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COVID-19: Global cases exceed one million: CAPA update 03-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:

- IATA: Global international pax were down 10% in Feb-2020, as COVID-19 started to impact;

- China: CAAC: Daily frequencies in Mar-2020 up 21% from Feb-2020.

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

- Global cases now exceed one million;

- 85,863 new cases diagnosed in 24 hours.

- Italy's mortality rate continues to rise, to 12%

Aviation & Travel Industry coronavirus news updates

Air Capacity Update: Major US domestic routes could be ceased; what is under threat? 

The USA continues to dominate the news around COVID-19 as the country diagnoses almost 250,000 cases with daily increases not slowing.

President Donald Trump announced yesterday plans to enforce the closure of certain major domestic routes connecting hot spots of the infection. The following graph highlights the busiest US domestic routes prior to these changes being introduced.

United States domestic routes by seat capacity: w/c 30-Mar-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 international pax down 10% in Feb-2020, as COVID-19 started to impact

IATA reported (02-Apr-2020) the following international passenger traffic highlights for Feb-2020:

  • Global: International passenger demand fell 10.1% year-on-year, the worst outcome since the 2003 SARS outbreak and a reversal from the 2.6% traffic increase recorded in Jan-2020. Europe and the Middle East were the only regions to record traffic increases. Capacity fell 5.0%, and load factor plunged 4.2pp to 75.3%.
  • Asia Pacific: Traffic plummeted 30.4%, steeply reversing a 3.0% gain recorded in Jan-2020. Capacity fell 16.9% and load factor collapsed to 67.9%, a 13.2pp drop;
  • Europe: Demand was virtually flat (+0.2%), the region's weakest performance in a decade. The slowdown was driven by routes to/from Asia, where the growth rate slowed by 25pp in Feb-2020, versus Jan-2020. Demand in markets within Europe performed solidly despite some initial suspensions on the routes to/from Italy. However, Mar-2020 data will reflect the impact of the spread of the coronavirus across Europe and the related disruptions to travel. Feb-2020 capacity rose 0.7%, and load factor slipped 0.4pp to 82.0%, which was the highest among regions;
  • Middle East: 1.6% traffic increase, a slowdown from the 5.3% growth reported in Jan-2020 largely owing to a slowdown on Middle East-Asia Pacific routes. Capacity increased by 1.3%, and load factor edged up 0.2pp to 72.6%;
  • North America: 2.8% traffic decline, reversing a 2.9% gain in Jan-2020, as international entry restrictions hit home and volumes on Asia-North America routes plunged 30%. Capacity fell 1.5%, and load factor dropped 1.0pp to 77.7%;
  • Latin America: 0.4% demand drop, which was an improvement over the 3.5% decline recorded in Jan-2020. However, the spread of the virus and resulting travel restrictions will be reflected in Mar-2020 results. Capacity also fell 0.4% and load factor was flat at 81.3%;
  • Africa: Traffic slipped 1.1% in Feb-2020, versus a 5.6% traffic increase in Jan-2020, marking the weakest outcome since 2015. The decline was driven by around a 35% year-on-year traffic fall in the Africa-Asia market. Capacity rose 4.8% and load factor sagged 3.9pp to 65.7%, the lowest among regions. [more - original PR]

2. Asia

China: CAAC: Daily frequencies in Mar-2020 up 21% from Feb-2020

CAAC reported (02-Apr-2020) China's daily frequencies averaged 6533 in Mar-2020, an increase of 20.5% compared to Feb-2020, but this was still only at 42% of the pre coronavirus level.

The majority of increased domestic demand was in regions where the labour force is relatively concentrated, such as the southwest, northwest and coastal areas. As of 01-Apr-2020, airlines have arranged more than 970 frequencies to transport 59,000 passengers to resume their work. [more - original PR - Chinese]

Thailand: Thai Airways suspends all operations from 01-Apr-2020 until 31-May-2020

Thai Airways suspended (02-Apr-2020) all operations from 01-Apr-2020 until 31-May-2020 due to the coronavirus outbreak. All staff will be placed on temporary leave from 04-Apr-2020 until 31-May-2020. [more - original PR]

Australia/New Zealand: Moody's Investors Service outlook for Australian airports turns negative

Moody's Investors Service reported (02-Apr-2020) Australian airport revenues will decline materially in 2020 due to coronavirus related disruptions, namely the government led containment measures that have resulted in airlines cutting capacity. Moody's Investors Service reported passenger volumes will decline sharply in 2020, driving a material fall in revenues, and airports are aggressively implementing countermeasures to protect their credit profiles.

Moody's expects a gradual recovery in revenues starting in 3Q2020, driven by supportive fiscal and monetary policy measure. Moody's is cautious about the pace of recovery as governments may retain travel restrictions and consumers may be wary of, or not have the financial capacity to return to pre-coronavirus levels of travel, however reported Australia's airports generally have adequate liquidity and are owned by well funded and well aligned investors with long term investment horizons. [more - original PR]

3. Middle East:

IATA: Middle East and Africa carriers to lose USD23bn in revenue due to coronavirus

IATA urged (01-Apr-2020) governments in the Middle East and Africa to provide financial relief to airlines as the latest IATA scenario for potential revenue loss by carriers reched USD19 billion for the Middle East and USD4 billion for Africa. This translates to a drop in industry revenues of 32% year-on-year for Africa and 39% for the Middle East for 2020. Impacts at a national level include:

  • Saudi Arabia: 26.7 million fewer passengers resulting in a USD5.6 billion in revenue loss, risking 217,570 jobs and USD13.6 billion in contribution to Saudi Arabia's economy;
  • UAE: 23.8 million fewer passengers resulting in a USD5.36 billion revenue loss, risking 287,863 jobs and USD17.7 billion in contribution to the UAE's economy;
  • Egypt: 9.5 million fewer passengers resulting in a USD1.6 billion revenue loss, risking almost 205,560 jobs and around USD2.4 billion in contribution to the Egyptian economy;
  • Qatar: 3.6 million fewer passengers resulting in a USD1.32 billion revenue loss, risking 53,640 jobs and USD2.1 billion in contribution to Qatar's economy;
  • Jordan: 2.8 million fewer passengers resulting in a USD0.5 billion revenue loss, risking 26,400 jobs and USD0.8 billion in contribution to Jordan's economy;
  • South Africa: 10.7 million fewer passengers resulting in a USD2.29 billion revenue loss, risking 186,850 jobs and USD3.8 billion in contribution to South Africa's economy;
  • Nigeria: 3.5 million fewer passengers resulting in a USD0.76 billion revenue loss, risking 91,380 jobs and USD0.65 billion in contribution to Nigeria's economy;
  • Ethiopia: 1.6 million fewer passengers resulting in a USD0.3billion revenue loss, risking 327,062 jobs and USD1.2 billion in contribution to Ethiopia's economy;
  • Kenya: 2.5 million fewer passengers resulting in a USD0.54 billion revenue loss, risking 137,965 jobs and USD1.1 billion in contribution to Kenya's economy. [more - original PR]

4. Europe:

British Airways accesses UK COVID-19 Job Retention Scheme for 30,000 staff in Apr/May-2020

IAG reached (02-Apr-2020) an agreement with trade unions GMB and Unite the Union to gain access to the UK's COVID-19 Job Retention Scheme for around 30,000 British Airways cabin crew and ground based employees during Apr/May-2020. Under the scheme, furloughed employees will receive 80% of their base pay and of certain allowances.
 
The agreement is subject to union ratification. British Airways also reached an agreement with its 4000 pilots to take four weeks of unpaid leave in Apr/May-2020. Additionally, Iberia received support from similar job retention and wage support schemes for more than 17,000 employees in Spain and IAG is seeking similar support in Ireland for Aer Lingus. [more - original PR]

5. North America:

Southwest Airlines to apply for US Government grants under CARES Act

Southwest Airlines announced (02-Apr-2020) its intention to apply to the US Department of Treasury under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, in order to discuss specific details regarding grants that could increase its liquidity and provide job security until 30-Sep-2020.
 
Southwest Airlines CEO Gary Kelly, via a video post on the airline's official blog, stated the grants would "help provide much needed cash flow to cover a significant portion of salaries, wages and benefits". [more - original PR]

6. Latin America:

IATA offers suggestions to Peru on assisting the aviation sector

IATA regional VP Americas Peter Cerda requested the Government of Peru implement measures to assist airlines in the country to mitigate the impact of the COVID-19 pandemic (Aero Latin News, 02-Apr-2020).

IATA estimates an USD1.3 billion loss in revenues in Peru due to the pandemic. IATA suggested that the government implement the following measures:

  • Postponing tax payment;
  • Postponing ATM fees;
  • Temporary customs flexibility for aircraft admissions;
  • Reduction or exemption of airport fees for aircraft parking;
  • Creation of a finance line for airlines and the tourism industry.

7. Africa

Kenya Airways: 'For the first time in our history we've put a pause on our flights'

Kenya Airways, via its official Twitter account, announced (02-Apr-2020) "For the first time in our history we've put a pause on our flights" (Nairobi News, 02-Apr-2020).

The measure is due to restrictions on travel imposed following the outbreak of coronavirus.

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)

Australia is fortunate in being able to boast perhaps the most efficient and best managed airline in the world. Qantas is by many measures a leader – in establishing the highly successful dual brand, with Jetstar, in its international strategy, an unmatched frequent flyer programme and data aggregation capability, a powerful distribution strategy….the list goes on. And it has a remarkably strong balance sheet, with provisions made to weather a long storm.

Qantas also dominates the Australian domestic air services market at all levels, owning more than two thirds of it, and much more in some pockets.

That includes regional markets, tourism markets and, above all the almost AUD10 billion corporate market, where it holds about a 90% share.

Internationally it also has a selection of valuable routes, such as the US, as well as very strong airline partnerships.

In those circumstances, does Australia need a strong second airline? Should Virgin Australia be bailed out?

At first, COVID-19 looked like previous crises: a hit to traffic and revenue followed by a return to normal, even if there was uncertainty about the depth and duration of the hit.

The revenue reduction faced by airlines this year as a result of COVID-19 far exceeds the impact from previous crises. It has the dimensions of a world war. Furthermore, a global recession is now coming in 2020/21 and this means that a recovery will take longer.

Moreover, even after recovery, 'normal' will not be the same as before. There are likely to be lasting impacts on demand for air travel. As a result of lockdowns, or near lockdowns, across the planet, people are fast learning new ways to live their lives, both at work and at leisure.

More than ever before, technology is now a more realistic and more widely used substitute instead of business travel by air. Even after COVID-19 has passed, aviation may also face a residual loss of confidence from passengers over travel, for fear of close contact with others.

In addition, the crisis may give an additional push to environmental campaigns against aviation.

COVID-19: Island nations' serious loss of air services. Part 1

When the General Manager of Atlanta Hartsfield-Jackson International Airport, the world’s busiest, reports an 85% year-on-year decline in passengers since the coronavirus outbreak, says revenue could be down by 50% or more, and that the airport normally services 26,000 flights per day but it has decreased to 1200, and "those flights are mostly empty"– you know that the aviation industry has a big problem.

But at the other end of the scale from Atlanta, in the world’s small island states, particularly remote ones, for which air travel is an absolute necessity, it is much more of a problem.

Broadly 25% of all independent nations are island countries.

This report looks at a selection of those states and airports, and at how they have been impacted by the COVID-19 outbreak.

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

Global cases now more than one million

202 countries are now affected

85,863 new cases diagnosed in 24 hours

New cases by day (3-Apr-2020)

Confirmed COVID-19 cases by day, excluding China (3-Apr-2020)

USA makes up 25% of total global cases

Top ten locations for COVID-19 (3-Apr-2020)

Top ten highest increases in infections by location (3-Apr-2020)

Global cumulative cases (3-Apr-2020)

Global mortality rate (dark blue line) vs. key locations mortality rate (3-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.

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.

Taiwan's strict measures prove effective for slowing spread

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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