11-Mar-2020 5:14 PM

COVID-19 Aviation Impact: CAPA Daily Update – 11-Mar-2020

Analysis

Welcome to the 11-Mar-2020 edition of CAPA's new daily Coronavirus and Aviation global update. We offer this new product to our active CAPA Members, as well as visitors to our website to help our industry navigate through this crisis.

The latest Novel Coronavirus (COVID-19) Global Situation

110 countries now affected

Brunei Darussalam, Cyprus, Guernsey, Mongolia and Panama were added to the list of countries reporting COVID-19 cases, taking the total to 110.

Top ten locations for COVID-19 excluding China (10-Mar-2020)

Meanwhile the number of new cases in China is flatlining.

China cumulative cases (10-Mar-2020)

Top ten locations by daily cases increase (10-Mar-2020)

Air Capacity Update: USA - international capacity reductions evident

COVID-19 cases have doubled in the US in the last 24-hours with 259 new cases reported and a total of 472 - representing a 121% increase.

Year-on-year international air capacity for the United States has been consistently down in 2020, and while growth had been projected for May-2020 this capacity will certainly be revised downwards on the basis of recent statements.

United States of America weekly total by international system seat capacity w/c 09-Mar-2020

Aviation & Travel Industry updates

1. Global:

ICAO Council adopts COVID-19 Declaration and guidance for governments on how to deal with COVID-19

ICAO Council adopted (09-Mar-2020) a special declaration on coronavirus, affirming the urgent need to reduce the risks of the spread of coronvirus by air transport, and to protect the health of air travellers and aviation personnel. ICAO expressed appreciation for the cooperation of airlines, airports and other industry participants in working with governments and international organisations to help implement response measures, along with expressing concern about the economic impact on air transport and civil aviation. It also stressed the importance of:

Ensuring that response actions and measures are based on science and facts;
Engaging in cross-sector collaboration and the principles of multilateralism, strong international cooperation and coordination among all entities involved in the joint action against this public health emergency of international concern;
Providing reliable and timely information to aviation authorities, airlines and other aircraft operators, airports and the public to help control the further spread of the virus.

In addition, the declaration expressed strong support for the calls by the WHO for states to perform their own risk assessments and adapt their response measures accordingly, taking into account international health regulations. It called on states to:

Apply existing regulations and guidance, particularly the standards and recommended practices and other relevant international standards in the Convention on International Civil Aviation, when addressing outbreaks of communicable diseases;
Apply existing recommendations and guidance provided by the WHO, in accordance with each country's risk assessment and unique circumstances;
Foster and implement a culture of collaboration and information sharing among public health and civil aviation authorities through the establishment of national facilitation committees comprising all relevant entities, in line with ICAO provisions;
Proactively join, contribute to and assist the Collaborative Arrangement for the Prevention and Management of Public Health Events in Civil Aviation;
Take the necessary actions to maintain the sustainability of air transport and the highest level of safety. [more - original PR]

2. Asia:

China: Shenzhen Bao'an International Airport pax declines 80% in Feb-2020

Shenzhen Bao'an International Airport reported (11-Mar-2020) the following traffic highlights for Feb-2020:

Passengers: 902,000, -79.5% year-on-year;
- Domestic: 840,900, -78.8%;
- International: 55,700, -85.6%;
- Regional: 5500, -88.4%;
Cargo: 61,500 tonnes, +7.9%;
- Domestic: 44,600 tonnes, +18.7%;
- International: 14,000 tonnes, -16.5%;
- Regional: 2900, +9.1%;
Aircraft movements: 12,300, -57.8%. [more - original PR - Chinese]

Australia / New Zealand: Australian Government extends Italy travel ban

Australia's Prime Minister Scott Morrison announced the government extended its travel ban to Italy from 18:00 on 11-Mar-2020 (ABC/7 News/9 News, 11-Mar-2020). Mr Morrison stated: "I think that it is important not to overstate this… Italy itself has effectively put itself into lockdown with travel now, and this largely closes that loop".

Mr Morrison said the travel restriction "will mean that any Australians, residents or others, who are obviously exempt from those travel bans, would be subject to the same isolation period that applies to the other countries for which there are travel bans (when they return to Australia)".

South Korea: Korean Air suspends 90% of overall services, grounds 100 aircraft due to coronavirus outbreak

Korean Air stated it has suspended more than 90% of its overall services as more than 100 countries impose travel bans and quarantine procedures on South Korea due to the outbreak of coronavirus (Yonhap News Agency/International Business Times/Forbes, 10-Mar-2020).

As previously reported by CAPA, the carrier has grounded 100 of its 145 aircraft, including 10 A380 aircraft.

3. Middle East:

Qatar Airways places temporary suspension on stopovers in Doha

Qatar Airways placed a temporary hold on stopover services in Doha for the purpose of connection (MENAFN, 09-Mar-2020).

This follows the Qatar Government Communications Office's temporary suspension of entry for travellers from 14 countries as a precautionary measure against the outbreak of coronavirus. In Jan-2020, tourist numbers had been up more than 40% y-o-y.

4. Europe:

EC President vows to accelerate relaxation of EU slot rules in response to Covid-19 crisis

European Commission (EC) President Ursula von der Leyen, via the Commission's official Twitter account, announced (10-Mar-2020) the Commission will accelerate the temporary relaxation of EU slot regulation to facilitate airlines' abilities to maintain slots in the face of declining passenger demand.

Ms von der Leyen said the proposals will relieve pressure on the aviation industry, and in particular smaller airlines, and on the environment by avoiding the operation of empty or near-empty aircraft to retain slots. Ms von der Leyen admitted the coronavirus crisis is having a "major impact" on European and international aviation industries, adding the situation is "deteriorating rapidly" and passenger traffic is expected to continue to decline.

5. North America:

Delta Air Lines unveils strategy to address coronavirus impact, to reduce Pacific capacity by 65%

Delta Air Lines announced (10-Mar-2020) it is immediately reducing capacity and introducing cost reductions and cash flow initiatives across the company, in order to address the negative impact of coronavirus on travel demand. The airline is organising a hiring freeze, offering voluntary leave, parking aircraft and considering early retirement of older aircraft.

Delta is likewise suspending share repurchases and deferring USD500 million in CAPEX and USD500 million in voluntary pension funding. Capacity cuts are as follows:

Pacific: -65%;
Trans Atlantic: -15% to -20%;
Domestic: -10% to -15%;
Latin America: -5%.

However, the carrier has recognised an expense benefit of approximately USD2 billion from the fuel price decline and CEO Ed Bastian said it is "well positioned to manage this challenge". It anticipates liquidity of at least USD5 billion by the end of 1Q2020, and maintains approximately USD20 billion in unencumbered assets, including USD12 billion in aircraft. [more - original PR]

6. Latin America:

Aerolineas Argentinas announces additional cancellations to Rome, Miami and Orlando due to COVID-19

Aerolineas Argentinas cancelled (10-Mar-2020) several frequencies to Rome, Miami and Orlando in Mar/Apr-2020 due to the coronavirus outbreak:

Rome: Cancellations 18/22-Mar-2020 and 4/6/10/12/19/26-Apr-2020 (in addition to previously announced cancellations for 12/16/19/26/28/30-Mar-2020);
Miami: Cancellations 18/26-Mar-2020;
Orlando: Cancelled 26-Mar-2020.

Affected customers will be accommodated on earlier or later flights. The carrier attributed the changes to an increasing number of booking cancellations. [more - original PR - Spanish]

7. Africa:

ACSA implements further coronavirus preventative measures at all airports

Airports Company South Africa (ACSA) implemented the following coronavirus preventative measures at all its international and regional airports (Etnw.co.za, 10-Mar-2020):

Stricter protocols for international arrivals, immigration and transit areas;
An isolation facility for suspected passengers.

ACSA reported the measures were in line with World Health Organisation, ICAO and South African Civil Aviation Authority standards.

The above is a selection of more than 150 news updates from today's CAPA Membership coverage specifically on COVID-19, which also covers traffic data, route and frequency announcements, government advisories and more. For more information about CAPA Membership, please click here.

Additional Analysis (please click on the headings to go to the full story)

COVID-19 coronavirus: US airlines take steps to preserve liquidity

As the US moves from attempting to contain the COVID-19 coronavirus to the mitigation stage, the country's airlines are following suit, attempting to fortify their respective war chests by cutting capacity, suspending share buy-backs, cutting capex and, in some cases, bolstering their liquidity.

COVID-19 has now become the black swan event that is testing the long-held belief that the US airline industry is much stronger than it was in previous crises, including the Sep-2001 terror attacks, SARs and the 2008 financial crisis.

Now is the time to lean on solid cash balances and be grateful for manageable leverage, and to that end, some US airlines are better positioned than others.

Qantas Sunrise's corona boost to Perth-London corporate non-stop

The threat of picking up coronavirus at stopovers en route to London has delivered Qantas a major endorsement of its Sunrise strategy.

As part of a large scale readjustment of its international flying, the airline will increase its Perth-London non-stop service from once daily to double daily, effective 20-Apr-2020.

For decades Qantas has had to compete with high quality intermediate ("Sixth Freedom") airlines like Singapore Airlines on all of its westbound and northbound services.

The introduction of its Sunrise flights meant that passengers between Perth and London could dispense with an intermediate stop, at the same time offering Qantas a competitive advantage.

COVID-19 aviation impact threatens Japan's 2020 tourism ambitions

The COVID-19 coronavirus outbreak has decimated many Asian airline markets, but for Japan the timing of the demand plunge is particularly unfortunate. This is supposed to be a big year for the Japanese aviation and tourism sectors, as they have planned for a significant surge in visitor traffic.

The government has made tourist growth an economic priority, and has backed this up with an expansion of Tokyo airport capacity this year to coincide with the summer Olympics coming to the city.However, the ambitious plans of the government and airlines for 2020 are now under threat from the coronavirus crisis.

The above is a selection of in-depth insights on the latest developments in the aviation and travel industry related to the COVID-19 outbreak.
CAPA Membership includes a range of reports featuring accurate data and independent commentary from our global team of analysts, who offer a unique perspective and actionable insights to help improve decision making. For more information about CAPA Membership, please click here.

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