India. I've been UA GS and AA CK due to spend, not influence. We all flew to every conferences and trade show we could. I was the first one to use all of the excuses to travel that others have been using: Some things can only be done in person... I need to take the client out to a nice dinner... they were all multitasking on the conference call, so we need to be in the same room... I want to be on the road, it's part of my lifestyle...

If I was completely honest with myself, what I was really doing was chasing status.

Our Global CFO said on an All Hands conference call "Remember all those times you told me you HAD to travel and it was the only way? You were wrong. We have not had a single trip in four months and we are the busiest we have ever been, the most productive we have ever been, and have never been more profitable. It will be a cold day in "heck" before you all travel like you did before this pandemic started." After talking with many other Road Warrior colleagues, they are all hearing virtually the same thing where they work. Your mileage may vary, but this seems to be the consensus, not the exception.

If having a corporate travel ban was not bad enough, in talking to most of my clients, they are prohibited from meeting me even if I did show up. No meals with vendors. No entertainment from vendors. No face to face meetings. They do not want the liability of having a vendor expose their employees to COVID.

Do I want all of this to be true? Absolutely not. It was a great lifestyle and I also have family members that work in the industry. I do not want anyone in the industry to be put out of work. However, having actually traveled through the last two "This is the end of business travel" events, this is a very different situation.


So I guess this means international J cabins will be getting smaller going forward.
 
2175301
Posts: 1907
Joined: Wed May 16, 2007 11:19 am

Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 10:39 pm

While business travel will return (beyond actual field service which never ended); I believe it will only be at 1/4 to 1/3 of the previous level.

Yes there are some things where person to person meetings are important and change the outcome. The other things can be successfully done by various video-conferencing methods.

I don't see travel returning to 2019 levels for many many years, if ever.

I also suspect that ultimately airline tickets will increase at least 25%; but, not more than 50%.

Have a great day,
 
User avatar
Revelation
Posts: 24780
Joined: Wed Feb 09, 2005 9:37 pm

Re: Pt2: SouthWest CEO Kelly, "If things don't improve, this cannot continue"

Fri Sep 11, 2020 10:47 pm

Interesting contrast between:

32andBelow wrote:
Sitting in zoom meetings is mind numbing and will
Lead to a development and collaboration loss at companies that let their teams become so disconnected

And:

ORDPlanesTrains wrote:
Our Global CFO said on an All Hands conference call "Remember all those times you told me you HAD to travel and it was the only way? You were wrong. We have not had a single trip in four months and we are the busiest we have ever been, the most productive we have ever been, and have never been more profitable. It will be a cold day in "heck" before you all travel like you did before this pandemic started." After talking with many other Road Warrior colleagues, they are all hearing virtually the same thing where they work. Your mileage may vary, but this seems to be the consensus, not the exception.

I think it's because some things need a lot of collaboration and other things need a bit of collaboration and a LOT of solo thinking and hard work.

I tried to explain this as one earlier place of employment went from individual cubicles to an "open concept" bullpen layout I referred to as the call center. The fancy real estate consultants came in and told us how it would increase collaboration. Instead it increased our purchases of noise canceling headsets because what most of us needed to do was a small amount of collaboration followed by a lot of concentrated thinking. It also decreased the real estate budget by around 40% by packing us in shoulder to shoulder. It's all about the bottom line, it always is. I'm sure I was more productive when I worked from home, so I did that as much as possible, as did most of my co-workers.

Miamiairport wrote:
One thing I’ve learned with 40 years in the business world is the sheer willingness of the suits to save a buck results be damn. They won’t give a fig about your “experience”, particularly if it involves multiple resources traveling and/or more expensive long haul flights.

:checkmark:

See above. It's always about the bottom line. People are going to have to find ways to adapt to the new norm. Those who can't or won't will get left behind.
Wake up to find out that you are the eyes of the world
The heart has its beaches, its homeland and thoughts of its own
Wake now, discover that you are the song that the morning brings
The heart has its seasons, its evenings and songs of its own

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