Analysis Reports

CAPA has launched a series of online events highlighting the people and issues confronting the airline and travel industries.

Held monthly, the CAPA Live series will include interviews with major players, as well as analysis from experts within the CAPA and Aviation Week Group.

This presentation from the Oct-2020 event gives an overview and sets the scene for the Australasian market.

In subsequent monthly briefings more specific market developments will be examined.

Any discourse on passenger numbers across its network offered by VINCI Airports, as one of the world’s biggest airport operators and represented across three continents, must make for essential reading.

While the pandemic has adversely affected traffic at all its airports, it is notable that there has been a notable uptick where borders have been opened – as might be expected. Moreover, VINCI perceives the beginning of a recovery in Brazil.

But the investment made last year in London Gatwick Airport has – so far at least – rebounded on it.

Before the COVID-19 pandemic, Mexico’s value airline Interjet was working to make 2020 a more positive year than 2019.

The challenges the airline was aiming to put behind it included ridding itself of Sukhoi Superjet 100s and working to build confidence in its financial state. 

Obviously, the world’s public health crisis has upended Interjet’s efforts to get back on track, and during the slowdown driven by COVID-19 the airline has not added back service as quickly as other Mexican operators. There also appears to have been a shake-up in Interjet’s executive ranks at the highest levels, and its strategy – if there is one in place – is murky at best. 

Until the situation develops further it is not known whether Interjet has the financial resources to withstand the ongoing shocks triggered by COVID-19; but its competitors are taking advantage of other airlines in Mexico that are shrinking during the pandemic, and Interjet could face challenges in working to regain its share. 

This report is based on an interview with Ed Sims, WestJet CEO, presented at CAPA Live on 14-Oct-2020. The next monthly CAPA Live will be on 11-Nov-2020.

There’s been little indication from Canada’s government for a time to ease or change strict travel restrictions that have been in place since Mar-2020, when the COVID-19 virus began spreading rapidly worldwide. 

Aviation stakeholders continue to stress that those prohibitions are creating significant disadvantages for Canada’s airports and airlines, and now WestJet is warning that Canadian operators are losing share to foreign competitors. 

WestJet is also facing the reality that it is tough to determine what could drive the government to take a different approach on restrictions, and the company does foresee a reopening of the US border before the end of 2020.

Against that backdrop, Mr Sims continues to stress that testing and vaccines are key to jump-starting demand, which is crucial to reaching break-even cash burn. 

Welcome to the 19-Oct-2020 edition of CAPA’s Coronavirus and Aviation global COVID-19 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 from around the world.

Top news headlines:

- United Kingdom aviation capacity downward trajectory expected to continue;

- IATA welcomes US military report on low risk of catching COVID-19 on a flight;

- CAAC: Domestic pax recovers to 98% of 2019 level in Sep-2020.

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

- 40 million cases expected to be diagnosed this.

With all the problems the air transport industry has at present, and those it will face again from the environmental lobby, it does not need any more. But a merger between two of the leading high-speed rail companies in northern Europe – Eurostar and Thalys, which was first mooted last year but considered unlikely to come to fruition soon, is pressing ahead.

What it will do is to present the aviation business with a genuine threat to its revival prospects across six very highly populated areas – Southeast England, Ile de France, Hauts de France, Belgium, the Dutch Randstad, and Germany’s Ruhr. And even further, if other operators join as associates to form a regulatory area of their own and exiting experiments between France and Spain are continued.

But rail does not have it all its own way. Services have been decimated just as they have in the air, and there are some technical difficulties to overcome.

Nevertheless we are shaping up for an almighty war for business in some of Europe’s most important regions.

This report is based on material presented at CAPA Live on 14-Oct-2020. (The next monthly CAPA Live will be on 11-Nov-2020).

Much of the world has some sort of recovery scenario from COVID-19, but Latin America is different.

A significant portion of the region has remained closed off to air travel, starting in Mar-2020, and the restart process has been occurring during the past couple of months. The next few weeks will be crucial to gauge Latin America’s path to recovery. 

One country that has remained open during the pandemic is Brazil. Its passenger levels, while low, are starting to climb, and two of its largest operators have been adding capacity back at a solid rate.

However, traffic still remains solidly depressed, and Brazilian airlines and other operators in Latin America may have to join their counterparts worldwide in engaging in testing schemes as a means to accelerate a recovery in demand. 

At CAPA Live on 14-Oct-2020 CAPA analysts presented an overview of the current situation and outlook for aviation in each of the major regions of the world.

For Europe, the challenge is how to reverse the slide in momentum since Aug-2020.

RPK growth in Europe 'recovered' to -73.0% year-on-year in Aug-2020, from -81.3% in Jul-2020 (and worse before that). However, Aug-2020 represented 'peak recovery' for seat capacity and traffic.

Moreover, the number of aircraft back in service in Europe has reached a plateau since mid Aug-2020. LCCs have returned a higher percentage of aircraft to service (74% versus 66% for all of Europe's airlines), but this is no longer climbing.

There are currently few signs in any data that Europe's aviation recovery will regain positive momentum as COVID-19 case numbers continue to increase and governments continue with fragmented quarantine requirements.

For Europe's biggest aviation market, the UK, CAPA projects seats at 35%-40% of 2019 levels through the coming winter – no higher than in early Oct-2020.

It is hard to fathom that North America and the rest of the world have been battling the COVID-19 pandemic for nearly eight months. And for the majority of operators worldwide the reality is setting in that the recovery is likely to be wildly unpredictable and slower than expected. 

In the US, capacity in the domestic market is projected to reach approximately 50% of 2019 levels by YE2020, but the road to revenue recovery will be long, as business demand remains essentially stalled and international travel is severely constrained. 

Even as airlines accept the reality that a long road lies ahead in recovering from the COVID-19 crisis, they are pointing to sequential improvements in revenues losses and decreasing their daily cash burn, which are relative achievements in the new reality that US operators and airlines worldwide find themselves in. 

It is a sure sign that things are desperate when Europe's airlines, pilot unions and airports all agree.

Jonathan Hinkles, CEO of the UK regional airline Loganair argues that without testing at airports, UK aviation is "whirling around like a leaf in an autumn storm".

EasyJet CEO Johan Lundgren says "Aviation continues to face the most severe threat in its history".

Virgin Atlantic CEO Shai Weiss warns that "without mass testing", the UK's economic recovery "will not take off".

British Airline Pilots' Association general secretary Brian Strutton believes "UK aviation is in a death spiral".

Augustin de Romanet, chairman/CEO of Groupe ADP, owner of the two main Paris airports, fears the "entire airline sector is slowly dying".

After reaching peak recovery in Aug-2020, Europe is now eight weeks into deepening year-on-year capacity cuts. Seat numbers are down -62.2% in the week commencing 12-Oct-2020. Only Middle East has a deeper cut, with -63.2%; Africa is -59.1%, Latin America -56.7%, North America -51.6%, and Asia Pacific is -39.0%.

The European aviation industry urgently needs standardised, consistent COVID-19 testing to replace the web of quarantine restrictions that are choking it.