Crandall: Smaller Airline Industry Will Emerge
- Former American CEO Bob Crandall told Bloomberg that he expects a “substantially smaller” airline industry for a long time to come. This crisis, in other words, is more than just a cyclical downturn. The central problem is that many people will feel unsafe in a confined space like an aircraft cabin. And that won’t change until there’s a vaccine, a cure, or much more systematic testing to identify and quarantine people who have the virus.
Crandall accepts the need for Washington to aid the airline industry in such times, serving as an insurer of last resort for an economically-vital industry. He accepts the notion of banning behaviors like stock buybacks. But he’s not in favor of government ownership.
- Romanians working in Italy. Mexicans working in the U.S. Indians working in Dubai. Filipinos working, well, everywhere. Migrant labor was a staple of the pre-Covid global economy, in industries as diverse as hospitality, construction, health care, and agriculture. Airlines, of course, benefit greatly from this cross-border flow of labor. But what now?
The Bloomberg “Stephanomics” podcast asks this question, as millions of migrants return home amid the crisis. In Eastern Europe, countries like Poland are wondering whether the influx of returning workers, now available for infrastructure projects, for example, can neutralize the lost income from migrant worker remittances. About one-third of Singapore’s workforce is foreign born. In Dubai, the population could drop as much as 10% as expats, including skilled workers like engineers and teachers, return home. The Gulf region of course, is also losing oil sector jobs traditionally filled by migrants.
“The export and import of labor,” notes Bloomberg’s Dan Moss, “is one of the biggest causalities of the Covid-induced downturn.” Add airlines to the collateral damage. What’s the longterm future of the globalized labor market? The best argument for eventual recovery is that the economies of worker-exporting countries and worker-importing countries are so heavily dependent on one another.