US Centers for Disease Control and Prevention (CDC) urged (28-Mar-2020) New York, New Jersey and Connecticut residents to avoid non essential domestic travel for 14 days, effective immediately, excepting critical infrastructure employees. [more - original PR]
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When the General Manager of Atlanta Hartsfield-Jackson International Airport, the world’s busiest, reports an 85% year-on-year decline in passengers since the coronavirus outbreak, says revenue could be down by 50% or more, and that the airport normally services 26,000 flights per day but it has decreased to 1200, and "those flights are mostly empty"– you know that the aviation industry has a big problem.
But at the other end of the scale from Atlanta, in the world’s small island states, particularly remote ones, for which air travel is an absolute necessity, it is much more of a problem.
An island state is a country whose primary territory consists of one or more islands or parts of islands. Broadly 25% of all independent nations are island countries.
This report looks at a selection of those states and airports, and at how they have been impacted by the COVID-19 outbreak.
Welcome to the latest edition of CAPA’s daily Coronavirus and Aviation global update. We offer this product to our active CAPA Members, as well as visitors to our website to help our industry navigate through this crisis.
The report contains a small selection of news briefs and CAPA commentary, on the US system and from each region.
Top news headlines:
- African airlines respond to growing number of cases;
- European Commission approves French airline tax deferral scheme;
- Kenya Airways seeking financial support from Kenyan Government.
Following the aviation summaries, the report contains the latest coronavirus data, globally and by country.
- At the current rate of increase global coronavirus cases could reach one million in two days;
- The UK's recent spike in cases but its growth above Italy.
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COVID-19: US airlines evaluate pros and cons of government aidAs demand for air travel continues to hit nearly zero and estimates for a recovery continue to move the right, US airlines are quickly evaluating how to utilise a package offered by the country’s government designed to keep their workers employed. And, if airlines agree, how to make use of loans with strings attached that could ultimately be deemed unattractive, including the result that the government potentially takes stakes in airlines.
The industry’s participation in the government’s support package remains tough to predict. It is a safe assumption that most airlines have no desire for the government to have a direct say in how they run their respective businesses, especially when the new normal of post-COVID-19 settles in.
Before the onset of the crisis most US airlines had reasonable liquidity positions, and they have rushed to the markets to access more cash to withstand the pandemic.
But credit markets will quickly dry up, and now airlines have to look into a murky crystal ball to determine whether their current liquidity levels will enable them to overcome the crisis without tapping federal loans.
As the COVID-19 coronavirus quietly emerged from the shadows in Wuhan and the news started to spread, CAPA's analysis shows airline searches ("shopping") closely tracked its development, as illustrated in 3Victors data.
IATA director general and CEO, Alexandre de Juniac, said on 24-Mar-2020 that "the airline industry faces its gravest crisis”. The same applies to most facets of the travel and tourism sector.
As much of the world has gone into lockdown, a steady decline in travel searches across the major GDSs could have been expected. Mostly that has been the case, but CAPA's analysis of searches recorded by the travel big data technology company, 3Victors, shows some interesting trends, where travel searches have spiked exponentially at key times as the pandemic has spread across the globe.
The pandemic’s spread highlights how the coronavirus crisis has influenced travel searches for flights, based on this data.
Premium Analysis
COVID-19: Canada's major airlines better positioned for survivalAs COVID-19 coronavirus continues to wreak havoc on the global aviation and travel industries, Canada’s airlines are joining their counterparts worldwide in significantly pulling down their operations.
Passenger operations at the company’s largest airline, Air Canada, are essentially coming to a standstill, and other Canadian airlines have also been forced to cut the bulk of their operations.
As is the case in other regions around the world, it is unpredictable how the Canadian aviation industry will have changed once the COVID-19 crisis is over, but it is likely that not all current operators will survive.
Recorded at CAPA Qatar Aviation Aeropolitical and Regulatory Summit, 5-6 Feb 2020
Consolidation And Change In The Aviation Sector: Will Economic Forces And Pressures Drive Changes In Aviation Policy?
The airline industry has undergone significant changes in the past years, with the exit of several “household names” from the market, and other carriers struggling for survival. These changes have dramatically affected consumers, and have altered the alliance ecosystem. This panel will consider:
• The role of the regulator in responding to carrier failures;
• Whether ownership and control rules are limiting or distorting the restructuring of the industry;
• The impact of national insolvency and competition rules on the restructuring process;
• Will see the emergence of truly multinational carriers?;
• Changes in carrier cooperation in a shifting competitive landscape.
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Macau International Airport recorded (30-Mar-2020) a 45% year-on-year decrease in passenger traffic and a 55% decrease in aircraft movements in the first three months of 2020, as of 30-Mar-2020. The decline is primarily due to the impact of coronavirus. [more - original PR]
Mexico's Secretary of Tourism Miguel Marques reported (31-Mar-2020) a 24.3% year-on-year reduction in offer (seats) in the week starting 23-Mar-2020, totalling 65,950 fewer seats from tourism source counties. Seats from North America declined by 21.2% week-on-week. Mr Marques stated that figures in Apr/May-2020 will be "crucial" to be able to forecast and amend the forecast for 2020.
- Week starting 30-Mar-2020: 55,930 scheduled inbound seats;
- Week starting 06-Apr-2020: 64,950 scheduled inbound seats. [more - original PR - Spanish]
Airports Council International World (ACI World) advocated (27-Mar-2020) for the following financial support measures for airport personnel due to coronavirus impacts:
- Immediate provision of government assistance through grants and subsidies to support operating expenses and wages to airport staff;
- Ensuring secured financing and loans at preferential rates and bank guarantees;
- Suspension of all national and local aviation specific taxes for 2020;
- Waiving or postponement of airport rents and concession fees applicable to airport operators, irrespective of their ownership status.
ACI World director general Angela Gittens stated: "ACI World is calling on States to consider financial relief measures that will help to alleviate the significant drop in cash flows and to ensure operational and business continuity of airport activities, and to protect jobs". [more - original PR]
Air China Limited reported (31-Mar-2020) the following financial highlights in accordance with International Financial Reporting Standards for the 12 months ended 31-Dec-2019:
- Total operating revenue: CNY140,240 million (USD20,311 million), -0.5% year-on-year;
- Passengers: CNY124,525 million (USD18,035 million), +3.4%;
- Cargo and mail: CNY5732 million (USD830.2 million), -49.7%;
- Operating costs: CNY125,598 million (USD18,191 million), -0.7%;
- Fuel: CNY35,965 million (USD5209 million), -6.5%;
- Labour: CNY25,474 million (USD3689 million), +4.2%;
- Operating profit: CNY14,642 million (USD2121 million), +2.1%;
- Net profit: CNY7264 million (USD1052 million), -11.6%;
- Total assets: CNY294,206 million (USD42,611 million);
- Cash and cash equivalents: CNY8935 million (USD1294 million);
- Total liabilities: CNY192,877 million (USD27,935 million). [more - original PR]
*Based on the average conversion rate at CNY1 = USD0.144832
Airport Operators Association (AOA) stated (31-Mar-2020) the UK Government needs to provide more support for the aviation sector in response to the coronavirus outbreak. CEO Karen Dee stated: "More than half the UK population flew at least once last year and 40% by value of our non EU trade travels by air. More than a million people are employed directly or indirectly in aviation". Ms Dee said the UK Government is lagging behind international competitors in terms of safeguarding the industry, adding: "We appear to be at the back of the queue when it comes to Government providing targeted support". [more - original PR]
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