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This is PR nonsense to help promote Airbnb's IPO plan, a plan exclusively launched to cash out before the buzzer sounds. Understandably AirBnb wants to create a

This is PR nonsense to help promote Airbnb's IPO plan, a plan exclusively launched to cash out before the buzzer sounds. Understandably AirBnb wants to create a story of how they brilliantly pulled the plane up at the last minute, and despite laying of 25% of the company, are still healthy and fine. These temporary boosts in one small sector are just blips that mask the fact that the leisure travel industry is in major, major trouble. There was a temporary boom in younger people looking to get out of cities and find some space this summer, but as more and more people lose jobs, or have jobs that are threatened there is going to be a smaller and smaller group of people willing to pay much less for travel. On top of this I'm still very bearish on leisure air travel. There have been numerous articles on HN about the two major drivers of airline revenue: credit card miles and corporate travel. Corporate travel will never return to pre-covid levels, and credit card miles are a big part of this as well. Airlines are already starting to have major layoffs (when I mentioned this months ago the comments were that this wouldn't happen, but here we are). Airlines seriously expected government bailout, but it didn't happen and so furloughs, which will become layoffs did. This will mean that air travel will return to a luxury good, which will make leisure travel a luxury experience. Likewise, gen-z workers are realizing that the economy is not always good times and full speed ahead. The idea of booking a last minute beach trip with a bunch of friends will quickly seem like a luxury of another age. We still haven't seen the consequences of this pandemic and our fragile startup ecosystem start to unfold.

secondbreakfast 6y ago
I think you're right about a lot of trends here, especially the funny point about how airlines rewards programs are worth more than the airlines themselves. However, business travel and leisure travel shouldn't be conflated. I'm much more worried about the hotel industry - which caters to business travelers that will be significantly impaired for much longer post-COVID. I.e. domestic Airbnb spending was actually up 22% in July YoY, whereas hotels are still getting destroyed.[1] [1]: https://trends.edison.tech/research/airbnb-hotel-sales-sept-2020.html https://trends.edison.tech/research/airbnb-hotel-sales-sept-...
norswap 6y ago
I predict none of those doomsday predictions will come to pass, and everything will be back to pre-covid levels soon enough (maybe 2-5 after the pandemic recedes). In the meantime, the sector is in for a rough ride, yes. I don't have much more compelling arguments than you have, so time will tell!
- pb7 6y ago
  >maybe 2-5 after the pandemic recedes Months? Years?
  - redis_mlc 6y ago
    I read aviation news sources weekly. Domestic air travel (inside national borders) will have various starts and stops due to corona. The worst-case is if the FAA rules something like jets must be 100% disinfected between flights, which could be $250,000 or more per leg. (That is the case for some drug-resistant TB patient flights.) But I'd estimate that international airline travel will take a year to start again after a vaccine is globally available, so in the area of 2 more years. I say globally because travellers were found to be skirting travel bans from China to the USA via legs to Africa and Canada. The international airline industry really doesn't have any corona answers at this time. A gradual increase in air travel is unavoidable since unpickling airliners will take a considerable amount of time - each jet will take about a calendar week to prepare for inspection, consisting of one man-month of work. If problems are found, then longer. (Airliners aren't designed to sit for an extended period of time, so there's all kinds of moisture, landing gear/tires and corrosion issues that are possible. Big planes create big problems.) Besides planes, another issue that will need to be addressed is that pilots need a variety of recurring training and medical certificates, so that would cause a spike in demand that can't be met after a sudden re-opening. Currently, the FAA has various modified rules and extensions, but those are temporary and the FAA is loathe to allow gaps in airmen standards. https://www.ainonline.com/aviation-news/business-aviation/2020-10-08/faa-continues-extension-expansion-covid-relief https://www.ainonline.com/aviation-news/business-aviation/20... Source: commercially-rated airplane pilot.
  - norswap 6y ago
jliptzin 6y ago
Good. Air travel in its current form should be more expensive. It should cost a lot more to fly from coast to coast. Maybe then they could take seats out and make the whole experience for the average person a lot better. Something in between getting stuffed into a tube like cattle, or paying for extremely expensive first class tickets which you may not get anyway even if you can afford them because there's so few available on each flight.
- tr352 6y ago
  Wouldn't count on it. Most people want to fly as cheaply as possible, also after corona. So airliners will keep on maximising seats per plane. Moreover, decreasing seats per plane will increase emission per passenger, so it also makes no sense from an environmental perspective. So it's more likely that you're going to pay more for the same "stuffed into a tube like cattle" experience.
- niij 6y ago
  Should only the rich be able to fly? I don't mind being crammed in a metal tube for a few hours if it means I can use the money to splurge on restaurants/activities while I'm there.
lhorie 6y ago
I think it actually makes sense that AirBnB might see business picking up in local rentals. With people generally being wary of air travel due to Covid, and the economic pressures to not spend as much, a road trip + an AirBnb do seem like an attractive vacation option: it's far enough from home, and it's more affordable than a hotel. On the topic of luxury, I'm not sure people appreciate what air travel becoming a luxury really entails. My wife mentioned a few months ago that air travel from North America to China was going for something like $80k per ticket at some point (and this is for economy class!). If we see Covid case numbers increasing again due to the flu season coming up, and if we see subsequent governmental pressures to limit air travel for even more extending periods of time, then the laws of supply and demand might make air travel prohibitively expensive even for relatively well-off people, like FAANG folks. Perhaps a silver lining is that in such a scenario, maybe places like Bali might get a chance to take a break from tourist ecological destruction.
- triceratops 6y ago
  I don't think international travel will ever become $80k/ticket expensive. Even before widespread air travel, people traveled abroad on ocean liners for far less than that.
- sjg007 6y ago
  The govt will subsidize airfares and go back to regulation before a ticket costs 80k.
  - zxcvbn4038 6y ago
    Would be great if the government just took over the US airlines - instead of trying to cram as many people as possible into a space let’s go back to all the countries trying to one-up each other with the luxury and opulence of their sovereign airlines.
bradly 6y ago
I have full-time vacation rentals in Hawaii on Airbnb and Vrbo which have been vacant since March. The past couple weeks we have finally started to get inquiries and bookings, with our first guests back arriving in the beginning of November. We've had very few cancellations for our 2021 dates, but we also haven't had our normal stream of bookings for 2021–more of a pause of 2021 activity. We believe there will be pent-up demand for vacations in 2021 after travel restrictions relax (Maui has had mandatory 14 quarantines in place which end this week). People will have more unused vacation time than normal and quarantine fatigue/cabin fever will also increase demand. I do agree that air travel will be the biggest barrier for us. The non-stops from where we live are gone for now, so the shortest travel time has gone from 5h 30m to an 11h 30m red-eye.
- andreilys 6y ago
  Pent up demand but no money to spend on these vacations. Why would you fly to Hawaii when you don’t know if you can make next months rent?
  - pengaru 6y ago
    Do you really think the people who can't make next month's rent substantially overlap with the frequent air travelers? It's definitely not the case among my peers. If anything, the people who traveled a lot have just been saving a lot of money during covid while they WFH and are unable to spend it as frivolously.
    - andreilys 6y ago
      I have friends who had great jobs (and would take frequent vacations) but have since been laid off and are now living at home. Sure my tech friends have done great, but not everybody works in an industry that's conducive to remote work.
  - metalliqaz 6y ago
    Were those people taking vacations in the first place? All the white-collar workers who fly to AirBnBs in better climates are still pulling in a paycheck working from home.
steffan 6y ago
> Corporate travel will never return to pre-covid levels, and credit card miles are a big part of this as well. One example - The last several years, I probably charged in excess of $120k / year on one particular airline card. This year, probably $1000 so far, mainly recurring bills I haven't bothered to switch to another card. Since cards had become a significant revenue driver for airlines, this is going to have some medium term negative financial consequences as well. (I'm probably not even in the top 20% of business travelers, either)
switch11 6y ago
agreed 100% AirBnb is looking for bagholders anyone with half a brain knows now is the absolute worst time to invest in something like AirBnb On the other hand, if the IPO flops, and prices go down a lot, then it might become a worthwhile risk

secondbreakfast 6y ago

I think you're right about a lot of trends here, especially the funny point about how airlines rewards programs are worth more than the airlines themselves. However, business travel and leisure travel shouldn't be conflated. I'm much more worried about the hotel industry - which caters to business travelers that will be significantly impaired for much longer post-COVID. I.e. domestic Airbnb spending was actually up 22% in July YoY, whereas hotels are still getting destroyed.[1] [1]: https://trends.edison.tech/research/airbnb-hotel-sales-sept-2020.html https://trends.edison.tech/research/airbnb-hotel-sales-sept-...

norswap 6y ago

I predict none of those doomsday predictions will come to pass, and everything will be back to pre-covid levels soon enough (maybe 2-5 after the pandemic recedes). In the meantime, the sector is in for a rough ride, yes. I don't have much more compelling arguments than you have, so time will tell!

pb7 6y ago
>maybe 2-5 after the pandemic recedes Months? Years?
- redis_mlc 6y ago
  I read aviation news sources weekly. Domestic air travel (inside national borders) will have various starts and stops due to corona. The worst-case is if the FAA rules something like jets must be 100% disinfected between flights, which could be $250,000 or more per leg. (That is the case for some drug-resistant TB patient flights.) But I'd estimate that international airline travel will take a year to start again after a vaccine is globally available, so in the area of 2 more years. I say globally because travellers were found to be skirting travel bans from China to the USA via legs to Africa and Canada. The international airline industry really doesn't have any corona answers at this time. A gradual increase in air travel is unavoidable since unpickling airliners will take a considerable amount of time - each jet will take about a calendar week to prepare for inspection, consisting of one man-month of work. If problems are found, then longer. (Airliners aren't designed to sit for an extended period of time, so there's all kinds of moisture, landing gear/tires and corrosion issues that are possible. Big planes create big problems.) Besides planes, another issue that will need to be addressed is that pilots need a variety of recurring training and medical certificates, so that would cause a spike in demand that can't be met after a sudden re-opening. Currently, the FAA has various modified rules and extensions, but those are temporary and the FAA is loathe to allow gaps in airmen standards. https://www.ainonline.com/aviation-news/business-aviation/2020-10-08/faa-continues-extension-expansion-covid-relief https://www.ainonline.com/aviation-news/business-aviation/20... Source: commercially-rated airplane pilot.
- norswap 6y ago

jliptzin 6y ago

Good. Air travel in its current form should be more expensive. It should cost a lot more to fly from coast to coast. Maybe then they could take seats out and make the whole experience for the average person a lot better. Something in between getting stuffed into a tube like cattle, or paying for extremely expensive first class tickets which you may not get anyway even if you can afford them because there's so few available on each flight.

tr352 6y ago
Wouldn't count on it. Most people want to fly as cheaply as possible, also after corona. So airliners will keep on maximising seats per plane. Moreover, decreasing seats per plane will increase emission per passenger, so it also makes no sense from an environmental perspective. So it's more likely that you're going to pay more for the same "stuffed into a tube like cattle" experience.
niij 6y ago
Should only the rich be able to fly? I don't mind being crammed in a metal tube for a few hours if it means I can use the money to splurge on restaurants/activities while I'm there.

lhorie 6y ago

I think it actually makes sense that AirBnB might see business picking up in local rentals. With people generally being wary of air travel due to Covid, and the economic pressures to not spend as much, a road trip + an AirBnb do seem like an attractive vacation option: it's far enough from home, and it's more affordable than a hotel. On the topic of luxury, I'm not sure people appreciate what air travel becoming a luxury really entails. My wife mentioned a few months ago that air travel from North America to China was going for something like $80k per ticket at some point (and this is for economy class!). If we see Covid case numbers increasing again due to the flu season coming up, and if we see subsequent governmental pressures to limit air travel for even more extending periods of time, then the laws of supply and demand might make air travel prohibitively expensive even for relatively well-off people, like FAANG folks. Perhaps a silver lining is that in such a scenario, maybe places like Bali might get a chance to take a break from tourist ecological destruction.

triceratops 6y ago
I don't think international travel will ever become $80k/ticket expensive. Even before widespread air travel, people traveled abroad on ocean liners for far less than that.
sjg007 6y ago
The govt will subsidize airfares and go back to regulation before a ticket costs 80k.
- zxcvbn4038 6y ago
  Would be great if the government just took over the US airlines - instead of trying to cram as many people as possible into a space let’s go back to all the countries trying to one-up each other with the luxury and opulence of their sovereign airlines.

bradly 6y ago

I have full-time vacation rentals in Hawaii on Airbnb and Vrbo which have been vacant since March. The past couple weeks we have finally started to get inquiries and bookings, with our first guests back arriving in the beginning of November. We've had very few cancellations for our 2021 dates, but we also haven't had our normal stream of bookings for 2021–more of a pause of 2021 activity. We believe there will be pent-up demand for vacations in 2021 after travel restrictions relax (Maui has had mandatory 14 quarantines in place which end this week). People will have more unused vacation time than normal and quarantine fatigue/cabin fever will also increase demand. I do agree that air travel will be the biggest barrier for us. The non-stops from where we live are gone for now, so the shortest travel time has gone from 5h 30m to an 11h 30m red-eye.

andreilys 6y ago
Pent up demand but no money to spend on these vacations. Why would you fly to Hawaii when you don’t know if you can make next months rent?
- pengaru 6y ago
  Do you really think the people who can't make next month's rent substantially overlap with the frequent air travelers? It's definitely not the case among my peers. If anything, the people who traveled a lot have just been saving a lot of money during covid while they WFH and are unable to spend it as frivolously.
  - andreilys 6y ago
    I have friends who had great jobs (and would take frequent vacations) but have since been laid off and are now living at home. Sure my tech friends have done great, but not everybody works in an industry that's conducive to remote work.
- metalliqaz 6y ago
  Were those people taking vacations in the first place? All the white-collar workers who fly to AirBnBs in better climates are still pulling in a paycheck working from home.

steffan 6y ago

> Corporate travel will never return to pre-covid levels, and credit card miles are a big part of this as well. One example - The last several years, I probably charged in excess of $120k / year on one particular airline card. This year, probably $1000 so far, mainly recurring bills I haven't bothered to switch to another card. Since cards had become a significant revenue driver for airlines, this is going to have some medium term negative financial consequences as well. (I'm probably not even in the top 20% of business travelers, either)

switch11 6y ago

agreed 100% AirBnb is looking for bagholders anyone with half a brain knows now is the absolute worst time to invest in something like AirBnb On the other hand, if the IPO flops, and prices go down a lot, then it might become a worthwhile risk