President Trump had an idea that would seemingly benefit airlines in the short term and government in the long term, saying the U.S. government should purchase years worth of airline tickets in advance at deeply discounted fares.
The logic being, pump much-needed cash into the struggling industry now in exchange for tickets for future use that, ostensibly, will be cheaper now than down the road.
“One of the ways we can help the airlines is buying tickets at a very large discount, maybe 50 percent off or maybe more, and you buy into four or five years’ worth of tickets, and you infuse them with some cash,” Bloomberg reported Trump saying at an Oval Office ceremony on Friday where he signed a $484 billion coronavirus stimulus measure. “And in the meantime, we’re flying the people of our country for a fraction of the cost it would be when the airlines get back.”
Of course, with any plan comes a plethora of questions. The most important one being, would the airlines do it? As the blog Simple Flying pointed out, contracted flying is one of the airlines’ biggest revenue generators.
Apple, for instance, spends hundreds of millions of dollars a year in business class travel on United Airlines while flying the world to push its iPads and iPhones. Government travel is no different and, in fact, is one of the most reliable forms of revenue for airlines.
At a 50 percent discount, airlines will lose out on loads of future revenue in exchange for short-term cash. They would have to look at the entire picture and try to project the future to see if it’s a good deal – or if they should pass.
Also at issue is whether this is a good deal for the four major airlines – American, Delta, Southwest and United – who might be able to weather such a plan by increasing costs of business or first-class tickets, and a bad deal for budget carriers like a Spirit Airlines, which doesn’t have that kind of option.
Time will tell if Trump’s idea comes to fruition.
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