Cnbc, Scott Crow, United States discussed on Squawk Pod

Squawk Pod


I I'm CNBC producer. Katie Kramer one of the voices behind the CNBC podcast squawk pot. In these times of uncertainty. We WanNa make sure we're bringing you our listeners. As much information as possible as quickly as we can. That's why we're sharing with you now a CNBC special report markets in turmoil. Listen I'm Sarah Ivan on Day? One hundred thirty. Eight of the corona virus crisis Washington gets set to vote on more stimulus for American businesses as more states including New York. Prepare for partial reopening. I have very recently seen early. Data from clinical trial with coronavirus vaccine new optimism from the White House. We're closing in on a vaccine. This is an industry that is built on the idea. You put as many people on the plane as possible. What could social distancing on an airplane look like tonight? What's possible and what isn't and this is the only source of income that I have this Special Forum for American business owners on their challenges and path forward including one owner. Who just met with the president this. Cnbc special report begins right now. Here's Sara Aisin good evening everyone and welcome stocks closing out today with small gains but ending the week with big losses the Dow S and p five hundred and Nasdaq. Oh with some fractional gains. Today the Dow rose sixty points but had been down at one point more than two hundred and seventy points but for the week the Dow. Snp both lost more than two percent for the S. and P. Five hundred it was the biggest weekly percentage loss in two months now to the big battle breaking out over what passengers want and what airlines are willing to give when it comes to safer seating. Philibeaux live tonight in Chicago fell sir. Let me take you back to what it was like pre cove nineteen when you looked at a seating chart for a typical 737. What you found was that about eighty five percent of the seats were full. In fact. Last year the industry had eighty four point four percent of the seats full and most of their flights if not all their flights. So when you look at those record load factors you thought okay. What does the industry going to do? Once cove in one thousand nine hits and we saw the images were of empty. Airplanes virtually empty airplanes. It was not uncommon to hear people say look I was on a flight yesterday and there were two other people on my flight and that gave the impression that when people would start flying again they would see empty airplanes or that the airlines would socially distance. The passengers take a look at what we're seeing within the last week. And this is what's causing quite a stir you're seeing load factors that have improved dramatically. And that's because the airlines have parked so many of their airplanes about sixty percent of the world's Commercial. Airplanes are now parked so as a result we have representative Peter Defazio. Who RUNS THE HOUSE TRANSPORTATION? Committee saying this is what should be done with airlines. They should guarantee that the middle seat will never be filled and that the planes are capped at a capacity with sixty seven percent of the seats filled. No more and this is what a typical seven thirty seven with. Look like by the way that does not equal true. Social distancing. Eighteen inches between two seats is far from six feet. If there was true social distancing at most you would get maybe twenty passengers in economy class and four passengers in business class on a typical seven. Thirty seven bottom line. Is this era. While people want social distancing especially in the airplane the reality is it just won't work for the airlines. They would have to charge ridiculous ticket prices in order for that to happen and even keeping the middle seat empty. They're going to have to raise their ticket prices substantially. They'll stay with us. Let's bring in Douglas Kid. The Executive Director of the National Association of Airline Passengers. His Organization follow the petition yesterday to pressure airlines to take more action to insure passenger safety. So what exactly is your organization calling for these airlines to do we're going for the airlines to do is to limit the load factor on all flights to no more than fifty percent We'RE NOT GONNA ask for the extreme measures. We think that fifty percent should be able to give the airlines adequate spacing between passengers. So that everybody can fly comfortably and in reasonable safety fell. What would that look like? Is that even economically possible for these airlines? It's not economically feasible for them at the current airfare rate. Which you know if you were to say okay. We're going to raise fares by forty fifty sixty percent. Then maybe we would have fifty percent capacity on our planes. But you're going down a slippery slope there because the airlines realize they start raising those fares. They are not gonNa have as many people flying and at fifty percent capacity. You're going to have people who are going to be way too close to each other at least for their own comfort level so the question is are you just going to accept it. Are you going to say I'm GonNa get on board? I'm not crazy about it but I'll take the precautions that I can take whether it's wearing a mask wearing goggles. Doing whatever I can to try to protect myself as much as possible and then you would get potentially lower fares and the airlines potentially would be able to bounce back a little bit quicker than they're expected to well dog Dogwood. Would your members be willing? Do you think the broader public would be willing to pay higher airline fares for for that kind of spacing out safety protocols that you're calling for fifty percent capacity first of all? I want to say this that flying is always involved. A degree of risk So when people know that when they get on board the airplane. There's always a risk that something could happen. Now if you say okay are people willing to pay additional money to save their life will. Of course they're willing to pay this money and they're willing to pay or fair in. That means that their safety is is substantially increased but people are not interested in is paying a higher to be on a packed plane where their health is put at risk. So if you have to say okay. Do you want to pay more? And have a little bit of social distancing. Most people I think would would go for that if you WANNA if you say. Hey we're going to put as many people on the plane. We're going to pretend that this. Ronin virus doesn't exist we're GONNA put you at risk and we're GONNA charge expert in the bargain. Passengers are not gonna go for that We expect to give value for value and when we travel expect to travel safely we expect the airlines to take reasonable precautions if that means flying at fifty percent or less For the duration of this emergency then fine and as far as the cost short. We'll pay more But then again. The cost of lying has always been variable. If you go on any of the ticket websites you can see. The price for a ticket can vary as much as one hundred percent. So okay we have to pay more to be safe will pay more to be safe. But we don't want to pay more the unsafe and have the airline CEO. We're doing everything we can about. Covert nineteen when in fact there are just operating the same way they did before. Phil are the airlines talking about fare increases to to make these sorts of proposals happen especially if they're going to get pushed by lawmakers to eliminate that middle seat know what the airlines are focused on right now is coming up with the fair that gets as many people to get back on board as possible and because they have part so many aircraft because they've got to bring down their cash burn they're burning millions tens of millions of dollars every month every day and so when they are looking at their bottom line they are saying we have got mike the flights that are in the air as profitable as possible. And how do you do that? You put as many people in as many seats as possible. Now you are trying to stress safety by saying. Wear a mask if you feel more comfortable wearing goggles where. I goggles wipe down your seat. There disinfecting aircraft after every flight at some point the airlines are saying we have got to do what we can in order to stay a lot. We cannot continue to burn tens of millions of dollars every day. It's a continue to debate that we will have here. Thank you dog our thanks to you as well for Wang. Let's move onto retail. Jc Penney just filing for bankruptcy the retailer joining others like J. crew and Neiman Marcus. Who have had to restructure from the impact of the pandemic with grim prospects for so many of these businesses. Look the normal look like for retail Scott Crow as the chief investment officer of Center Square. It's a retail investment firm. Scott thanks for joining US tonight. Just how heard how hard it would be economically for for the airlines to figure out social distancing and safety precautions. How are the retailers? GonNa do that. Well it's going to be tough for retailers. Well and you know basically what we're looking at is Right now a at about a twenty percents rent collection so the average retail Mo- landlord and about fifty percent for a shopping center rate and about eighty percents of service retail. My point that out because that's a pretty good indicator of how those Tennessee Business So as it relates to sitting in an enclosed environment. It's going to be very challenging. It's going to be much more challenging for movie theaters. Restaurants Gyms And other forms of retail. We'll bounce back that along with hospitality and leisure retail. Makes UP ABOUT TWENTY. Five percent of the underlying workforce in the US and there are a lot of those people who are out of the job right now and a lot of those jobs won't be coming back.

Coming up next