/biz/ - Business & Finance

>>17988530
Airlines will never be profitable in the long term, and it's for fundamental reasons. Let me explain.

Airlines are highly capital intensive, both initially and on an ongoing basis. Airplanes are expensive to buy in the first place, and renting terminal space and negotiating flight schedules cost a lot of money every month. You also have to service and maintain the airplanes and pay lots of labor costs for everyone involved.

Additionally, customers have almost zero brand loyalty. People will choose different airlines over extremely minor differences in in price, which drives a race to the bottom. Most people who fly also don't care enough to fly first class to get better service or experience, so there's no way an airline can avoid the race to the bottom by seeking to be seen as a luxury brand.

Finally, with the advent of telecommunications and the internet, most in person meetings can be replaced by teleconferencing. Until now boomers kept in person meetings going but with corona, they're being forced to teleconference, and once the beancounters see how cost effective it is, business flights will stay low during the recovery and forever after. Government flights will also go down but more slowly because the beancounters have much less power there.

Basically, airlines are NEVER a good investment, and this has been known since the 70s. Every new airline is an ego play by the billionaire or national government that gets it started and they all lose money in the long run. The only real utility they have (international/intercontinental travel) is being replaced by teleconferencing. At best they can be profitable short plays, but I would never hold an airline stock for more than 366 days, and only then to get favorable tax treatment.