COVID-19: Wuhan Airport resumes domestic operations: CAPA update 08-Apr-2020

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]

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]

Lufthansa Group executive board stated (07-Apr-2020) it does not expect the aviation industry to quickly return to pre-coronavirus crisis levels of demand.

The Group estimated it will take "months" until global travel restrictions are completely lifted and "years" until global demand for air travel returns to pre-crisis levels. [more - original PR]

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]

COVID-19 Aviation recovery: Asian domestic airline capacity regrows

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.

COVID-19: American Airlines' international route reductions

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.

COVID 19: Air cargo suddenly attractive for US airlines

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.