COVID-19 wipes out 35 percent of global airline capacity, with more to come

More than a third of the world’s airline capacity has been wiped out in the first 10 weeks of the coronavirus crisis, accounting for a staggering 37 million seats.

The 10th week of the pandemic saw single biggest ever capacity cut in one week as 21 million seats dropped out around the globe to cut capacity by 23 percent.

The sobering figures emerged from aviation data experts OAG Tuesday as airlines continued to scale back international flying and significantly reduce domestic operations.

Global airlines — including familiar brands such as Singapore Airlines, Cathay Pacific, Emirates, Qantas and United Airlines — are parking thousands of planes in response to the precipitous fall in demand and unheard of restrictions on international travel.

They are laying off staff and scrambling to find lines of credit to bolster liquidity even as they ask governments to help them survive.

READ: Singapore must ensure its airline soars after COVID-19

OAG’s John Grant described the situation as stark and predicted the 35 percent of capacity already wiped out was likely to get worse in the coming weeks as airlines continue to adjust their schedules.

And no region is unscathed.

Capacity in Western Europe fell 53 percent in seven days while in Latin America it was down by 42 percent.

Middle East capacity was down by a third even before the announcement by Emirates that it would suspend all operations.

And the cuts continued: South-East Asia was down 29.4 percent, the Southwest Pacific by 17.5 percent and North America by 9.1 percent.

“Those looking for the shoots of recovery will immediately focus on China where a further 217,000 domestic seats could be seen as positive against what is a dramatic situation,’’ Grant said in his weekly update.

“Capacity from the United States will continue to decline as the major carrier’s work through the precise detail of their already announced cutbacks.”

The top 10 countries to be ravaged by capacity reductions all saw seat numbers drop by more than 62 percent.

They include Peru, Portugal, Spain, Austria, Greece and Singapore.

Moving against the trend and adding capacity are Chinese carriers such as China Southern and China Eastern.

Ryanair produced the biggest capacity cuts to March 22, followed by SAS Scandinavian Airlines and Spain’s Iberia.

But a flurry of changes in the coming week is likely to see those rankings change.

“Perhaps the biggest concern is that the current “top four” airlines are still supplying OAG with their latest schedule changes and the record week-on-week capacity reductions we have seen exclude the majority of cuts those airlines have announced but are still working through,” Grant said.

“Put another way; next week could be as bad as this week, if not worse.”

Governments must do more for airlines as REX pleads for help

Geoffrey Thomas

The time has come for the Australian federal and state governments to move swiftly to secure its airlines and thus the lifeline around the country and to the regions.

Regional Express which provides the country’s vital links to the regions waved the white flag and said it would shut down around Australia from April 6 if governments did underwrite its losses.

However, Rex will continue in Queensland where all services are underwritten.

The airline is Australia’s largest independent regional operator with 60 Saab 340 aircraft and some 1,500 weekly flights to 60 destinations around the country.

Putting the airline’s plight into perspective the airline’s deputy chairman, the Hon. John Sharp AM said that the recent A$715 million stimulus package was of little benefit to Rex which would gain only an A$1 million a month while it projects losing A$10 million a month running a heavily reduced schedule it announced last week.

“The US Government has put in place a rescue package of USD$50 billion for a total airline revenue in the USA of USD$240 billion – about 20 per cent of one year’s worth of revenue,” said Mr Sharp.

“Australia’s total airline revenue is A$23 billion indicating that an equivalent effort in Australia would require a rescue package in the order of A$4.6 billion instead of the A$715 million proposed.”

Separately there also appears to be friction between Qantas and Virgin Australia over government assistance.

Responding to a suggestion on Sky News about government support for Virgin Australia, Qantas chief Alan Joyce said “the government can’t pick winners and losers, the government has to be fair to every company. Whatever aid it’s giving to one company it must give to everyone in the sector.”

He added that the nation shouldn’t choose to look after “badly managed companies” in an apparent dig at Virgin Australia.

Yet, is wasn’t so long ago in the 1990s that Qantas was considered badly managed with bad aircraft and product decisions.

Today Qantas and Virgin Australia are well managed and both deserve government support.

Arguments that these airlines are either totally or partially foreign owned are irrelevant. They all employ Australians and are critical to our infrastructure.

Singapore must ensure its airline soars after COVID-19

Geoffrey Thomas

Microsoft’s co-founder Bill Gates said that aviation is the world’s first worldwide web but after the COVID-19 pandemic is over and just a very bad and tragic memory some country’s webs will be in far better shape than others.

Rescue packages for airlines are being announced almost daily.

New Zealand, Australia and the US have stepped up with billions or assurances of lifelines.

READ: Singapore Airlines grounds most of its aircraft.

In the Middle East, giants such as Qatar Airways, Emirates and Etihad Airways are backed by their respective countries and while they will get a black eye they will emerge ready to snare more traffic off those airlines that have not had the enormous benefit of government ownership or a bailout.

While Singapore Airline’s biggest shareholder is the government through Temasek Holdings Pte Ltd the government has steadfastly refused to bail out companies in the past.

But this is different, very different and the government must step up to support Singapore Airlines which has been a huge money earner for the government over the decades.

If it does not the airline may be forced to sell assets at fire-sale prices to survive.

Sure, it’s in great shape but this pandemic and the resulting social and financial panic are like nothing anyone has ever been through since 1945.

And this is not just about the numbers.

The true importance of a vibrant airline system extends well beyond pure numbers as an integral part of the fabric of society and robust economies.

Efficient mobility systems are essential facilitators of economic development. Cities could not exist and global trade could not occur without systems to transport people and goods cheaply and efficiently.

And for the country of Singapore, Singapore Airlines is one of the world’s greatest brands that speak to perfection, integrity, service and efficiency, all the qualities that sell “Singapore”.

Countries and people will be judged by how they handled this crisis, the like of which most of us have never witnessed.

The Singapore Government needs to ensure its airline – one of the world’s very best – flies out of his pandemic stronger than ever, not struggling with its wings clipped.

Singapore Airlines grounds most of its aircraft

Steve Creedy

Singapore Airlines will ground most of its aircraft until the end of April as it cuts capacity by 96 percent due to the COVI-D-19 crisis.

The Singaporean airline group announced Monday it will ground 138 of its 147 SIA and SilkAir aircraft and 47 of the 49 planes operated by low-cost offshoot Scoot.

The additional suspensions, prompted by the closure of Singapore’s borders to even transit passengers, will take place between now and March 30.

The group will be flying to just five destinations: Brunei, Guangzhou, Shanghai, Beijing and Jakarta.

It also revealed it was drawing on lines of credit to meet immediate cash flow requirements while it discusses future funding with several institutions.

READ: Emirates leaves lifelines open as it cuts most passenger services.

Singapore said it was unclear when it would be able to resume normal services given the uncertainty about when stringent border controls would be lifted.

“Even during this crisis, our customers and staff remain our top priority,’’ SIA chief executive Goh Choon Phong said.

“We continue to focus on getting as many of our passengers as possible back home safely and protecting the jobs of our people.

“I would like to thank the SIA Group staff for their commitment and sacrifices during this extremely challenging time.

“I would also like to apologize to our customers and thank them for their patience and understanding, as we grapple with this unprecedented situation.

“We have more than doubled the handling capacity at our service centers and sales offices, and (we’re) trying to help as many of you as soon as possible.”

SIA said it was taking steps to build up its liquidity to get it through the crisis and said it would release details when the measures were firmed up.

It is also reducing capital expenditure and operating costs and has vowed to aggressively pursue all measures to address the impact of the COVID-19 outbreak.

Measures taken so far include ongoing discussions with aircraft manufacturers to delay aircraft deliveries and payments as well as management salary cuts and a voluntary no-pay leave scheme for some managers.

“Given the worsening situation, the unions have been engaged on the additional cost-cutting measures that are needed and more steps will be taken imminently,’’ it added.

Virgin offers quick way home for Aussies facing restrictions

Steve Creedy

Virgin Australia has waived change fees and fare differences for Australians wanting to head home before domestic travel restrictions are introduced on Tuesday.

Western Australia and South Australia have joined Tasmania and the Northern Territory in closing their borders and Virgin says it will work to re-accommodate passengers booked to depart on Virgin Australia and Tigerair flights on or before March 27.

They can change to a flight on or before Tuesday by presenting at the airline’s check-in counters or via their contact centers.

READ: Emirates leaves lifelines for passengers as it cuts most passenger services.

Tigerair passengers unable to get a seat on the low-cost carrier will be rebooked on a Virgin Australia flight without additional cost.

“We want guests to know that during these uncertain times, we’re committed to getting them home,’’ a Virgin spokesperson said.

“Whether they’re overseas or interstate, we’re waiving change fees and fare differences to get them safely home before travel and border restrictions come into effect.”

The arrangements are in addition to waivers offered to passengers who were due to depart before June 30.

Both Virgin and Qantas are reducing flights as a result of the restrictions and a warning by Australian Prime Minister Scott Morrison to avoid all but non-essential travel.

UPDATED: Emirates cuts all passenger services

Steve Creedy

Emirates has backtracked on plans to keep a lifeline open to some countries and will now suspend all flights from March 25 for at least two weeks.

The airline issued a statement early Monday that it planned to keep flying to Australia, the US, the UK, Switzerland, Hong Kong, Thailand, Malaysia, Philippines, Japan, Singapore, South Korea South Africa and Canada.

But a directive from the United Arab Emirates government means that will now not happen.

“As per the latest UAE government directive, Emirates will temporarily suspend all passenger flights for two weeks from 25 March 2020.” a spokesperson said.

“These measures are in place for the protection of communities against the spread of COVID-19, and we are in full support.

“We look forward to resuming passenger services as soon as feasible.”

Emirates suctomers were advised to visit the airl’s website on contact their travel agent.

The Dubai-based airline said it would also continue to maintain international air cargo links for economies and communities, deploying its fleet of 777 freighters for the transport of essential goods including medical supplies across the world.

READ: United reinstates some flights to get people home

It said it had aimed to maintain passenger flights for as long as feasible to help travelers return home amid the rise in travel bans, restrictions and country lockdowns.

“The world has literally gone into quarantine due to the COVID-19 outbreak,’’ Emirates chairman and chief executive Sheikh Ahmed bin Saeed Al Maktoum said.

“This is an unprecedented crisis situation in terms of breadth and scale: geographically, as well as from a health, social, and economic standpoint.

“Until January 2020, the Emirates Group was doing well against our current financial year targets. But COVID-19 has brought all that to a sudden and painful halt over the past 6 weeks.

“As a global network airline, we find ourselves in a situation where we cannot viably operate passenger services until countries re-open their borders, and travel confidence returns.

“By Wednesday March 25, although we will still operate cargo flights which remain busy, Emirates will have temporarily suspended most of its passenger operations.

“We continue to watch the situation closely, and as soon as things allow, we will reinstate our services.”

The Emirates Group, which says it has “strong liquidity and a healthy cash position”, has implemented basic salary cuts for most employees for three months but said it did not intend to cut jobs.

Emirates president Sir Tim Clark will take a 100 percent basic salary cut for three months as will the head of dnata, Gary Chapman.

Other measures include postponing or canceling discretionary expenditure, a freeze on all non-essential recruitment and consultancy work and work with the suppliers to find cost savings.

“Emirates remains committed to serving its markets and looks forward to resuming a normal flight schedule as soon as that is permitted by the relevant authorities,’’ it said.

Rex plans to cut nearly all passenger services.

Steve Creedy

Australian regional carrier Rex has called for significantly increased financial help as it moves to shut down all scheduled air services except government-supported routes in Queensland.

The carrier says it will be forced to make the dramatic move from April 6 unless federal and state governments are prepared to underwrite losses of about $A10m a month.

It says an Australian industry rescue package should be in the order of $A4.6 billion to be proportionate to a proposed $US50 billion US airline relief package.

READ: United reinstates some flights to get people home.

It comes as the Australian government has called for people to abandon all but essential domestic air travel and governments in Western Australia, Tasmania, South Australia and the Northern territory have imposed restrictions on inbound travelers.

Rex services to remain unaffected include Ambulance Victoria fixed-wing air ambulance services, charter contracts with mining companies, freight services and pilot training at its pilot academies in Victoria and New South Wales.

Travel demand has already plummeted and Rex expects it to be down by 80 percent as the result of new restrictions imposed by governments. In normal times, the airline operated 60 Saab aircraft to 60 destinations.

The Australian government recently unveiled a $715m rescue package for airlines but the regional carrier says the $A1 million a month direct benefit it receives from the package is far outweighed by the $A10 million a month it would cost to run a recently-announced reduced schedule.

“Rex is supportive of the strong measures taken by the federal and state governments such as the shutting of state borders and imposing a lockdown within the states as well as discouraging all non-essential travel,” Rex deputy chairman John Sharp said.

“These measures will definitely reduce the number of infections from COVID-19,
prevent the health care system from being overwhelmed and save many lives.

“However, tragically for the airline industry, this means that we can expect the year-on-year
reduction of passenger numbers to nosedive to around 80 percent from the 60 percent we are experiencing today.

“There is a tipping point in the airline business beyond which it will no longer be sustainable to operate reduced services.”

Sharp said the airline may be able to reconsider its plans if an assistance package “of sufficient magnitude and availability can be negotiated by the end of the week.”

“Regional air services provide an invaluable and priceless contribution to the socio-economic well-being of local communities throughout regional and remote Australia,” he said.

“State and local Governments should be leading the charge in extreme times like these to assist regional carriers rather than leaving it to the federal government.”

United reinstates some flights to get people home

Steve Creedy

United Airlines has moved against the torrent of constant cancellations to reinstate some flights it intended to suspend in order to get customers home.

The airline had announced it was suspending 95 percent of its international flying in April, including flights to Australia, Canada Latin America and Europe and the UK.

In what is now an unusual move, it reversed course over the weekend.

WATCH: Virgin Australia assures passengers on the cleanliness of its aircraft.

It said travel demand continued to drop but it was aware there were still people around the globe who were displaced and needed to get home.

“While United’s international schedule will still be reduced by about 90 percent in April, the airline will continue flying six daily operations to and from the following destinations – covering Asia, Australia, Latin America, the Middle East and Europe – in an effort to get customers where they need to be,’’ it said.

“This remains a fluid situation, but United continues to play a role in connecting people and uniting the world, especially in these challenging times.”

These United flights continuing from now through May schedule:

Newark/New York – Frankfurt (Flights 960/961)
Newark/New York – London (Flights 16/17)
Newark/New York – Tel Aviv (Flights 90/91)
Houston – Sao Paulo (Flights 62/63)
San Francisco – Tokyo-Narita (Flights 837/838)
San Francisco – Sydney (Flights 863/870)

In addition to the above, United has reinstated the following flights through to March 27 to help displaced customers who still need to get home:

Newark/New York – Amsterdam (Flights 70/71)
Newark/New York – Munich (Flights 30/31)
Newark/New York – Brussels (Flights 999/998)
Washington-Dulles – London (Flights 918/919)
San Francisco – Frankfurt (Flights 58/59)
Newark/New York – Sao Paulo (Flights 149/148)

San Francisco-Seoul flights have also been reinstated to March 29.

The airline is also looking at ways it can help customers stranded in destinations to which it can’t fly.

“In destinations where government actions have barred us from flying, we are actively looking for ways to bring customers who have been impacted by travel restrictions back to the United States,’’ the airline said.

“This includes working with the US State Department and the local governments to gain permission to operate service.”

Qantas, which plans to suspend all international flying, is also talking to the Australian government about flights to repatriate people.

Airbus test aircraft on COVID-19 mercy flights

Steve Creedy

Airbus is using test aircraft to ferry medical and other vital supplies to Europe as it moves to partially resume production work in France and Spain.

A test Airbus A380-800 superjumbo this weekend transported two million masks from Tianjin, China, to help the fight against COVID-19 and said additional flights are planned in the coming days.

The majority of the masks will be donated to Spanish and French authorities as part of wider donations to hospitals and public services around Europe.

READ: Cathay passenger capacity shrivels to 4 percent.

The European manufacturer is also bringing its French and Spanish production back online after suspending it to revamp hygiene, cleaning and social distancing requirements in its health regime.

It was the most serious disruption to Europen production since a 1989 strike at then partner BAE systems. The manufacturer also closed its final assembly line in Tianjin as a result of the coronavirus outbreak but has since re-opened it and says it is “working efficiently”.

Airbus said it had carried out extensive work with its partners to ensure the health and safety of employees and work stations would only re-open if they complied with the strict new regime.

The manufacturer is also encouraging employees globally to work from home where possible.

“Health and safety is our number one priority at Airbus so the work stations at our sites in France and Spain will only re-open if they meet the required standards,” said Airbus chief executive Guillaume Faury.

“I’d like to salute the strong commitment from our employees to ensure business continuity in close cooperation with our social partners and other stakeholders.

“At the same time, we are doing all we can to support those on the frontline to fight the coronavirus and limit its spread.

“We try to live up to our values, humbled by the complexity of the situation, and contribute as much as we can to society in these very difficult times.”

Airbus later announced it had opened a new €15 billion credit facility, withdrawn its 2019 dividend and stopped topping up pension funding to bolster liquidity.

It also withdrew its 2020 earnings guidance.