general

The coronavirus has suddenly and unexpectedly created the biggest challenge for the global airline industry since 9/11. Bookings around the world are falling sharply. US carriers are following Asian and European airlines in cutting flights, grounding planes and enacting draconian cost reductions, such as hiring freezes and unpaid leave. Foreign airlines are looking for help from governments, banks and investors. Major airlines are trying to reassure passengers with promises of scrubbed cabins, filtered air and free-flowing hand sanitizer. “Delta has been preparing for such a scenario,” Delta CE Ed Bastian wrote in an email to customers Sunday that outlined the airline’s response, insisting that travel “can’t—and shouldn’t— simply stop.” The IATA estimates the virus could reduce passenger revenue world-wide this year by between $63b and $113b, or as much as 20%. As recently as last month, the trade group was forecasting a hit of less than $30b. The coronavirus has grounded 2,000 aircraft around the world, analysts at Jefferies estimate. By comparison, the Sept. 11, 2001, terrorist attacks cut airline revenues by 7%, or $23b, according to IATA. “This coronavirus is driving us all a bit crazy,” said JetBlue CE Robin Hayes. US airline stocks have fallen 35%, on average, over the past two weeks as bookings fall, including a 7.5% decline on Monday. Bookings for April travel made over the past week are estimated by analysts to have fallen 25% from last year’s levels. Bond prices for US airlines fell sharply on Monday, a sign of investor unease about their ability to pay back debt.<br/>

Airport passenger traffic in the Asia-Pacific region is expected to take a 24% hit in the first quarter from the coronavirus, leading to a $3b decline in airport revenue and placing pressure on growth projects, an industry group said Monday. Airports Council International (ACI) Asia-Pacific said the cancellation of flights had led to lower airline landing and parking charges, a decline in passenger and security charges and a drop in retail spending that was hurting airport operators. "Unlike airlines, who can choose to cancel flights or relocate their aircraft to other markets to reduce operating costs, airport operators manage immovable assets that cannot be closed down," Stefano Baronci, Director General of ACI Asia-Pacific said. "They are faced with immediate cash flow pressures with limited ability to reduce fixed costs and few resources to fund capacity expansion efforts for longer-term future growth." <br/>

The US aviation industry and the Trump administration are in a pitched battle over the response to the coronavirus pandemic, three sources familiar with recent calls between officials from several government agencies and US airlines have said. In a series of contentious conversations, agency officials and aviation executives have clashed over the administration's demand that airlines collect new kinds of data from passengers to help officials track potential virus carriers. Airlines say they can't meet that demand right away -- a claim some administration officials say they don't believe, according to several sources say the calls have deteriorated so badly that agency officials have issued threats, spat expletives and accused airline executives of lying. It is an "epic battle," said one source. Centers for Disease Control and Prevention officials have even threatened recommending that the administration try to ground planes in the US if they can't get the passenger data, according to one source. The administration officials' vitriol has left airline officials in a state of "shock and disbelief," one source said. Government officials have displayed "a lot of ignorance about what is possible," the source said. Others familiar with the talks contend the airlines seem to be acting unreasonably by not providing the data more quickly.<br/>

The coronavirus will accelerate a Darwinian shakeout in Europe’s overcrowded airline industry that ultimately benefits Ryanair and BA owner IAG, industry experts predict. Nobody is exempt from the short-term pain that has already seen Flybe collapse and Norwegian Air stock lose about 70% of its value in a month, with no end to the crisis in sight. But the extreme stress-test already promises to increase the power of a handful of key players, when the epidemic eventually recedes and passengers return en masse. “It’s inevitable in the next couple of weeks we’ll see more failures,” Ryanair CE Michael O’Leary said, citing Flybe and Norwegian as vulnerable. Within days, the British regional carrier had ceased operations, blaming the virus outbreak for a sudden cash drain, and Norwegian scrapped 2020 guidance. Whereas four airlines now control 80% of the US market, Europe remains fragmented, with governments, unions and bilateral agreements impeding tie-ups. Consolidation happens when airlines grab routes and traffic from bankrupt rivals. Flybe’s demise reduces price competition on routes it shared with Ryanair and easyJet, just as a Norwegian exit would support competitors’ fares and traffic.<br/>

Global airlines are scrambling to keep high-spending frequent flyers loyal amid a global slump in business travel caused by the coronavirus. Frequent flyers grounded by the growing number of corporate travel bans are unable to collect the number of loyalty points they would expect from premium airfares and hotel stays — not to mention linked points deals on the credit cards used to pay for these. Access to different “tiers” of membership depends on how much money is spent within a set period, leading some airlines to reassure customers that they will not lose their coveted perks as a result of coronavirus disruption. Singapore Airlines is extending the time-dependent elite status it grants to its most loyal passengers by a year, emails sent to frequent flyers showed. This means they will not lose their membership of the airline’s elite flying clubs, which is heavily dependent on the number of miles they fly at the front of the plane, if corporate travel bans keep them grounded.  Cathay Pacific has awarded people with the top three tiers of membership to its Marco Polo loyalty scheme extra reward points until April, giving them more chances of keeping their elite status.  However, other US, European and British carriers such as Delta, Lufthansa and BA are yet to follow suit, which has angered some business customers who fear their membership to elite flying clubs that offer free upgrades and lounge access will expire in 2020. Story has more background.<br/>

Greece suspended all flights to and from northern Italy as part of measures to combat the spread of coronavirus, its civil aviation authority said on Monday. The suspension takes immediate effect and will run until March 23, encompassing all airports in the northern Italian regions of Emilia Romagna, Piedmont, Lombardy and Veneto and applying to all airlines. Greece reported 11 new confirmed cases of coronavirus infections on Monday, bringing the total to 84 with no fatalities so far. Italy has one of the world's worst outbreaks of coronavirus with at least 7,375 cases and 366 dead.<br/>

South Korea's two largest airports ― Incheon International Airport and Gimpo International Airport ― were left virtually empty, Monday, as Korea and Japan began enforcing tightened entry restrictions against each other's citizens, according to officials from airports and airlines. The two countries enforced mutual entry restrictions ostensibly over the concerns about the fast spread of COVID-19 amid already strained relations between the two due to disputes over trade and history. In the morning, only eight passengers boarded the 121-seat Korean Air flight at Incheon Airport to Kansai International Airport in Osaka. There were no Korean passengers ― the eight passengers were all foreigners, including a Chinese passenger who had to go to Japan to renew his visa. According to the Incheon International Airport Corp., 116 passengers were expected to depart for Japan from the airport, while 202 were expected to arrive from the neighboring country the same day. The number of outbound and inbound passengers decreased by 96% and 93%, respectively, compared to figures tallied on March 2.<br/>

Airbus’ target for record jetliner deliveries this year may be at risk as virus-shocked customers postpone taking new planes, according to people familiar with the matter. Some Chinese airlines have deferred deliveries through April, the people said, asking not to be named discussing private information, while Malaysia’s AirAsia X has already said it will pare handovers. Qantas aid Tuesday it has asked Airbus for more time to confirm an order for as many as 12 A350-1000 jets for ultra-long-haul services. Airbus is tracking carriers’ willingness to take jets and may decide whether to lower the 2020 target from about 880 deliveries as soon as next month, one of the people said. A spokesman declined to comment on individual customers but said Airbus is closely monitoring the situation and its impact on clients and the supply chain. A cut in annual targets at Airbus or Boeing would represent the next level of pain for the aviation industry, which has been walloped by a rapid slowdown in air travel. <br/>