How are legacy airlines surviving covid-19? By borrowing from the low-cost playbook

Following the 9/11 attacks, big U.S. airlines were forced to slash fares to compete with their low-cost rivals. In the Covid-19 crisis, they are also learning how to act like them.

The economic model of the U.S. full-service carriers seems broken for the foreseeable future. American Airlines and United Airlines last week started cutting 32,000 jobs, even as they maintain hopes of a second bailout.

Unlike budget carriers, which fly “point-to-point” routes, the largest airlines rely on “hub-and-spoke” networks to feed traffic to key airports. With passenger capacity stuck at 50% of pre-pandemic levels and 86% of international routes still restricted, the connectivity of these carefully crafted networks has plummeted, particularly for second-tier hubs, an analysis of Oliver Wyman’s PlaneStats database suggests.