13-Mar-2020 5:58 PM

COVID-19 Aviation Impact: CAPA Daily Update – 13-Mar-2020

Analysis

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.

The latest Novel Coronavirus (COVID-19) Global Situation

118 countries now affected

Honduras, French Polynesia, Cote d Ivoire and Turkey were added to the list of countries reporting COVID-19 cases, taking the total to 118.

Top ten locations for COVID-19 excluding China (12-Mar-2020)

China cumulative cases (12-Mar-2020)

Top ten highest increases by location (12-Mar-2020)

Global cumulative cases excluding China (12-Mar-2020)

Air Capacity Update: Spotlight on Germany. Lufthansa adjusts US capacity

Outside China, countries within Europe are by far the most impacted by the COVID-19 outbreak. Six out of the top ten countries are from this region and the growth in cases does not seem to be slowing.

Yesterday, 12-Mar-2020, the United States Government announced it would restrict and suspend the entry into the United States 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 comes as countries like Denmark, Switzerland, Austria and Sweden see the growth of cases exceed 50% above the previous day.

Today, we take a closer look at Germany, who has consistently been in the top ten countries with confirmed cases.

Germany weekly total system seats capacity w/c 09-Mar-2020, prior to the Trump announcement

Lufthansa Group announced (12-Mar-2020) plans to maintain the following schedule to the US and other long haul markets in light of new travel restrictions in place for European, Swiss and other nationalities:

Lufthansa Group airlines will continue to operate from Frankfurt to Chicago and New York Newark, from Zurich to Chicago and New York Newark, from Vienna to Chicago and from Brussels to Washington DC after 14-Mar-2020 in order to maintain some capacity for travellers exempt from the travel ban;
All other routes to the US will be suspended until further notice due to restrictions in place, including all departures from Munich, Duesseldorf and Geneva;
Lufthansa Group will continue to operate as normal to Canada until further notice;
Recent adjustments for entry regulations for India are also being evaluated by the company. [more - original PR]

Deutsche Lufthansa AG weekly total system seats capacity w/c 09-Mar-2020

Aviation & Travel Industry updates

1. Global:

EAL: Work resumption in China produces 30% year-on-year spike in outbound cargo

Cargo operator Eastern Airlines Logistics (EAL) reported (12-Mar-2020) there has been a gradual resumption of work and production in China, and global manufacturers have also resumed their shipments to/from the country as the spread of novel coronavirus slows.

EAL reported the daily outbound cargo volume by its dedicated all-cargo aircraft was reached 946 tons in early Mar-2020, an increase of 60% before the work resumption in China and a 30% year-on-year increase in volume. Inbound and return cargo volume was 816 tons per day in early Mar-2020, a year-on-year increase of 54.5%. [more - original PR]

2. Asia:

China: CAAC - Chinese airlines report USD3 billion loss in Feb-2020

CAAC reported China's civil aviation recorded its largest monthly loss of CNY24.6 billion (USD3.5 billion) in Feb-2020, including CNY21 billion (USD3 billion) loss for the country's airlines (Carnoc.com, 12-Mar-2020). Overall industry loss for the first two months of 2020 reached CNY17.6 billion (USD2.5 billion).

Australia / New Zealand: Australian PM announces 'level three travel advice'

Australia's Prime Minister Scott Morrison advised: "Australians to reconsider your need to travel overseas at this time, regardless of your destination, age or health - if your travel is not essential, consider carefully whether now is the right time" (SBS, 13-Mar-2020). Mr Morrison said: "We are effectively putting in place what is called a level three travel advice for travel of Australians overseas. This is done to protect their health and to limit their exposure".

India: Indian Government suspends 'all existing' tourist visas from 13-Mar-2020 to 15-Apr-2020

India's Ministry of Health and Family Welfare announced (11-Mar-2020) the government plans to suspend "all existing visas, except diplomatic, official, UN/International Organisations, employment, project visas", effective 13-Mar-2020 to 15-Apr-2020, with the aim of preventing the transmission of coronavirus.

The Ministry stated "all incoming travellers, including Indian nationals, arriving from or having visited China, Italy, Iran, South Korea, France, Spain and Germany" since 15-Feb-2020 will be quarantined for a minimum of 14 days, effective 13-Mar-2020. It added: "Indian nationals are strongly advised to avoid all non-essential travel abroad". [more - original PR]

3. Middle East:

Gulf Air suspends operations to Kuwait until further notice

Gulf Air suspended (12-Mar-2020) all Kuwait operations, effective 13-Mar-2020 until further notice. Remaining services to and from Kuwait are limited to Kuwaiti citizens with non-Kuwaitis denied entry into Kuwait International Airport on services landing on 12-Mar-2020 and 13-Mar-2020. [more - original PR - Arabic/English]

4. Europe:

ENAC proposes 'minimum airport infrastructure scenario' closures across Italy due to nationwide quarantine

ENAC president Nicola Zaccheo proposed a "minimum airport infrastructure scenario" in Italy to the Ministry of Transport due to the emergency situation brought about by the spread of the coronavirus (La Repubblica/mobilita.org/Corriere della Calabria, 12-Mar-2020).

The scenario would entail the temporary closure of all commercial airports in the country with the exception of Ancona, Bari, Bologna, Cagliari, Genoa, Lamezia Terme, Milan Malpensa, Naples Capodichino, Pescara, Pisa, Rome Fiumicino, Turin, Venice, Catania, Palermo, Pantelleria and Lampedusa airports.

The criteria for these airports is based on geographic location and ability to serve a catchment area in a uniform way across the country for both freight and passenger segments, Mr Zaccheo concluded.

5. North America:

IATA warns US-Schengen market restrictions 'will create enormous cash-flow pressures for airlines'

IATA director general and CEO Alexandre de Junaic stated (12-Mar-2020) the US Government's decision to introduce restrictions on travel between the US and Schengen market "will create enormous cash-flow pressures for airlines".

The association previously estimated the coronavirus crisis could cause airlines to record revenue losses of up to USD113 billion, which did not include the measures put on travel by the US, Israel, Kuwait and Spain.

The US-Schengen market was worth USD20.6 billion in 2019, and it is expected the markets which will suffer the highest losses will be US-Germany (USD4 billion), US-France (USD3.5 billion) and US-Italy (USD2.9 billion).

Mr de Junaic said airlines "will need emergency measures to get through this crisis" and urged governments to consider "all possible means to assist the industry through these extreme circumstances", such as "extending lines of credit, reducing infrastructure costs, lightening the tax burden". He warned: "Air transport is vital, but without a lifeline from governments we will have a sectoral financial crisis piled on top of the public health emergency". [more - original PR]

6. Latin America:

LATAM cuts international capacity by 30% in response to coronavirus outbreak

LATAM Airlines Group reduced (12-Mar-2020) international operations by approximately 30% due to lower demand and government travel restrictions in reaction the coronavirus pandemic.
The measure will apply principally to services from South America to Europe and the US between 01-Apr-2020 and 30-May-2020. LATAM Airlines Group CCO and CEO-elect Roberto Alvo stated: "Faced with this complex and extraordinarily dynamic scenario, LATAM is taking immediate and responsible measures to safeguard the group's long-term sustainability, while seeking to secure passengers' travel plans and protect the jobs of the group's 43,000 coworkers".
Other measures include the suspension of new investments, expenses and hiring as well as incentives for unpaid leave and to bring forward vacations. LATAM's domestic markets have not yet been affected and the group has decided not to implement changes to national flight itineraries for the time being. [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)

COVID-19: Schengen-US travel ban another blow to airlines

On 12-Mar-2020 US President Trump banned entry into the United States by foreign nationals with 14-day prior travel within any of the 26 countries of Europe's Schengen zone (essentially a borderless travel region).

The ban takes effect from midnight (EDT) on 13-Mar-2020. US citizens, legal residents and certain family members will be allowed to enter through 11 approved airports.

The UK and Ireland are the most important trans Atlantic aviation markets not included in the ban. IAG's British Airways and Aer Lingus may possibly benefit from any additional traffic through their hubs in London and Dublin.

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.

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.

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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