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COVID-19: Over 250,000 global cases diagnosed over the weekend: CAPA update 06-Apr-2020

Analysis

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.

The report contains a small selection of news briefs and CAPA commentary, on the US system and from each region.

Top news headlines:

- Brazil responds to increase case numbers with dramatic capacity decreases;

- South Korea pax demand projected to drop 40% in 2020 due to coronavirus outbreak.

Following the aviation summaries, the report contains the latest coronavirus data, globally and by country.

- Over 250,000 global cases diagnosed over the weekend;

- Significant decrease in volume of daily cases reported in the last 24 hours.

Aviation & Travel Industry coronavirus news updates

Air Capacity Update: Brazil responds to increase case numbers with dramatic capacity decreases 

Brazil has the largest amount of COVID-19 cases in Latin America with 11,254. Last week, we reported that ABEAR president Eduardo Sanovicz, stated the aviation sector is going through the "steepest drop since the impacts of 11-Sep-2001".

The below snapshot highlights the dramatic decrease in capacity - to close to zero - in order to slow the spread of the virus. 

Brazil weekly total system seats: w/c 06-Apr-2020

The above is an example of future planned air capacity, available to CAPA Members from CAPA’s country profiles. For more information about CAPA Membership, please click here.Aviation & Travel Industry news updates

1. Global

IATA: Global domestic demand down 21% in Feb-2020

IATA reported (02-Apr-2020) global demand for domestic travel dropped 20.9% year-on-year in Feb-2020, as the Chinese domestic market collapsed (-83.6%) in the face of the government lockdown.

Globally, domestic airline capacity fell 15.1% and load factor dropped 5.6pp to 77%. [more - original PR] These figures for Feb-2020 reflect a situation before the main impact of national market closures began.

2. Asia

China: China air pax decline averages 75% between 02-Apr-2020 and 04-Apr-2020

China's Ministry of Transport reported (05-Apr-2020) the following traffic highlights by mode of transport between 02-Apr-2020 and 04-Apr-2020:

  • 04-Apr-2020:
    • Total passengers: 20 million, -60.5% year-on-year;
      • Air: 327,100, -80.9%;
      • Rail: 3.9 million, -69.6%;
  • 03-Apr-2020:
    • Total passengers: 20.1 million, -57.3%;
      • Air: 531,400, -69.3%;
      • Rail: Four million, -57.3%;
  • 02-Apr-2020:

Australia: Australian Government, Qantas and Virgin Australia establish rescue service network

Australia's Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development Michael McCormack, in conjunction with Qantas and Virgin Australia established (03-Apr-2020) a continuing network of services to London, Los Angeles, Hong Kong and Auckland for four weeks to assist Australians to travel home.

The services will also provide freight capacity to Australian exporters and importers. [more - original PR]

South Korea: IATA: South Korea pax demand projected to drop 40% in 2020 due to coronavirus outbreak

IATA forecast (03-Apr-2020) the following impacts on South Korea's aviation sector in 2020 due to the coronavirus outbreak:

  • Change in passenger demand: -40% year-on-year;
  • Passenger demand impact: -45.14 million origin-destination passengers;
  • Potential job losses: 287,700;

The predictions are based on a scenario where severe restrictions on travel are lifted after three months, followed by gradual recovery. [more - original PR]

3. Middle East:

Gulf Air: Transit passengers permitted at Bahrain Airport 

Gulf Air, via its official Twitter account, announced (04-Apr-2020) in accordance with new regulations issued by Bahrain's Civil Aviation Authority, transit passengers are now permitted through Bahrain International Airport, however arrivals into Bahrain remain restricted to nationals and residents.

4. Europe:

airBaltic to operate at reduced capacity until end of Oct-2020 

airBaltic announced (03-Apr-2020) plans to decrease overall capacity from 15-Apr-2020 to 31-Oct-2020, cancelling approximately 50% of services, as a result of the coronavirus outbreak. The carrier also plans to delay service launches initially scheduled for summer 2020.

airBaltic CEO Martin Gauss said the carrier plans to restart operations gradually, operating daily on top routes with a reduced number of aircraft. Mr Gauss added: "With each upcoming week, more aircraft will return to service, offering more flights". [more - original PR]

5. North America:

Berkshire Hathaway sells part of stakes in Southwest Airlines and Delta Air Lines

Berkshire Hathaway sold (03-Apr-2020) approximately 2.3 million shares of common stock in Southwest Airlines for around USD74 million and approximately 12.9 million shares of common stock in Delta Air Lines for around USD314 million (Reuters, 04-Apr-2020). [more - original PR - Southwest Airlines] [more - original PR - Delta Air Lines]

6. Latin America:

Argentina limits entry of passengers to 700 per day

Aerolineas Argentinas announced (03-Apr-2020) Argentina's Government implemented a "safe corridors" policy which allows for a maximum of 700 people to enter the country by air on a daily basis.

The government envisioned a "gradual, planned and safe reopening of borders", commencing with scheduling individual flights one by one, in order to regulate the flow of people entering the country and to ensure compliance with health and preventive isolation measures. Aerolineas Argentinas operated one repatriation service from Cancun on 06-Apr-2020 and one from Punta Cana on 07-Apr-2020. [more - original PR]

7. Africa

Kenya extends ban on international services for a further 30 days

US Embassy in Kenya advised (05-Apr-2020) the Kenyan Government extended the ban on all international services in Kenya for another 30 days, effective 06-Apr-2020. [more - original PR]

The above is a selection of more than 150 news updates today specifically on COVID-19, from today’s CAPA Membership coverage, 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)

In the span of less than a month US airlines have had to change their strategies for the short and medium term drastically, as the COVID-19 crisis has reached pandemic levels and triggered historical degradation of demand. 

Those airlines were forced to adapt quickly to the new reality. They worked to fortify their balance sheets and cut capacity as travel restrictions were issued to the US from various regions of the world.

But as the US quickly became the epicentre for the spread of COVID-19, the airlines' planned capacity cuts have become starker as loads have fallen to unsustainable levels. 

There is now a disconnect between specific capacity guidance that airlines have offered as COVID-19 intensifies, and the capacity that remains in the domestic system. However, it does seem that airlines are slowly beginning to alter their schedules to match their stated capacity decreases.

It is a fluid situation, but there seems to be movement toward the stated targets for capacity decreases. 

Air China has filed domestic schedules for the week-long May holidays that offer similar capacity to 2019 levels, a remarkable sign of planned domestic aviation recovery.

It is quite possible the plans will be revised down again, as the airline continually adjusts its capacity, but there are few if any other airlines that would even contemplate such a recovery. As almost every other country has grounded most of its fleet, China is sending a message to the world that it believes normality is returning.

This is the first in a new CAPA report series, ‘Airline Future Plans’ , is designed to show which airlines have started the slow post-COVID-19 recovery process, moving beyond the operation of skeletal networks. The series aims to provide rare insights into airline strategy on core fleet and network deployment as airline management grapples with fast-changing circumstances.

China is emerging first, having largely contained its COVID-19 outbreak. The patterns established in China may offer some guidance to the rest of the world, just as China’s strict containment measures have also provided cues to efforts elsewhere. 

This report looks in particular at Beijing-based Air China’s forward capacity/schedule plans and fleet utilisation trends.

China Southern Airlines, China Eastern Airlines and Hainan Airlines will also be covered in the first wave. Airlines in other countries will follow once they show evidence of success in containing COVID-19 outbreaks, such as in South Korea. The focus will be on countries whose airlines have access to domestic markets, which are expected to unlock first.

Air cargo traffic tends to be more sensitive to economic growth than passenger demand and also a lead indicator. Already showing negative growth in 2019, cargo contributed only 12% of world airline revenue last year.

However, given air cargo's usual added sensitivity to economic downturns, it is ironic that it is currently proving more robust than passenger traffic. Crucial for keeping supply chains open, particularly for food, pharmaceuticals and other essential sectors, air freight is not subject to the same COVID-19-related restrictions as passengers.

Freighters in service are relatively stable compared with passenger aircraft, particularly among widebodies. However, passenger belly space is a massive contributor to cargo capacity. Reduced passenger networks mean that cargo capacity has fallen heavily year-on-year in all regions, but less so than passenger capacity.

According to IATA analysis published on 31-Mar-2020, airline industry revenue for 2Q2020 is expected to fall by 68% year-on-year. This is less than the anticipated 71% drop in RPKs, thanks in part to cargo revenue, but not by much.

Cargo revenue certainly helps, but is not enough.

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.

Coronavirus Situation Report

Over 250,000 additional global cases diagnosed over the weekend

205 countries are now affected

Significant decrease in volume of daily cases reported in the last 24 hours

New cases by day (6-Apr-2020)

Confirmed COVID-19 cases by day, excluding China (6-Apr-2020)

United Kingdom posts its highest daily increase of cases

Top ten locations for COVID-19 (6-Apr-2020)

Top ten highest increases in infections by location (6-Apr-2020)

Global cumulative cases (6-Apr-2020)

Global mortality rate (dark blue line) vs. key locations mortality rate (6-Apr-2020) 

Spread of virus is proving difficult to manage

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, while the US continues with the highest trajectory, as it comes late to lock downs - and even now, several states have still not done so.

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.

Brazil trajectory on par with European counterparts

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

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

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