May 1, 2020

Axios Navigate

Hi and welcome back! We made it to May, everyone! Hope you continue to be safe and healthy.

Join Axios co-founder Mike Allen and health care reporter Bob Herman on Monday, May 4, at 12:30pm ET for a live virtual event on gene therapy and the future of disease treatment.

  • Our conversation will be with Rep. Scott Peters (D-Calif.) and Jane F. Barlow, senior adviser of the MIT FoCUS Project.
  • Register here.

Today's Smart Brevity count: 1,640 words, a 6-minute read.

1 big thing: Flying will never be the same

Illustration: Sarah Grillo/Axios

Whenever you're ready to fly again, be prepared: Air travel after the coronavirus will look and feel a lot different from the last time you boarded a plane.

The big picture: With passenger traffic down 95% during the height of the pandemic, airlines have all but given up on trying to salvage the lucrative summer travel season. The global industry expects to lose $314 billion this year, and airline executives say it could be two to three years before air travel recovers to pre-crisis levels.

In the meantime, pack your patience along with your face mask: Everything is going to take longer.

  • Expect new procedures for everything from luggage check-in to security clearance and boarding.
  • You might even need to have your blood tested to prove you're in good health before boarding.
  • “9/11 changed travel completely with added security checks and longer check-in times. The impact of COVID-19 on air travel will be even more far-reaching,” airline consultant Shashank Nigam, CEO and founder of SimpliFlying, said in the company blog.

The big question: How much hassle will people tolerate, or will they avoid flying altogether?

What's happening: Flights are practically empty right now, making it easy to spread out, and airlines like Jet Blue and United are starting to require passengers wear face masks.

Masks and social distancing are only the beginning. In a new report, "The Rise of Sanitised Travel," consultancy SimpliFlying anticipates dozens of ways air travel might change in the coming months and years. Some examples:

  1. Airport curbside: Passengers could be required to arrive at least four hours ahead of their flight, and pass through a "disinfection tunnel" or thermal scanner to check their temperature before being allowed to enter the airport.
  2. Check-in and bag drop: New touchless kiosks would allow passengers to check in by scanning a barcode, or using gestures or voice commands. Agents would be behind plexiglass shields, and bags would be disinfected and then "sanitagged."
  3. Health check: Passengers would undergo a health screening, and potentially even have their blood tested. In April, Emirates became the first airline to conduct rapid on-site COVID-19 testing of passengers before boarding.
  4. Security: Each carry-on bag and security bin would be disinfected when entering the X-ray machine, using fogging or UV-ray techniques, then “sanitagged."
  5. Boarding: Passengers would need to be present an hour before departure, maintain social distancing in the gate area, and board only when they receive individual notifications on their smartphones to prevent crowding in the jet bridge.
  6. On the plane: Passengers may wipe down their seats and tray tables and there may be in-flight janitors to disinfect high-touch areas. In-flight magazines will be removed, seatback pockets emptied, and passengers will likely use their own devices to watch videos.

What to watch: Designers like Italy's Aviointeriors are contemplating new seating arrangements or barriers between seats to minimize the risk.

  • Imagine the middle seat facing the other way, for example, with clear barriers between passengers.

The bottom line: If it seems hard to fathom, remember this: We never imagined we'd have to take off our shoes before passing through airport security, either.

Read more

Bonus chart: Collapse of air travel
Reproduced from Deutsche Bank Global Research via TSA; Chart: Axios Visuals

Stay-at-home orders, along with fear of contracting the coronavirus, devastated the travel industry, including airlines, hotels, amusements and conventions.

  • While virus fears are lessening, people are growing more worried about their finances, according to research cited by the U.S. Travel Association
  • Airlines don't see a recovery any time soon.
2. Pandemic flattens the "sharing economy"

Illustration: Sarah Grillo/Axios

The "sharing economy" — as embodied by companies like Uber, Airbnb, and WeWork — is in critical condition because of the coronavirus pandemic, Axios' Scott Rosenberg writes.

Why it matters: Basic assumptions about the evolution of human behavior in the digital age are melting under the pressure of COVID-19, requiring us to recalibrate how we envision the tech-enabled future.

The pandemic has brutally shut down these companies' fundamental bets.

  • Right now, Americans simply aren't leaving home much, and when they do, they will drive in their own cars if that's an option.
  • Of note: They may still prefer ride-hailing to mass transit, or may have to use these services in places where transit routes have been drastically cut back.

The big picture: The sharing economy — an idealistic vision birthed and branded in the late 2000s, during the last economic crisis — held that Americans were moving beyond an ethos of acquiring and protecting stuff.

  • Instead, we would willingly share use and enjoyment of space, vehicles, and tools, saving money to buy memorable experiences and fulfilling leisure activities.

Yes, but: The companies that emerged to deploy this vision, driven by a startup ideology of "scaling fast" and enriching investors, turned it into something faster and nastier — a grinding gig economy with a flashy app front-end.

  • The billion-dollar sharing giants were all about squeezing new efficiencies out of existing human and material assets, and then trying to squeeze a profit from fees on the margins.
  • That was always a tough business proposition: Uber and Lyft, which are both now publicly traded, have never turned a profit.
  • Now, even if these firms bounce back in the post-lockdown world, they've lost all room to maneuver.

Read more

3. Ford CEO: "Don't waste a crisis"

James Hackett. Photo: Spencer Platt/Getty Images

The coronavirus pandemic couldn't have hit Ford Motor Co. at a worse time — midway through a restructuring effort, with several critical vehicle debuts just around the corner.

Why it matters: With its factories closed and car demand sharply lower, it's more important than ever for Ford to get the company back on track quickly so it can weather the storm.

  • But some analysts are worried about what they see as a lack of urgency after Ford posted a $2 billion Q1 loss and predicted it would lose another $5 billion or more this quarter.
  • Pressed during an earnings call about whether Ford would accelerate its restructuring actions in light of the pandemic, CEO James Hackett acknowledged "one truth, right? Don't waste a crisis." But he offered no new plans.

What they're saying: "While the cash burn dynamics were in-line with what we had modeled, Ford did not appear to have a firm grasp on how it might accelerate restructuring actions to offset what could be a lower sales environment even post-lockdowns," Barclays analyst Brian Johnson wrote in a note to clients.

By the numbers: Ford has $35 billion in cash after recent borrowings, enough to last through the year if there's a prolonged crisis, CFO Tim Stone said.

  • So far, none of the Detroit automakers appears to be in need of a bailout.

For the record: Ford still owes the federal government $1.5 billion for government loans it received during the last crisis in 2009.

What we're watching: It's not clear when Ford will reopen its U.S. manufacturing plants but every day that it's not producing cars means more red ink.

  • Ford's European factories are scheduled to gradually resume production starting Monday.
4. Driving the conversation

Traffic cop: The Paris mayor won’t let coronavirus slow her car-free ambitions (Feargus O'Sullivan — CityLab)

  • What's happening: As cities reopen, many people may prefer driving their own cars to avoid overcrowded public transportation. But increased air pollution has been linked to a higher risk of mortality from COVID-19, giving officials like Paris Mayor Anne Hidalgo more reason to push alternatives like walking or biking.

Air battle: The auto industry’s fight with the FCC over vehicle-to-everything communication is heating up (Andrew J. Hawkins — The Verge)

  • Between the lines: It’s a classic case of “use it or lose it.” Automakers want to head off an FCC plan to repurpose radio spectrum set aside long ago for vehicle safety communications. But the industry's last-ditch promise to install 5 million pieces of technology equipment over the next five years is too little, too late, says the FCC.

No bailout: Boeing declines government funding after raising $25 billion in a bond deal (Orion Rummler — Axios)

  • Why it matters: The announcement was a sign of Boeing executives’ determination to ride out the crisis without government support, though that could hasten layoffs at a company that might face much lower demand for its products after the crisis, the Washington Post writes.
5. Pandemic helps robot company gain traction

Refraction AI's REV-1 robot. Photo: Refraction AI

Refraction AI, a robot delivery startup in Ann Arbor, Michigan, was having trouble gaining traction before the pandemic. Now it's racing to capitalize on our stay-at-home mentality.

Why it matters: In the midst of the pain and suffering from a crisis, there's often room for innovation by forward-looking entrepreneurs with good timing.

Founders Matt Johnson-Roberson and Ram Vasudevan, both professors at the University of Michigan, developed an autonomous electric cargo bike they believed would be cheaper and easier to deploy than other delivery robots. They said...

  • The three-wheeled REV-1 can travel in bike lanes or on the street, thus filling a sweet spot between small sidewalk robots like Starship and Nuro's compact delivery vans.
  • It’s categorized as an e-bike, so it has fewer regulatory hurdles.
  • Teleoperators monitor the robots remotely to take over when needed at busy intersections.
  • The company raised $2.5 million and started a six-month pilot with eight robots delivering prepared meals to some 500 customers in Ann Arbor.
  • Still, convincing people to get their dinner from a robot was a challenge.

Then the coronavirus arrived. Stay-at-home orders created a surge in grocery delivery, and Refraction AI quickly pivoted.

  • "I said, this is our moment. Our dream was to get to national scale, but we didn't know what the path looked like until this virus hit," Johnson-Roberson told me.
  • "It took a pandemic to crystallize for people why robot delivery could be huge."

The company is quadrupling output, with help from Michigan's Roush Industries, and expects to have 25 robots running in Ann Arbor within the next two months.

  • "We had a 6 month plan ... that turned into a two-week plan."

What's next: The company is beginning a free touchless grocery delivery service in Ann Arbor, using its own employees as pickers to load the vehicles at the store.

I took a break from test-driving vehicles this week. (I felt like staying home for a change.) But next week I'll share my impressions of a new electric Mini Cooper.