COVID-19 Aviation Impact: CAPA Daily Update – 12-Mar-2020


Welcome to the latest 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.

Top news headlines:

- US President Donald Trump announced (11-Mar-2020) the US will be "suspending all travel from Europe to the United States for the next 30 days", effective 13-Mar-2020;

- World Health Organization (WHO) formally characterised (11-Mar-2020) the outbreak of novel coronavirus (COVID-19) as a pandemic;

- French govt rules out Groupe ADP privatisation in current market conditions.

  • US President Donald Trump announces suspension of travel from Europe to the United States for 30 days.
  • World Health Organization declares COVID-19 outbreak as a pandemic.
  • French government rules out privatization of Groupe ADP due to unfavorable market conditions.
  • United States to Europe air capacity expected to be greatly impacted by travel suspension.
  • British Airways and Virgin Atlantic expected to benefit from the US travel ban as UK-origin and destination passengers are exempt.
  • Airlines worldwide take measures to preserve liquidity and cut capacity in response to COVID-19.

The latest Novel Coronavirus (COVID-19) Global Situation

114 countries now affected

Bolivia, Burkina Faso, Jamaica and the Democratic Republic of the Congo were added to the list of countries reporting COVID-19 cases, taking the total to 114.

Top ten locations for COVID-19 excluding China (11-Mar-2020)

China cumulative cases (11-Mar-2020)

Top ten locations by daily cases increase (11-Mar-2020)

United States cumulative cases (11-Mar-2020)

Air Capacity Update: The impact of the US suspending all Europe-US travel

As a result in the spike of cases shown above, the United States Government has announced that, "effective at 11:59 p.m. (US) eastern daylight time on March 13, 2020", it will restrict and suspend the entry into the United States, as immigrants or nonimmigrants, of all those who were physically present within the Schengen Area during the 14-day period preceding their entry or attempted entry into the United States. This includes 26 European states: Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and Switzerland.

The United States to Europe capacity represents approx. 700,000 to 1.1m seats per week, with volumes now being greatly impacted by the announcement.

United States of America-Europe weekly system seat capacity. Schedules effective w/c 09-Mar-2020. Following the Trump announcement, we expect airlines will rapidly adjust this capacity downwards

US international departing system seat capacity w/c 09-Mar-2020. Europe is the largest and most valuable US route group

Top 10 airlines impacted by the announcement (weekly seats flown on North Atlantic routes prior to the Trump ban)

Aviation & Travel Industry updates

1. Global:

WHO characterises COVID-19 as a pandemic

World Health Organization (WHO) formally characterised (11-Mar-2020) the outbreak of novel coronavirus (COVID-19) as a pandemic. WHO director-general Dr. Tedros Adhanom Ghebreyesus said: "WHO has been assessing this outbreak around the clock and we are deeply concerned both by the alarming levels of spread and severity, and by the alarming levels of inaction. We have therefore made the assessment that COVID-19 can be characterized as a pandemic."
Dr Ghebreyesus noted that describing the situation as a pandemic does not change WHO's assessment of the threat posed by the virus, nor does it change what WHO is doing or what countries should do. [more - original PR]

2. Asia:

Hong Kong: Cathay Pacific expects 'substantial loss' in 1H2020

Cathay Pacific chairman Patrick Healy stated (11-Mar-2020) the carrier will incur a "substantial loss" in 1H2020. Despite the "very uncertain" outlook, Mr Healy said the carrier remain confident in its future. [more - original PR]

Australia / New Zealand: Tom Hanks confirms positive virus result in Australia

Tom Hanks, via his official Twitter account, announced (12-Mar-2020) he was tested for coronavirus in Australia and was found to be positive. Mr Hanks added that he will be isolated, observed and tested "for as long as public health and safety requires".

South Korea: Air Busan implements paid leave scheme in response to coronavirus outbreak

Air Busan implemented a paid leave scheme due to low demand as a result of the outbreak of coronavirus (International Newspaper, 11-Mar-2020). Of the company's 1400 employees, 1000 will be taking paid leave from 16-Mar-2020 to 24-Apr-2020 on the condition they receive 70% of the average wage.

3. Middle East:

Lebanon suspends travel to Italy, South Korea, China and Iran due to coronavirus outbreak

Lebanon's Prime Minister Hassan Diab stated all travel to and from Italy, South Korea, China and Iran has been suspended as a precautionary measure against the outbreak of coronavirus (Asharq Al-Awsat/Middle East Eye/The Daily Star, 11-Mar-2020).

4. Europe:

French govt rules out Groupe ADP privatisation in current market conditions

France's government spokesperson Sibeth Ndiaye reported the government has decided that current market conditions "are not at all favourable" for carrying out the privatisation of Groupe ADP (Reuters, 11-Mar-2020). Groupe ADP's stock is currently trading at around EUR116 per share at the time of writing, down from a 52 week high of EUR183.10, according to Euronext.

5. North America:

US suspends travel from Schengen Europe from 13-Mar-2020. British Airways and Virgin Atlantic should be winners

US President Donald Trump announced (11-Mar-2020) the unprecedented suspension of "entry into the US of all foreign travellers who were physically present in the Schengen Area during the 14 days prior to their intended entry into the US, due to the potential for transmission of coronavirus". The proclamation will remain in effect from "11:59 p.m. (US) eastern daylight time on March 13, 2020", until terminated by Mr Trump. Mr Trump commented: "The free flow of commerce between the United States and the Schengen Area countries remains an economic priority for the United States, and I remain committed to facilitating trade between our nations", read the proclamation.

Mr Trump said restrictions will be "adjusted subject to conditions on the ground" and exemptions will be available for US citizens "who have undergone appropriate screenings" (New York Times/BBC, 12-Mar-2020). Mr Trump also stated the regulations will apply to "trade and cargo" and "various other things as we get approval". [more - original PR] [more - original PR - II]

For US and most European airlines, this means in broad terms that their available travel market is immediately halved, as only Americans will be allowed to enter the US.

The UK and British airlines should be best positioned

The ban specifically excludes UK-origin and destination passengers (who have not been in a Schengen country in the previous 14 days), so that much trans Atlantic travel activity will focus on the London and other major UK airports.

This has to be good news particularly for British Airways and Virgin Atlantic, for whom North American capacity accounts for around 20% and 80% respectively - in what is the highest yielding major market in the world.

However, the other European majors will struggle to operate service from their home countries at any level.

6. Latin America:

LATAM Airlines allows free rescheduling for services from/to Italy, Spain and Israel

LATAM Airlines Group announced (10/11-Mar-2020) new measures to assist customers due to measures taken by the Chilean, Italian and Israeli authorities during the coronavirus outbreak. Chile's Health Ministry announced that all inbound passengers from Italy or Spain must self isolate for 14 days. Customers with bookings to Italy and Israel or from Spain and Italy to Chile can reschedule or change the destination of their bookings without charge.

Passengers who travelled to Italy, Spain, France, Germany, US, Iran, Japan, China or South Korea are also being given the option to reschedule. Colombian authorities are also requesting passengers who have been to Italy, Spain, France or China to self isolate for 14 days. [more - original PR - Portuguese] [more - original PR - Portuguese - II]

7. Africa:

Air Seychelles 'forced to cancel' approx 40% of flying schedule due to coronavirus

Air Seychelles chief commercial officer Charles Johnson stated (11-Mar-2020) the airline has "been forced to cancel approximately 40% of our flying schedule" until the end of Apr-2020, "due to the negative effects of COVID-19 on demand". Cancelled frequencies include the following:

  • Seychelles-Mauritius: 10 frequencies cancelled, effective 26-Mar-2020 to 30-Apr-2020;
  • Seychelles-Johannesburg: 11, effective 26-Mar-2020 to 30-Apr-2020;
  • Seychelles-Mumbai: 21, effective until 30-Jun-2020.

The carrier plans to consolidate some services on its Seychelles-Praslin route, and noted it is experiencing tremendous reductions in domestic bookings due to overseas cancellations. Staff are being encouraged to take annual leave during this period. [more - original PR]

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)

Several Airlines Ground A380s To Cut Back Capacity

Around 25% of the worldwide Airbus A380 fleet is in the process of being grounded as airlines cut their largest widebodies from services dealing with the fall-out of the coronavirus crisis.

Korean Air has become the latest carrier to decide that it will take its 10 A380s out of service until Apr. 25, citing reduced travel demand. Other aircraft have also been grounded.

South Korea has been among the countries hardest hit by the coronavirus outbreak, causing many governments to impose restrictions on travelers from Korea. Korean Air has suspended over 130 flights according to its latest update, with frequency reduced on others.

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.

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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