Unable to fill planes with passengers as the coronavirus destroys travel demand, airlines are instead using their fleets to transport more cargo, including medicines, smartphones and Korean strawberries. Airlines are hauling a greater amount of goods in the belly of their passenger planes to keep up with demand. Cargo rates have risen over 10% in recent weeks as some companies are prepared to pay more to ship goods after drastic cuts in passenger flights left airlines with less capacity for cargo. Airlines typically don’t operate in this fashion. Yet they are desperate to use whatever capacity they can for cargo as earnings from passenger operations have almost vanished with traffic down 90%. Though travel has been decimated, global trade continues, especially with factories reopening in China. <br/>
general
The cost of purchasing jet kerosene is continuing to fall despite a slight uptick in crude prices, as demand from airlines dries up completely in some regions. Energy information provider ICIS assesses that the price of jet kerosene for delivery to northwest Europe is US$280.25 per tonne, down from around $650 at the start of the year. Similar price declines were seen in Asian and North American markets. With storage space for jet fuel limited, the idea of using tankers to hold unsold kerosene – common practice for some crude products – was dismissed because the quality deteriorates when stored for long periods. ICIS also reports that some refiners are starting to blend their jet fuel into diesel to reduce the excess supply, while others are planning to bring forward refinery maintenance that will reduce their throughput. <br/>
The Trump administration is raising the possibility of the govt getting ownership stakes in US airlines in exchange for US$25b in direct grants to help the carriers survive a downturn caused by the coronavirus pandemic, according to people familiar with the matter. Details were unclear Thursday, but one approach being considered by treasury secretary Steven Mnuchin is to give the govt warrants — options to buy shares in airlines that accept grant money, the people said. A key factor would be the price at which the govt could exercise the warrants. Airlines would balk if the govt could buy their shares near the current, depressed prices. Aid to airlines is one of the last sticking points in Washington's negotiations over the economic-rescue plan. <br/>
As Congress prepares to approve a US$2tr stimulus bill to mitigate the financial impact of the corona virus, airline labour unions appear to have achieved unprecedented success in extending its protections to their workers. The bill provides $31b in direct grants to pay as many as 750,000 airline industry workers, many but not all union members, through Sept 30. Of the total, $25b is allocated for passenger airlines, $4b for cargo airlines, and $3b for contractors, including those who employ caterers and airport workers, according to the Transportation Trades Department of the AFL-CIO. “After the Gulf War, people got laid off with almost no salary protection,” said the International Association of Machinists. “That’s what would be happening right now, if it wasn’t for all of the furious lobbying by the labour movement”. <br/>
While govt support would provide vital relief to US aerospace manufacturing at a time of impending crisis, such aid could create a “synthetic” aircraft market to the detriment of the industry in future years. That’s one concern held by Teal Group aerospace industry analyst Richard Aboulafia, who thinks govt aid could be essential to averting a broader aerospace manufacturing “catastrophe”. But he says aid comes at a price. Aboulafia notes the aerospace industry typically swings between 7 up years followed by 3 down years, during which commercial aircraft delivery values sink about 35%. “You’ll probably see it be worse than that by 2022, because you’ve just removed several years of accrued demand and kept the synthetic market going,” Aboulafia says. “I’m a little concerned about the years to come.” <br/>
European lawmakers overwhelmingly agreed Thursday to suspend until Oct 24 a rule requiring airlines to use at least 80% of their flight slots to keep them the following year so as to ease an industry crisis unleashed by the coronavirus pandemic. Following a deal reached last week, the European Parliament voted in its first-ever remote session in Brussels to suspend the EU slots rule until the summer season ends in late October as European flights fell 60% this week with several major airlines forced to ground their fleets. The last time the EU waived the airport slots rule was in 2009 because of the financial crisis. EU govts will still need to approve the final agreement but that is seen as a formality. <br/>
Europe's aviation traffic has slumped by 65%. The COVID-19 viral pandemic has prompted Paris Orly and London City to plan flight suspensions as Eurocontrol recorded a two-thirds slump in traffic through its 41-nation airspace. Eurocontrol published data Wednesday showing a 65% slump in weekly traffic compared to the same period last year. And, compared to March 25 last year, Eurocontrol Wednesday displayed an even more dramatic 77% statistical nose-dive. Pooling data from Wednesday, its Aviation Intelligence Unit counted a mere 8,619 "planned flights." The trend Wednesday appeared worse than Europe's aviation shutdown in 2010 — because of an Icelandic volcanic eruption — when over an 8-day period 48% of total air traffic was cancelled, affecting some 10m passengers. <br/>
Europe’s airlines are expected to lose US$76b in passenger revenues over the course of 2020 because of travel bans combating the spread of the coronavirus outbreak, IATA has warned. The figures suggest European airlines will bear a significant part of the global hit caused by the pandemic, which has resulted in an unprecedented decline in the number of passengers. IATA has already warned it expects demand for passenger flights to fall by 38%, causing global revenues to fall by $252b in 2020, almost halving the industry’s revenues compared with 2019. Rafael Schvartzman, IATA’s regional VP for Europe, said Thursday that many airlines did not have enough cash to sustain them through more than 2 months of shutdowns. <br/>
Embraer says it has not had any order cancellations as a result of the current global coronavirus pandemic that has decimated the air transport industry, but it is seeing some customers ask for deferments of deliveries as airlines reduce capacity for an undetermined period. “The discussion is dynamic,” says CFO Antonio Carlos Garcia. “All these [discussions] are regarding the delivery schedule, but no cancellations. The situation is really changing, and we need to know for how long the capacity reductions will last in order to have an accurate assessment.” The company ended the year with a backlog of US$16.8b, and says it received 69 new firm orders during the year from the likes of American Airlines, KLM, Azul and United Airlines. Its new generation E2 jet backlog reached 153 firm orders and more than 570 commitments. <br/>