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COVID-19 cases surge in the US, global aviation impact spreads: CAPA update 20-Mar-2020

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.

Top news headlines:

- China: CAAC calls on airlines to reduce international capacity, diverts Beijing arrivals to other airports;

- IATA: African airlines lose USD4.4bn in revenue due to coronavirus, int'l and domestic bookings drop;

- Hawaiian Airlines to reduce system wide capacity by nearly 40% in Apr-2020.

The latest Novel Coronavirus (COVID-19) Global Situation

165 countries now affected

Mauritius, Fiji, El Salvador, Chad and Nicaragua were added to the list of countries reporting COVID-19 cases, taking the total to 165.

Top ten locations for COVID-19, excluding China (20-Mar-2020)

Top ten highest increases in infections by location (20-Mar-2020)

United States cumulative cases (20-Mar-2020)

China vs Global (excluding China) cumulative cases (20-Mar-2020)

Global mortality rate (yellow line) vs. key locations mortality rate (20-Mar-2020) 

China vs. Italy mortality cases (20-Mar-2020) 

Italy has overtaken China to become the country with the most deaths as result of COVID-19. The graph below shows both countries from the date of first death to today, clearly illustrating the rapid pace of the impact in Italy.  

Daily increase in COVID-19 cases, selected countries : Day 1 = 100 case threshold

The growth rate of the COVID-19 virus has differed greatly between countries depending on the measures in place to combat the spread. Aggressive containment in countries like Japan and Singapore has slowed the pace of spread of the virus.

The comparison below shows the growth rate per selected country once each has reached 100 cases, so there are different start dates e.g. that threshold was reached first for Japan, so that country was 27 days in.

Aggressive containment appears to slow the growth rate (daily counting starts once the country reaches 100 cases)

Air Capacity Update: Australia braces for border closures

Australia's Prime Minister Scott Morrison announced yesterday a ban on non citizens and non residents from entering Australia, effective 21:00 on 19-Mar-2020. Mr Morrison reported that he consulted New Zealand to "align arrangements across the Tasman Sea" and a 14-day isolation period for those returning will remain in place. As a result, Australia's largest airlines Qantas Airways and Virgin Australia both announced dramatic reductions to their international and domestic capacity. 

Australia weekly total system seat capacity w/c 16-Mar-2020

Aviation & Travel Industry news updates

1. Global:

US Ambassador to the UN resigns from Boeing board over request for COVID-19 support

Boeing announced (19-Mar-2020) the resignation of Nikki R Haley, the US Ambassador to the UN, from the company's board of directors, effective 16-Mar-2020. Ambassador Haley served on the finance and audit committees, having joined the board on 29-Apr-2019. Ambassador Haley informed Boeing that, as a matter of philosophical principle, she does not believe it should seek support from the Federal Government, and therefore decided to resign from the board. Boeing is involved in discussions to address the near term liquidity needs of the aerospace, travel, and other sectors affected by the current COVID-19 crisis. [more - original PR]

2. Asia:

China: CAAC calls on airlines to reduce intl capacity, diverts Beijing arrivals to other airports

CAAC requested (19-Mar-2020) airlines reduce international capacity as part of efforts to control the coronavirus pandemic. The civil aviation authority stated several international services operated by Chinese airlines scheduled to arrive at Beijing in the near term will be diverted to other airports, including Tianjin, Taiyuan and Hohhot. [more - original PR - Chinese] [more - original PR - Chinese - II] [more - original PR - Chinese - III]

India: Indian Government to prohibit all international arrivals from 22-Mar-2020 to 29-Mar-2020

India's Ministry of Health and Family Welfare announced (19-Mar-2020) "No scheduled international commercial passenger aircraft shall take off from any foreign airport for any airport in India", effective 22-Mar-2020 to 29-Mar-2020. The ministry added: "As such, no incoming scheduled international commercial passenger aircraft shall be allowed to disembark its passengers *on Indian soil* (Foreigner or Indian)". The temporary measure is aimed at preventing the transmission of coronavirus. [more - original PR]

Australia/New Zealand: New Zealand closes borders to all foreign nationals

New Zealand's Prime Minister Jacinda Ardern further restricted (19-Mar-2020) travel measures, prohibiting all foreign nationals from arriving into New Zealand, effective immediately. New Zealanders, their partners, legal guardians or any dependent children travelling with them may return. Restrictions apply to Pacific Island nations, which have previously been exempted. [more - original PR]
 

3. Middle East:

IATA: Middle Eastern airlines lose USD7.2bn in revenue due to plummeting travel demand

IATA reported (19-Mar-2020) Middle Eastern airlines have lost USD7.2 billion in revenue as of 11-Mar-2020, due to the effects of coronavirus on travel demand. Ticket refunds have increased 75% year-on-year in 2020, and 16,000 frequencies have been cancelled since the end of Jan-2020. Domestic bookings are now down 20% in Mar-2020 and Apr-2020 and 40% in May-2020 and Jun-2020, while international bookings are down 40% in Mar-2020 and Apr-2020 and 30% in May-2020 and Jun-2020. IATA published a list of expected disruptions to countries affected by coronavirus, which included the following:

  • Saudi Arabia: USD3.1 billion in base revenue losses, 15.7 million in passenger volume losses and more than 140,300 jobs at risk; 
  • UAE: USD2.8 billion in base revenue losses, 13.6 million in passenger volume losses and more than 163,000 jobs at risk; 
  • Egypt: USD1 billion in base revenue losses, 6.3 million in passenger volume losses and approximately 138,000 jobs at risk; 
  • Kuwait: USD547 million in base revenue losses, 2.9 million in passenger volume losses and more than 19,800 jobs at risk; 
  • Jordan: 118.5 million in base revenue losses, 645,000 in passenger volume losses and at least 6100 jobs at risk. [more - original PR]

4. Europe:

Moscow Sheremetyevo Airport to temporarily close terminals E and C

Moscow Sheremetyevo Airport announced (19-Mar-2020) plans to temporarily close terminals E and C from 20-Mar-2020, due to the reduction in demand and the introduction of restrictions on international services. All services will be transferred to terminal D and F. [more - original PR - Russian]

5. North America:

Hawaiian Airlines to reduce system wide capacity by nearly 40% in Apr-2020

Hawaiian Airlines announced (18-Mar-2020) it is reducing system wide capacity by nearly 40% in Apr-2020. Consequently, the carrier adjusted its domestic schedule for Apr-2020, with changes including the following:

  • Suspended:
    • Las Vegas-Maui; 
    • Kona-Lihue;
  • Frequency reduced:
    • Honolulu-Las Vegas: From three times daily to daily;
    • Honolulu-Los Angeles; From three times daily to daily;
    • Kona/Kauai-Los Angeles: From daily to five times weekly;
    • Lihue-Oakland: From daily to five times weekly; 
    • Honolulu-San Francisco: From twice daily to daily;
    • Maui-San Francisco: From daily to five times weekly;
    • Honolulu/Maui-San Jose: From daily to five times weekly;
    • Honolulu-Seattle: From daily to five times weekly. [more - original PR]

6. Latin America:

Gol to presents proposal for crew wage adjustments up to 50% and guarantees of job safety

Brazil's Sindicato Nacional dos Aeronautas (National Aviators' Union – SNA) president Dutra, via SNA's official YouTube account, announced (19-Mar-2020) Gol presented a three month proposal to crew, with the following conditions:

  • Apr-2020: Minimum of 16 rest days and a 30% reduction in wage;
  • May-2020: Minimum of 18 rest days and a 40% reduction in wage;
  • Jun-2020: Minimum of 20 rest days and a 50% reduction in wage.

The carrier also ensured job safety with the proposal.

7. Africa:

IATA: African airlines lose USD4.4bn in revenue due to coronavirus, intl and domestic bookings drop

IATA reported (19-Mar-2020) African airlines lost USD4.4 billion in revenue as of 11-Mar-2020, due to the effects of coronavirus on travel demand. International bookings dropped approximately 20% in Mar-2020 and Apr-2020, while domestic bookings are down roughly 15% in Mar-2020 and 25% in Apr-2020. Ticket refunds are up 75% year-on-year in 2020 and thousands of passenger services have been cancelled. IATA outlined expected disruptions to countries affected by coronavirus, including the following:
  • South Africa: USD1.2 billion base revenue loss, six million loss in passenger volumes and more than 102,000 jobs at risk;
  • Nigeria: USD170 million base revenue loss, 853,000 loss in passenger volumes and more than 22,200 jobs at risk;
  • Rwanda: USD20.4 million base revenue loss, 79,000 loss in passenger volumes and and approximately 3000 jobs at risk. [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)

The major global US airlines have slashed capacity by unprecedented levels as the country works to combat the spread of COVID-19 coronavirus through drastic measures, with large municipalities in the US encouraging bars, restaurants and cinemas to shut down. Schools across the country have already closed, with a growing level of uncertainty over when children will return to normal studies.

In conjunction with a major pull-down in supply, some large US airlines are also parking a large portion of their respective fleets. Delta’s decision to ground 300 aircraft represents approximately 33% of its operating fleet. American is also temporarily parking a substantial number of widebody jets.

The grounding of these aircraft is necessary, but as capacity comes out of the system and revenue continues its free fall, it will take some time for the cost actions that airlines are taking to catch up with the precipitous decrease in demand. 

Unfortunately, it could be some time before US and airlines worldwide see the bottom of the demand curve, and as those operators continue to adjust their expectations amid an increasingly fluid situation, management at Delta and United appear to be the most candid with their employees regarding the severity of the crisis. 

COVID19: US budget airlines and LCCs feel the heat

Like their larger counterparts, low cost and budget operators in the US are working to fortify their balance sheets, slashing capex and cutting their capacity as COVID-19 dries up demand for air travel in the short term. 

Alaska, Southwest, JetBlue and Spirit are cutting their capacity growth to varying degrees, and Alaska and Southwest are taking steps to borrow funds to withstand the crisis – the duration of which is anyone’s guess. 

As bookings continue to turn negative and cancellations continuing to spike, US operators are no doubt ratcheting up their messaging that a proposed financial aid packaging totalling more than USD50 billion needs to materialise sooner rather than later. 

In a statement to the stock market on 16-Mar-2020 easyJet neatly summarised the current, unprecedented, challenge facing European Airlines:

"European aviation faces a precarious future and there is no guarantee that the European airlines, along with all the benefits it brings for people, the economy and business, will survive what could be a long-term travel freeze and the risks of a slow recovery. Whether it does or not will depend significantly on European airlines maintaining access to liquidity, including that enabled by governments across Europe."

A number of European governments have indicated that they are prepared to support the airline industry in the light of the COVID-19 pandemic and the consequent near total collapse of demand resulting from travel restrictions.

This report presents CAPA's analysis of the liquidity balances of leading European airline groups, with Wizz Air and Ryanair leading and Norwegian trailing.

It also gives a review of recent actions taken to cut capacity and expenditure by those groups. It comes with the caveat that, as with the spread of the virus, the situation is changing rapidly and its content may be quickly superseded.

The coronavirus is a fact of life now. Its ramifications are immense, but it will diminish – and then pass.

While we adjust to this new and changing world, it’s important to try to see through the fog to what might be the next phase. These are early days, but by tracking developments from now on, we hopefully can perceive trends that point to a more stable environment.

In the first of a new weekly CAPA Membership series, we look in depth at forward or leading indicators of future demand. The aim is to provide insight into signs of stabilisation through the COVID-19 crisis in aviation/travel markets worldwide. 

We begin our series with an outlook for China. The world’s second biggest aviation market, China, was first into this crisis, so we ask: are there signs of stabilisation there? And if so, could this provide a guide to other markets that are now in free fall?

This report is prepared with thanks to our partners, CAPA Membership, OAG, ForwardKeys, PredictHQ and Skyscanner.

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.

MEDIA – If you are seeking further commentary on this topic, please contact our Marketing Team.

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