Analysis Reports

Schiphol Group issues EUR750m green bond

ICAO: Benin to participate in voluntary phase of CORSIA

The Australia Institute: Commercial aviation emissions could halve due to coronavirus

Tourism Industry Aotearoa CEO: We can make a better tourism industry in New Zealand

Green Alliance: CORSIA in its current form is not ambitious enough

Total seat capacity in Europe has fallen by 85.4% year-on-year for the week commencing 6-Apr-2020, according to the latest schedules data from OAG combined with CAPA Fleet Database seat configurations. Domestic capacity has dropped 74.4%, and international capacity has been slashed by 88.8%.

Europe's capacity cut is greater than in any other region, reflecting the dominance of international routes. Flights that are still operating are associated with repatriation, support to essential industries, and cargo (cargo flights have significantly increased their share of all flights in Europe).

Schedules data now more closely reflects announcements on capacity and aircraft grounding from European airlines. However, comparison with data on flight numbers tweeted by Eurocontrol indicates that this gap has still not been closed fully.

Expect the declared capacity cuts by European airlines to grow further.

While there may be very few passengers willing to fly anywhere right now – even if they could – and equally, few airlines there to take them, many eyes will be on developments in the airfreight sector, which struggled badly in 2019 as a result of trade wars and other factors.

Supply lanes must be kept open, and passenger aircraft are being adopted to fulfil that role, even when still configured as passenger aircraft.

Few airports have anything other than a steep cargo volume decline curve during Jan to Apr-2020, although it was at its steepest in different months, depending on the airport’s location. The majority of them appear to have ‘bottomed out’ now, although whether the growth curve will be as positive as the one being presented is anyone’s guess.

Freight volume is often taken as a precursor to what will happen in the passenger segment and it languished throughout 2019. Statistics are skewed by the necessity to ship vital supplies across the world but beyond that, figures will be examined closely to see if there will be a freight-led recovery for airlines.

This report covers the top 20 cargo airports worldwide by volume and how that volume is varying according to current global and local circumstances.

In an attempt to force the cancellation of its Airbus orders, easyJet's founder and largest shareholder, Stelios Haji-Ioannou, is urging shareholders to oust directors. His concerns for easyJet are shared by all airlines: cash balance, survival in lockdown and oversupply of aircraft in the recovery.

EasyJet has tapped a UK government loan scheme and taken other steps to bring its total liquidity to GBP2.3 billion by 9-Apr-2020, equivalent to approximately 140 days of 2019 revenue, more than available to most major European airline groups.

In lockdown, with variable costs effectively removed, with additional cost saving measures in place to lower fixed costs, and assuming the deferral of capital expenditure, this cash reserve should be enough to ensure easyJet's survival well beyond the end of 2020.

Nevertheless, Stelios' intervention raises legitimate questions about future fleet needs in the post-virus world, not only for easyJet, but also for all European airlines.

He envisages a sluggish domestic-led recovery, with airlines competing for "a few profitable routes for a few aircraft at a time" and confidence in international travel slow to build. Since only 13% of European airline ASKs were domestic in 2019, this is a challenging outlook.

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:

- Wuhan Airport resumes domestic operations as the lockdown is ended;

- IATA: 2.7 million airline jobs at risk; 25 million in wider aviation, travel and tourism sectors;

- Lufthansa Group: It will take 'years' for global demand to reach pre-coronavirus crisis levels.

China and other East Asian nations were in the frontline in the fight against coronavirus. It is reasonable to assume they should equally be the first to emerge. As we search for a tipping point in the global battle against COVID-19, these Asian markets may offer cause for optimism - or at least the signs of what the road back might look like.

The most recent schedule filings certainly support that emergence proposition, for domestic airline market regrowth. International expansion will be some time away as many countries remain effectively locked against international visitation.

In some cases it is two steps forward, one step back, as concerns remain about lingering pockets of contamination. But a consistent pattern is emerging of domestic markets that have turned the corner.

The domestic airline markets of China, Korea, Taiwan, Japan, and Indonesia are all clearly demonstrating a belief by their airlines that a corner has been turned, as they re-introduce capacity into the market. While welcome signs, they may not yet all be timely.

The COVID-19 pandemic has created an extra layer of complexity for network planners worldwide as airlines are working carefully to preserve some level of network integrity once the crisis is over. But that remains a tricky exercise, since the duration of the pandemic remains anyone’s guess. 

American Airlines has outlined its planned international reductions for the peak season in the Northern Hemisphere, which will result in a 60% cut in capacity. The adjustments include a mix of pushing back the dates for the resumption of service in some markets and a decision by the airline to eliminate seasonal services in a number of markets. 

American’s hub in Philadelphia appears to be bearing the brunt of seasonal route cuts. The airline has launched numerous routes to secondary trans Atlantic markets, which were performing well before COVID-19 wiped out in demand in a matter of weeks.

American is striking an optimistic tone, noting that 25 seasonal flights are suspended until the US summer of 2021; however it is entirely too early to determine whether demand in some markets will regain pre-pandemic levels by next summer. 

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:

- China air pax down 79% on 05-Apr-2020, although domestic capacity increases;

- Etihad Airways to trial self service health assessment technology;

easyJet successfully issues GBP600m CCFF short-term note, requests USD500m RCF drawdown  

Following the aviation summaries, the report contains the latest coronavirus data, globally and by country.

- Global cases increase show signs of slowing;

- Spain overtakes Italy as second highest COVID-19 cases.

As demand for air travel disappears in the wake of the COVID-19 pandemic, passenger airlines operating around the world are turning to cargo in order to produce fractional revenue. 

In the US, major passenger airlines – after turning their attention away from freight during the past year in order to push up revenues from credit card deals, frequent flyer miles and other general ancillary sales – are opting to operate cargo flights. North America’s cargo traffic declined by 3.4% in 2019, and cargo revenues for the largest US airlines fell solidly year-on-year. 

Obviously, cargo is not a long term saviour for the airlines, as they continue to navigate fast-moving changes brought on by the COVID-19 outbreak, but operators are turning over every rock in order to recapture even a fraction of their lost revenue. 

It might appear to be a strange time to be negotiating the sale of equity in an airport, but discussions between the Stobart Group and AviAlliance to that end over Southend Airport appear to have been progressing for some time. The deal could be worth up to GBP800 million.

The FTSE 250 Stobart Group encompasses road freight, rail and air transport. The group also has an interest in Carlisle Airport and Teesside Airport in northeast England, where it holds a 25% stake and a management contract. Stobart is in a difficult period, owing to liabilities arising from the collapse of the airline Flybe, in which it held a 30% stake.

Southend was once one of the UK’s busiest airports. Essex is a heavily populated county (1.5 million) to the east of London and a rail link directly to and from the airport means that it can be considered as an alternative airport to London City and London Stansted airports for those living in the east of London, and even in the centre.

The smallest of the London airports seems to be an obscure interest for the German company, but recent events highlighting the diminishing prospect of additional runways in London make Southend look like an enticing prospect.