Refunding passengers for cancelled flights in the wake of the coronavirus pandemic would be an “unbearable task” for cash-strapped airlines, the head of an industry group says, as many companies opt to offer vouchers instead. Alexandre de Juniac, the CE of the IATA, said on a weekly conference call Tuesday that the coronavirus outbreak has caused the “biggest crisis” ever seen in the airline industry. Many companies are concerned with survival, he said, with just a few weeks worth of cash on hand. “The key element for us is to avoid running out of cash, so refunding the upfront ticket is almost unbearable, financially speaking, in this terrible situation,” de Juniac said. “We are perfectly conscious of the difficulty for the passenger not to be refunded immediately. But the point is that it is a matter of survival for us. We have no cash to refund the upfront ticket.” He also said IATA is open to offering vouchers or deferred refunds that can be delayed for a period of time to avoid using the limited cash resources currently available to airlines. “It’s very difficult to find the cash in our balance sheet to refund the upfront tickets,” de Juniac said. “That’s the reason why the industry has proposed to pay with vouchers.”<br/>
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The airline industry is calling for a global set of coronavirus-related health measures for when travel resumes to avoid the chaos that ensued after 9/11 when countries enacted a raft of separate requirements. The IATA Tuesday warned states against burdening airlines with rules and red tape in a bid to guard against fresh flare ups of the Covid-19 pandemic. “We are totally conscious of the need to be safe and secure, and there will be health and sanitary conditions imposed,” IATA DG Alexandre de Juniac said. “But these conditions need to be coordinated so that we don’t come back to the post-Sept. 11 situation in which many new processes were imposed and we ended up with a mess of measures piled on top of measures.” Airlines have been hit with an unprecedented near-total shutdown of travel as the health crisis sweeps across continents and governments close borders and order populations to stay at home. At the start of Q2, 70% of global carrier capacity is idled even as flights within the US continue and Chinese domestic services return, according to IATA. Jets are parked on the tarmac across airports in Europe, where more than 90% of operations have halted. Following the September, 2001 terrorist attacks in the U.S., shocked nations initially took unilateral and sometimes contradictory decisions on flight safety rules. De Juniac on Tuesday said the “physical restart” of global flying after the pandemic begins to ease will be a challenge for carriers. <br/>
Talks between US airlines and the Treasury Department over how to award $25b in cash grants earmarked for payroll assistance due to the coronavirus outbreak were set to continue into the evening Tuesday, people briefed on the matter said. Airlines and the Treasury have been in talks since last week over what compensation the government will demand as a condition of the grants. Treasury has sought additional information from airlines as the talks have progressed on a formula for determining government compensation, the people said. The Treasury Department declined to comment on Tuesday. Treasury Secretary Steve Mnuchin has repeatedly said taxpayers will be “compensated” for the grants and that the assistance is not a “bailout,” while some Democrats in Congress and aviation unions have urged him not to demand equity or warrants. Under the law, Mnuchin can demand equity, warrants or other financial instruments to “provide appropriate compensation to the federal government.” Earlier Tuesday, the US DoT finalized minimum service rules for airlines receiving assistance. The department said where multiple airports serve the same point, carriers do not need to maintain service to all of them, which would “impose undue costs.” <br/>
The federal government ordered airlines accepting financial aid to maintain minimal service levels to cities they served before the Covid-19 pandemic ravaged the transportation system, but made adjustments for low-cost carriers and those that fly to some destinations only part of the year. The US DoT eased some requirements it made in a March 31 proposal after airlines and other industry groups asked for more flexibility, the department said in the order Tuesday. The final order was a regulatory win for ultra low-cost carriers such as Spirit and Allegiant, which would have been forced to make potentially hundreds of new flights beyond their normal schedules to satisfy the department’s initial proposed rule. Under the revisions, an airline that served a city less than five times weekly would need to provide only one weekly flight. For carriers with more than 25 weekly flights, they could trim their flying to five per week. The original proposal set required flights based on March 1 service, but the final DOT rule gave carriers that fly to some destinations for only portions of the year the flexibility to make seasonal changes.<br/>
US airlines have been all but paralyzed by the coronavirus, and as they face an uncertain future they have turned to Washington for financial help, but that might mean ceding part of their companies to the federal government. Industry sources say a behind-the-scenes tug of war has begun between airline executives and the US Treasury, which is in charge of distributing the $2.2t stimulus package signed by President Donald Trump into law late last month that includes $50b specifically for airlines. Treasury Secretary Steven Mnuchin has spoken of airlines as a priority, saying on Tuesday he was aiming to move "very quickly" to determine how to spend the money, half of which is earmarked to pay employee salaries through September 30. The Treasury wants to avoid the impression that it is giving airlines a blank check, fearful of a repeat of the public ire that followed Washington's response to the global financial crisis more than a decade ago. Aiming to get taxpayer money paid back, the government is considering taking an equity stake in airlines, at least temporarily. That an outcome is one the four major US carriers -- Delta, United, Southwest and American -- want to avoid, industry sources say, as they fear Wall Street would reject having the government as majority shareholder, even though the companies desperately need the cash.<br/>
Up to E1.1b in European air navigation charge payments is being deferred under an agreement intended to assist airlines struggling under the impact of the coronavirus outbreak. Eurocontrol says its members have agreed the deferral as part of a financial package to provide “liquidity support”. Eurocontrol data for 43 associated countries in the region shows that traffic had fallen by more than 90% in 33 of them by 5 April, compared with the previous year. “Many airlines contacted Eurocontrol to confirm that they would not be in a position to facilitate their next payments,” says DG Eamonn Brennan. “This payment deferral will ease the immediate burden on airlines and it provides certainty on financial planning to both airlines and the air navigation service providers on when payments will be made after the crisis has abated.” Eurocontrol calculates route charges for air navigation by combining a distance factor with an aircraft weight factor and a country-specific unit rate. Eurocontrol had previously been estimating route charges for 2020 would total E8.2b, based on a 3.4% rise in traffic service units to 173m.<br/>
South Korean airlines, one of the hardest-hit industries by the outbreak of the new coronavirus, are taking unprecedented measures, such as unpaid leave, job cuts and asset sales, to overcome the COVID-19-triggered crisis, industry sources said Wednesday. Korean Air Lines said Tuesday it will have 7 out of 10 workers take paid leave for six months beginning April 16 as part of the company's self-help efforts. In other self-rescue plans announced last month, Korean Air said executives' salaries will be reduced by up to 50% beginning in April and the wage cut will continue until the business is back on track. The company said it will make stepped-up efforts to raise funds by selling more assets on top of parent firm Hanjin KAL Corp.'s previously announced sale of low-profit, non-core assets. Asiana on Tuesday increased the limit on its credit line with two state lenders by 300b won ($245m) to 1.1t won to pay maturing debts and secure operating capital. In its self-help plans released last month, Asiana said it will have all of its 10,500 employees take unpaid leave for 15 days in April and executives return 60% of their wages. Among the country's seven low-cost carriers, Eastar Jet Monday came up with a plan to cut 20% of its 1,680 workers and to return 10 out of 23 B737-800 aircraft to leasing companies.<br/>
International and domestic flights of Philippine Airlines, as well as Air Asia, will remain suspended until April 30, as the government extended the enhanced community quarantine, across Luzon. PAL spokesperson Cielo Villaluna said Tuesday that their regular commercial operations will remain on hold “until at least April 30” as “(t)he plan is for PAL operations to partially resume after quarantine is lifted.” “We will announce details on the start date and which flights will resume in due course,” she added. AirAsia said Tuesday that all of their affected guests will be notified either through email or SMS that their flights have been cancelled.<br/>
A key test flight of the Boeing 737 MAX has been pushed back by a month to May due to the upheaval of the coronavirus crisis, two sources said Tuesday. The certification flight, overseen by the US FAA, is a vital step in clearing the jet to resume service, and had been targeted for April. The MAX has been grounded by regulators since March 2019 following two crashes that killed 346 people. The new delay in restoring the plane to service comes as Boeing faces great financial pressure from loss of the top-selling aircraft as well as from the coronavirus, which has shuttered its US commercial plane manufacturing operations and devastated the financial outlook of its airline customers. Boeing has been saying that it expected to receive regulatory approval to resume flights on the MAX in mid-2020, and a company spokesman confirmed that timeframe still holds. An FAA spokesman said "work is still ongoing" on the MAX certification. Social distancing policies enacted throughout the United States to address COVID-19 have forced teams from Boeing and the FAA to work remotely and posed challenges for the test flight itself because of the need for closer physical contact. <br/>