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COVID-19 Aviation Impact: CAPA Daily Update – 17-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.

Top news headlines:

- Global airline alliances call on governments and stakeholders to alleviate impact of COVID-19;

- Qantas cuts international capacity by 90%, domestic capacity by 60%;

- Canada suspends air travel from all countries except the US from 18-Mar-2020.

The latest Novel Coronavirus (COVID-19) Global Situation

154 countries now affected

A variety of new countries have reported COVID-19 cases, taking the total to 154. These countries include:

Benin Greenland Guam
Liberia Mayotte Puerto Rico
Somalia Tanzania The Bahamas

Top ten locations for COVID-19, excluding China (17-Mar-2020)

China cumulative cases (17-Mar-2020)

Top ten highest increases in infections by location (17-Mar-2020)

Global cumulative cases excluding China (17-Mar-2020)

Global mortality rate vs. key locations mortality rate (17-Mar-2020) 

Air Capacity Update: President Macron - "We are at war"

Overnight, French President Emmanuel Macron urged citizens to stay at home for at least 15 days in a bid to curve increasing cases of COVID-19. The aggressive move by France came as the country faced another large increase of almost 50% new cases, bring the total to 6,650.

The plan is to begin from midday on Tuesday and lasting through at least the end of the month, with people expected to stay home, leaving only for essential activities like food shopping. In an address to the nation on Monday President Macron said: “We are at war. The enemy is invisible and it requires our general mobilisation.”

Capacity to the country has already been affected with further reductions expected this week as a result of the quarantine. 

France weekly total system seats capacity w/c 16-Mar-2020

Air France CEO Anne Rigail, in an internal memorandum to staff, reported the impact of the coronavirus on 1Q2020 operating result will be "even more significant" than the EUR200 million figure provided in Air France-KLM's guidance in Feb-2020. A reduction in ASKs by 70% to 90% is expected in the coming days.

Air France weekly total system seats capacity w/c 16-Mar-2020 (future trend line will change)

Aviation & Travel Industry updates

1. Global:

WTTC: Global airline alliances call on governments and stakeholders to alleviate impact of COVID-19

oneworld, SkyTeam and Star Alliance issued (16-Mar-2020) a joint statement, calling on governments and stakeholders to take action to "alleviate the unprecedented challenges faced by the global airline industry amid the COVID-19 pandemic". The three global alliances are strongly supporting a request by IATA for regulators to suspend slot usage rules for the northern summer 2020 season as the airline industry suffers from extraordinary reductions in passenger demand.
 
The alliances also welcomed moves in recent days by some regulators who have suspended slot regulations temporarily and urge others to follow suit promptly. They also request that regulators consider extending the suspensions for the entire operating season.
 
The three alliances urged governments worldwide to prepare for the broad economic effects from actions taken by states to contain the spread of COVID-19, and to evaluate all possible means to assist the airline industry during this unprecedented period.
 
The alliances also call on other stakeholders to provide support. For example, airport operators are urged to evaluate landing charges and fees to mitigate the financial pressure faced by airlines due to a severe decline in passenger demand. [more - original PR]

2. Asia:

Cathay Pacific Group pax down 64.4%, cargo down 9.6% in Feb-2020

Cathay Pacific Group reported (16-Mar-2020) the following combined traffic highlights for Cathay Pacific and Cathay Dragon for Feb-2020:

  • Passengers: 1.0 million, -64.4% year-on-year:
  • Passenger load factor: 53.1%, -28.6pp:
    • Mainland China: 43%;
    • Northeast Asia: 56%;
    • Southeast Asia: 49%;
    • South Asia, Middle East and Africa: 41%;
    • Southwest Pacific: 60%;
    • North America: 54%;
    • Europe: 54%;
  • Passenger traffic (RPKs): -54.1%:
    • South West Pacific: -34.3%:
    • North America: -49.2%:
    • Europe: -52.5%:
    • South Asia, Middle East  & Africa: -58.1%:
    • North East Asia: -58.3%:
    • South East Asia: -62.3%:
    • Mainland China: -87.3%;
  • Cargo: 118,711 tonnes, -9.6%:
  • Cargo load factor: 66.6%, +5.8pp. [more - original PR]

Australia / New Zealand: Qantas cuts international capacity by 90%, domestic capacity by 60%

Qantas reported (17-Mar-2020) the following "much larger cuts to domestic and international flying schedules" as a result of significant falls in travel demand due to coronavirus, and new government restrictions across multiple jurisdictions:

  • Total Group international capacity to by reduced by 90% until "at least" the end of May-2020, up from 23%;
  • Total Group domestic capacity to be reduced by 60% until "at least" the end of May-2020, up from 5%;
  • Previously announced cuts in place from end-May through to mid-September remain in place and are likely to be increased, depending on demand;
  • Use of some domestic passenger aircraft for freight only services to replace capacity lost from regular scheduled services;
  • Fleet of freighters to continue to be utilised. [more - original PR]

3. Middle East:

Inbound services to Doha suspended from 16-Mar-2020

Qatar's Government Communications Office, via its official Twitter account, announced (16-Mar-2020) all inbound services to Doha have been suspended from 16-Mar-2020 for a period of 14 days as a precautionary measure against the spread of coronavirus. Cargo and transit services are exempt from this decision.
Qatar citizens will be permitted to enter the country from any destination but are required to spend 14 days in quarantine.

4. Europe:

Lufthansa grounds Austrian until late Mar-2020

Austrian Airlines announced (16-Mar-2020) it will suspend all scheduled operations due to travel bans being imposed globally and a "rapid" decline in demand for air travel.
The carrier will operate OS066 from Chicago to Vienna on 19-Mar-2020 before suspending scheduled operations until 28-Mar-2020 initially, keeping one long haul and one medium-haul aircraft available for evacuation and other relief or emergency flights. Austrian stated it is also still negotiating an agreement with its works council for company-wide short-time work measures.

5. North America:

Canada suspends air travel from all countries except the US from 18-Mar-2020

Canada's Government announced (16-Mar-2020) the suspension of entry into Canada, via air travel, of foreign nationals from all countries except the US who are not citizens or permanent residents and have resided in any country other than the US in the last 14 days, in order to reduce the spread of coronavirus.

This travel ban is effective from 12:00 on 18-Mar-2020, and will not apply to air crews, travellers arriving in Canada in transit to a third country, permanent residents, diplomats or immediate family members of citizens. Canadians are urged to avoid non essential travel outside Canada, and any traveller entering the country will be required to undergo 14 days of self isolation, with the exception of workers who are essential for the movement of goods and people.

The government will also redirect some international inbound services to one of four airports, effective 00:01 on 18-Mar-2020: Toronto Pearson International Airport, Vancouver International Airport, Montreal Pierre Elliott Trudeau International Airport and YYC Calgary International Airport. The Canada Border Services Agency and Public Health Agency of Canada (PHAC) will ensure an increase in resources at these four airports. Furthermore, the government is requesting airlines undertake the following obligations:

  • Effective immediately for implementation at 00:01 on 19-Mar-2020 (these measures do not apply to domestic or cargo services):
    • Airlines are to begin denying boarding to travellers who are symptomatic and to keep them from going on an international service to Canada, irrelevant of citizenship status;
    • Air operators are to perform basic health assessment of all air travellers before boarding, based on guidance from the PHAC;
    • Carriers are to refuse boarding to travellers symptomatic of coronavirus for a period of 14 days and until the traveller is able to demonstrate they are non symptomatic, or until a medical certificate is presented that will confirm the passenger as a non carrier.

If passengers become symptomatic inflight, carriers must isolate the passenger immediately and flight crews must put on personal protective equipment and notify air traffic control. Airports will also be required to segregate any symptomatic passengers immediately upon deplaning. The government is requesting airport operators perform enhanced cleaning and disinfection, and that strengthened screening measures be put in place at airports. [more - original PR] [more - original PR - Prime Minister of Canada]

6. Latin America:

LATAM Airlines sheds international capacity by 90%

LATAM Airlines Group announced (16-Mar-2020) plans to reduce capacity by 70%, corresponding to a 90% reduction in international and 40% in domestic capacity. LATAM CCO and CEO-elect Roberto Alvo stated: "We made this difficult decision following border closures that have made operating to a large part of our network impossible.
 
If these unprecedented travel restrictions are extended over the next few days, we cannot rule out further reductions to our operation". All passengers with affected domestic or international bookings from 16-March 16, 2020), will be able to reschedule their bookings until 31-Dec-2020, at no additional cost. Mr Alvo added: "We are working to ensure the group's long-term sustainability and protect the jobs of LATAM's 43,000 employees.
 
However, the scale and unpredictability of this crisis makes it difficult to anticipate results. This is why we are going to require the support of governments to overcome the greatest crisis in history for the tourism and civil aviation sectors". [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)

Despite the coronavirus being less intense in Latin America, long haul international demand from the region is coming under pressure. The drop-off in demand, coupled with currency pressure, has forced the Brazilian airline Azul to slash its international capacity. 

Perhaps fortunately for Azul, the majority of its capacity is deployed into Brazil’s domestic market, but the airline is still making adjustments on domestic routes, pledging to match its capacity in line with demand. 

As airlines worldwide work to shore up their liquidity and halt nonessential spending, Azul is touting its ability to weather the fallout from the spread of COVID-19 coronavirus, including no significant debt payments that are due in 2020. 

COVID-19. By the end of May, most world airlines will be bankrupt

By the end of May-2020, most airlines in the world will be bankrupt.

Coordinated government and industry action is needed - now - if catastrophe is to be avoided.

As the impact of the coronavirus and multiple government travel reactions sweep through our world, many airlines have probably already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants.

Cash reserves are running down quickly as fleets are grounded and what flights there are operate much less than half full.

Forward bookings are far outweighed by cancellations and each time there is a new government recommendation it is to discourage flying. Demand is drying up in ways that are completely unprecedented. Normality is not yet on the horizon.

The US government’s decision to initiate a travel ban covering the Schengen Area of Europe is essentially rubbing salt into the wounds the country’s airlines are suffering as the COVID-19 coronavirus has reached pandemic status, and that decision significantly raises the levels of uncertainty about when a recovery in demand will occur. 

As the country’s largest airlines American, Delta and United navigate the effects of the ban, they are also likely being forced to examine their long term view of how they plan to rebound once the pandemic is over. 

With US and world markets continuing to get pummelled, those airlines may need to change their judgement that COVID-19 is a “fear event” rather than an “economic event”. The public health emergency caused by COVID-19 has now turned into an economic crisis, whose duration is impossible to predict. 

Attempts to compare this black swan event to 9/11 or SARS could soon be rendered irrelevant as sports teams suspend their seasons and an increasing number of employees are being required to work from home. The economic reverberations will be deep, and the timing of any recovery is by no means yet within view.

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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