Jul 10, 2020

Axios Navigate

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  • Breaking: Electric truck maker Rivian raised $2.5 billion today, accelerating its push to deliver electric pickups and SUVs early next year.

Today's newsletter is 1,405 words, a 5-minute read.

1 big thing: virus sinks summer air travel

Illustration: Eniola Odetunde/Axios

Any hope for a rebound in air travel this year has vanished, with coronavirus cases surging in much of the U.S. and some states imposing quarantines to keep visitors away.

Why it matters: The airline industry is already suffering the worst crisis in its history. The soaring infection rates mean planes will be grounded even longer, putting tens of thousands of people out of work in the coming months.

Driving the news: United Airlines this week warned 36,000 employees — nearly half its U.S. workforce — could be furloughed in October, a grim omen about the state of the aviation industry.

  • With bookings at just 25% of normal July traffic, and a projected 35% in August, United offered workers a sobering assessment.
  • "Given the recent resurgence of COVID-19 cases across the country, it's increasingly likely that travel demand will not return to normal until there is a widely available treatment or vaccine."

What they're saying: "A gut punch" is how Sara Nelson, president of the Association of Flight Attendants-CWA, described the projected job losses in a tweet.

  • "They are also the most honest assessment we've seen on the state of the industry — and our entire economy," she added.
  • Airline workers are bracing for more furlough notices in the coming weeks, as government support programs are set to expire at the end of September.

Just a few weeks ago, there had been a glimmer of hope for a modest rebound in air travel this summer.

  • Airline bookings — mostly for leisure travel — have improved slightly from their April low and airlines were beginning to slowly ramp up passenger capacity.
  • But that was before the new spike in cases across the Sun Belt, including Florida, Texas and Arizona.
  • New York, New Jersey and Connecticut — which successfully beat back the virus — are now requiring visitors from 19 states to quarantine for two weeks. Chicago adopted a similar quarantine for visitors from 15 hot spots.

The budding recovery barely got off the ground.

  • On Tuesday, United said it was cutting back on the August flight schedule it announced days earlier because travel demand was sliding again. Increased bookings to Newark, for example, collapsed after the region's quarantine order, United said.
  • Delta Airlines, which is adding back about 1,000 flights this month, to about 30 percent of its normal schedule, struck a cautious note in a memo to employees Thursday.
  • "The continued growth of the virus through the Sun Belt, coupled with quarantine restrictions being implemented in large markets in the northern part of the country, give us renewed caution about further schedule additions at this time," wrote CEO Ed Bastian in an employee memo.

The big picture: Foreign countries don't want American visitors either.

  • Europe banned American travelers, along with those from Brazil and Russia, because the U.S. failed to control the spread of the virus, and China still has a ban on U.S. travelers.
  • Overseas cargo flights can offset some, but not all, of the decline in international passengers.
  • American Airlines, which expects international travel to continue to be depressed next year as well, is cutting routes to Asia and South America from several U.S. cities.

What to watch: Leisure travelers are staying close to home, and driving, while business travel won't likely rebound until conferences and conventions do.

2. Airlines say relax, take a deep breath

Photo: Chandan Khanna/AFP via Getty Images

Airlines are trying to reassure customers the risk of being infected by the coronavirus on a flight is low because of their improved cleaning efforts and sophisticated cabin ventilation systems.

Why it matters: The airline industry can't recover until passengers feel it is safe to travel again.

The catch: If you're crammed into a seat next to a sick person — especially if they're not wearing a mask — the risk is higher.

How it works: The air on a plane is exchanged as frequently as 10 to 12 times per hour, writes Harvard public health professor Joseph Allen, author of "Healthy Buildings," in a Washington Post op-ed.

  • Air vents above passengers' heads push air downward, not sideways, to vents near the floor, which helps minimize infection from one passenger to another.
  • The air is cleaned using sophisticated HEPA filters that capture 99% of germs and viruses, then mixed with fresh air and recirculated every two to three minutes.

What to watch: New technologies being tested will make the ventilation systems even more effective.

  • Honeywell Aerospace, for instance, is developing cabin sensors that would detect buildups of carbon dioxide, indicating stagnant air.
  • This could occur, for example, during boarding, when people are crowding the aisles and exerting themselves.
  • "It's not dangerous, it's just an indicator of poor ventilation in this area," Honeywell's Tom Hart tells Axios.

Yes, but: Even with proper ventilation, on a crowded plane, it's difficult to avoid your neighbor breathing on you.

  • While some airlines are intentionally limiting bookings to allow for social distancing, some low-cost airlines are urging Transportation Department officials not to impose any capacity limits, including leaving the middle seat vacant.
3. Musk: Tesla on the cusp of full autonomy

Tesla CEO Elon Musk. Photo: Frederic J. Brown/AFP via Getty Images

Tesla CEO Elon Musk told a Chinese audience the carmaker is on the verge of developing fully self-driving cars, Bloomberg reports.

Why it matters: It's a claim he's made many times before, but has yet to deliver, so take it with a grain of salt.

  • Tesla just raised the price of its "full self-driving package" to $8,000, even though the feature is not yet activated on its cars.
  • That means customers are paying for the hardware, while the software is still in development.
  • For now, Tesla's Autopilot system still requires the driver to be fully attentive and ready to take over at any moment.

What he's saying: In a video message played Thursday during the World AI Conference in Shanghai, Musk said Tesla is "very close" to level 5 autonomy, meaning its cars won’t require any human intervention.

  • "I remain confident that we will have the basic functionality for level 5 autonomy complete this year," Musk said.
  • "I think there are no fundamental challenges remaining for level 5 autonomy."
  • "There are many small problems, and then there's the challenge of solving all those small problems and then putting the whole system together, and just keep addressing the long tail of problems."

My thought bubble: In other words, Tesla is not on the cusp of level 5 autonomy.

What to watch: There could be a court ruling next week in a lawsuit brought by German officials over allegations that the name of Tesla's Autopilot system amounts to false advertising.

4. Driving the conversation

Amazon plans at least $100 million to keep Zoox talent after $1.3 billion deal (Stephen Nellis and Jane Lanhee Lee — Reuters)

  • The intrigue: Amazon can walk away from the deal if large numbers of Zoox employees turn down Amazon's incentives to stay. Amid a war for AV talent, Zoox isn't worth much to the online retail giant without the engineers who built the technology.

Uber agrees to buy food-delivery service Postmates for $2.65 billion in stock (Alex Sherman — CNBC)

  • What they're saying: Investors are cheering, but gig workers who underpin the ride-hailing and food-delivery business are sounding off: "It's like an embezzler buying a bank," one worker told Fortune.

Electric car maker Fisker eyes deal to go public (Joshua Franklin, Ben Klayman and Rebecca Spalding — Reuters)

  • Why it matters, per Axios' Ben Geman: If Fisker has a successful public launch, it'll be yet another sign that the market hive-mind sees something in EVs that aren't yet reflected in their actual financials.
5. What I'm driving

The 2020 Cadillac XT4's interior. Photo: GM

Last week I drove to northern Michigan in the 2020 Cadillac XT4, a compact crossover utility.

The big picture: The XT4 is Cadillac's entry-level crossover. It was introduced in 2019, but adds important assisted-driving features as standard equipment for 2020.

Key takeaways: The XT4 is roomier than some other small luxury crossovers like the Mercedes GLE or BMW X1.

  • Its new infotainment system is well-designed, with reasonably easy controls, a characteristic that's often difficult to find in some luxury models.

The knock against the Cadillac XT4 is that the interior isn't fancy enough for a luxury car.

  • The dashboard and upper door panels are covered in a stitched, faux-leather wrap, and there are some plastic bits on the lower doors and center console.
  • I confess I was initially surprised by the Plain Jane dashboard, but the more I drove it, the more I liked its refined simplicity.

The 2020 XT4 adds standard safety features at all price levels, including forward collision warning, forward automatic emergency braking, and front pedestrian braking.

  • Other popular features like blind-spot monitoring, rear cross-traffic alert and adaptive cruise control cost extra.

You can buy an XT4 starting at $36,690, or jump up to the Premium or Sport trims, which both begin at $40,790.

  • But shop around. If you prefer being bathed in luxury, the XT4 might not be for you.

What to watch: Today's XT4 is powered by a turbocharged four-cylinder engine, but Cadillac is going all-electric across its lineup in the future.