COVID-19: Wuhan Airport resumes domestic operations: CAPA update 08-Apr-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.
The report contains a small selection of news briefs and CAPA commentary, on the US system and from each region.
Top news headlines:
- Wuhan Airport resumes domestic operations as the lockdown is ended;
- IATA: 2.7 million airline jobs at risk; 25 million in wider aviation, travel and tourism sectors;
- Lufthansa Group: It will take 'years' for global demand to reach pre-coronavirus crisis levels.
Aviation & Travel Industry coronavirus news updates
Air Capacity Update: Air China's domestic operations: Capacity addition become more aggressive as the May Labour Day (week-long) holiday approaches
Air China is consistently delaying the redeployment of ‘normal’ levels of service, but the airline is seemingly becoming more optimistic about the market situation from May-2020 – at least, according to its filed schedules. The CAAC has postponed the switch to summer schedules from late Mar-2020 to early May-2020, which is making direct year-on-year comparison difficult.
Air China’s domestic capacity levels are currently down approximately 40% on levels in 2019 – a welcome improvement from the 70% reduction in the trough in February.
Relative to other markets in the midst of massive COVID-19 capacity reductions of 90% cuts or worse, Air China’s domestic operating output is reasonably healthy.
To read more, visit our full report on Air China by following this link.
Air China weekly total domestic seat capacity (millions): 2019 vs. 2020 (scenarios, see details)
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
IATA: 2.7 million airline jobs at risk; 25 million in wider aviation, travel and tourism sectors
IATA released (07-Apr-2020) new analysis showing 25 million jobs in the aviation industry, as well as dependent sectors such as travel and tourism, are at risk of disappearing with plummeting demand for air travel amid the COVID-19 crisis. According to IATA, 2.7 million airlines jobs are threatened, as are the following jobs in aviation and related sectors:
- Asia Pacific: 11.2 million jobs;
- Europe: 5.6 million jobs;
- Latin America: 2.9 million jobs;
- North America: 2.0 million jobs;
- Africa: 2.0 million jobs;
- Middle East: 900,000 jobs. [more - original PR]
China: Wuhan Airport resumes domestic operations
China's Ministry of Transport, via its official WeChat account, announced (08-Apr-2020) Wuhan Tianhe International Airport resumed domestic services on 08-Apr-2020, following a temporary suspension of operations since 23-Jan-2020 due to the outbreak of coronavirus (Xinhua/CAAC News/Bloomberg, 08-Apr-2020).
The airport is scheduled to handle more than 200 aircraft movements on 08-Apr-2020, to destinations including Shanghai, Guangzhou, Shenzhen, Chongqing, Kunming, Chengdu, Hangzhou, Tianjin, Haikou, Xiamen, Shenyang, Qingdao and Xian. As previously reported by CAPA, international services and domestic services to Beijing will continue to be suspended at Wuhan.
Australasia: New Zealand Government collaborating on plans for the future of New Zealand tourism
New Zealand's Government Tourism Minister Kelvin Davis reported (08-Apr-2020) the Government, industry and business are collaborating to develop a plan for how tourism will operate in a post coronavirus world.
Mr Davis stated he tasked: "Tourism New Zealand with leading a piece of work alongside MBIE and the Department of Conservation, and with industry stakeholders, to reimagine the way we govern Tourism, how we market domestically and internationally, who we market to, and how we manage visitors when they arrive on our shores".
Mr Davis said: "We have an opportunity to rethink the entire way we approach tourism to ensure the country remains a sustainable tourism destination, with a phased approach due to international travel restrictions". [more - original PR]
South Korea: Korean Air to place more than 70% of personnel on leave for six months
Korean Air announced (07-Apr-2020) plans to place non essential personnel on leave for a six month period, effective 16-Apr-2020 to 15-Oct-2020, due to the impact of coronavirus on travel (Yonhap News/Reuters/Korea Herald, 07-Apr-2020).
The measure will apply to more than 70% of the airline's employees, who will reportedly receive a portion of their salaries during the leave period. [more - original PR - Korean]
3. Middle East:
Middle East Airlines incurs USD35m loss per month during coronavirus outbreak
Middle East Airlines chairman of the board directors Mohamed Al-Hout estimated the company is incurring a loss of US35 million per month as a result of Beirut Rafic Hariri International Airport's closure during the coronavirus crisis (Yemen Voice/Middle East Monitor, 07-Apr-2020).
Lufthansa Group: It will take 'years' for global demand to reach pre-coronavirus crisis levels
5. North America:
Allegiant makes major cuts to Apr/May-2020 capacity, estimates cash burn at USD2m per day
Allegiant Travel Company announced (07-Apr-2020) a 12.2% year-on-year capacity reduction in Mar-2020, with revenue to decrease approximately 40% to 45%. Capacity for Apr-2020 and May-2020 is now expected to be down 80% to 90%, resulting from an unprecedented amount of cancellations and much lower bookings for future travel.
The flight schedule is being reduced into the summer season and will be continuously reevaluated. Current cash burn is estimated at USD2 to USD2.5 million per day, leading the carrier to apply for payroll support funds from the US Treasury, with other government and financing alternatives also in view. It is calculated that as much as USD320 million in cash outlay reductions from Allegiant's initial 2020 plan may be realised through the following measures:
- Renegotiating payment terms and contracts with vendors;
- Suspending all non essential capital expenditures;
- Freezing hiring for all non essential roles;
- Suspending stock buybacks and dividend payments;
- Suspending nearly all contractor positions and subscriptions;
- Suspending non essential training and travel.
Additionally, executives have now reduced their salaries by 50% and board members are foregoing cash compensations, while nearly 700 staff have volunteered for 60 days of leave at half pay. [more - original PR]
6. Latin America:
Gol lists measures adopted to maintain cash
Gol CEO Paulo Kakinoff, via Gol's investor update video, commented (07-Apr-2020) on measures to maintain cash and reduce costs during the COVID-19 pandemic, listing the following:
- 5400 employees on unpaid leave;
- Most of Gol's administrative employees will have their working hours and remuneration reduced by 35% for the months of Apr/May/Jun-2020;
- Flight crew remuneration reduced by over 50%;
- Senior and middle management team remuneration reduction by 40%;
- Jet fuel payments deferred into instalments to be paid after 30-Sep-2020;
- ATM and airport fees have been suspended;
- Engine maintenance payment terms extension up to 180 days;
- Suspension of governmental taxes and fees in 2Q2020.
Ethiopian Airlines operating at 10% capacity, loses USD550m due to coronavirus: CEO
Ethiopian Airlines Group CEO Tewolde GebreMariam stated the airline is operating at only 10% of normal capacity due to the coronavirus pandemic and added: "So far we have lost USD550 million" as of Apr-2020 (AFP/Borkena/New Business Ethiopia/Reuters, 07-Apr-2020). The carrier is operating to only 19 of the 110 passenger destinations it served prior to the pandemic.
Mr GebreMariam also confirmed the airline "has not laid off any employees and has no plan to do so".
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)
China and other East Asian nations were in the frontline in the fight against coronavirus. It is reasonable to assume they should equally be the first to emerge. As we search for a tipping point in the global battle against COVID-19, these Asian markets may offer cause for optimism - or at least the signs of what the road back might look like.
The most recent schedule filings certainly support that emergence proposition, for domestic airline market regrowth. International expansion will be some time away as many countries remain effectively locked against international visitation.
In some cases it is two steps forward, one step back, as concerns remain about lingering pockets of contamination. But a consistent pattern is emerging of domestic markets that have turned the corner.
The domestic airline markets of China, Korea, Taiwan, Japan, and Indonesia are all clearly demonstrating a belief by their airlines that a corner has been turned, as they re-introduce capacity into the market. While welcome signs, they may not yet all be timely.
The COVID-19 pandemic has created an extra layer of complexity for network planners worldwide as airlines are working carefully to preserve some level of network integrity once the crisis is over. But that remains a tricky exercise, since the duration of the pandemic remains anyone’s guess.
American Airlines has outlined its planned international reductions for the peak season in the Northern Hemisphere, which will result in a 60% cut in capacity. The adjustments include a mix of pushing back the dates for the resumption of service in some markets and a decision by the airline to eliminate seasonal services in a number of markets.
American’s hub in Philadelphia appears to be bearing the brunt of seasonal route cuts. The airline has launched numerous routes to secondary trans Atlantic markets, which were performing well before COVID-19 wiped out in demand in a matter of weeks.
American is striking an optimistic tone, noting that 25 seasonal flights are suspended until the US summer of 2021; however it is entirely too early to determine whether demand in some markets will regain pre-pandemic levels by next summer.
As demand for air travel disappears in the wake of the COVID-19 pandemic, passenger airlines operating around the world are turning to cargo in order to produce fractional revenue.
In the US, major passenger airlines – after turning their attention away from freight during the past year in order to push up revenues from credit card deals, frequent flyer miles and other general ancillary sales – are opting to operate cargo flights. North America’s cargo traffic declined by 3.4% in 2019, and cargo revenues for the largest US airlines fell solidly year-on-year.
Obviously, cargo is not a long term saviour for the airlines, as they continue to navigate fast-moving changes brought on by the COVID-19 outbreak, but operators are turning over every rock in order to recapture even a fraction of their lost revenue.
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
206 countries are now affected
New cases by day (8-Apr-2020)
Confirmed COVID-19 cases by day, excluding China (8-Apr-2020)
Top ten locations for COVID-19 (8-Apr-2020)
Top ten highest increases in infections by location (8-Apr-2020)
Global cumulative cases (8-Apr-2020)
Global mortality rate (dark blue line) vs. key locations mortality rate (8-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.
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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