There will be a “significant rebound” in the aviation industry once borders start to open up, the founder of a private jet company said this week. Air travel has been badly affected by the ongoing coronavirus crisis, with demand evaporating as countries scramble to limit the spread of the disease. “We’ve got to be ready for the restart, and the restart will come,” said Thomas Flohr, chairman of VistaJet. “We believe that to be taking place in the second part of the second quarter, towards the end of May or early June,” he said Wednesday. “We believe there will be a significant rebound eventually, once borders are slightly starting to open up. People will need to travel,” said Flohr. He also said traffic in Asia and Australia is reopening “slightly.” The region was the initial epicentre of infections before hotspots emerged in Europe, the Middle East and America. Signs of recovery have appeared, with people being allowed to leave Wuhan on Wednesday for the first time since the Chinese city went into lockdown in late January. VistaJet sees “certain pockets of traffic” between Australia and Southeast Asia, as well as repatriation flights into China. While it’s “very difficult” to forecast what will happen for the rest of 2020, Flohr said there are “slight hopes of improvements.” He predicted, however, that airlines will have trouble trying to restore services. <br/>
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Airlines are demanding the rewriting of a global agreement designed to cut aviation carbon emissions, in order to scale back their targets in the wake of the coronavirus crisis. The IATA, the global trade association for airlines, claimed a scheme to offset any rise in emissions would place an “inappropriate economic burden” on operators already struggling with the impact of the worldwide Covid-19 lockdown. IATA warned airlines could pull out of the UN-led carbon offsetting and reduction scheme for international aviation (Corsia) unless it was amended. Under the terms of the agreement, drawn up by the UN’s ICAO, aviation operators are required to pay to offset any annual growth in emissions above an agreed baseline as part of commitments to work towards carbon neutral flights. The baseline is set at the average emissions for the years 2019 and 2020. IATA is arguing the collapse in global air traffic caused by the coronavirus crisis will mean a “significant reduction” in that baseline — leading to increased offsetting requirements and costs for airlines in years to come. Climate campaigners have said any bailouts should come with environmental strings attached.<br/>
US airlines’ desperate bid for $29b in government rescue cash is being frustrated by a lengthening process and demands that companies provide more detailed financial information, people familiar with the situation said. Carriers that filed April 3 for the grants intended to help meet payroll costs expected the checks to begin arriving days ago, said people familiar with the aid discussions. Instead, US Treasury officials have asked for another round of data that appears to be more related to a separate loan process instead of the cash grants, further delaying the relief, the people said. The federal stimulus bill provided for carriers to receive payments within 10 days after the law was signed March 27. That would have been Monday, though the legislation gave Treasury Secretary Steve Mnuchin discretion on the timing. The additional demand for information was so detailed it would take more than a week to review all the submissions, one person said. “Treasury’s preliminary guidance did not provide applicants with clear direction on a number of critical items,” two US senators from Illinois wrote to Mnuchin in a letter Wednesday. Senator Tammy Duckworth and Senator Dick Durbin called on the agency “to make sure the confusing application process doesn’t hamper the ability of applicants to receive the funds intended for them.”<br/>
US airlines are starting to look past the coronavirus peak, anticipating a world where travellers remain leery about returning to the skies and flights are drastically reduced in the normally robust summer travel season. The bleak picture is compounding an already dire financial situation for the airlines, which are burning through cash and talking to the Treasury Department about grants. Newly revised federal rules will let the companies cut some routes by as much as 90% through September and eliminate others altogether to avoid flying nearly empty planes. A carrier that served a city less than five times weekly would need to provide only one flight a week under final DoT rules issued Tuesday on minimum domestic flying levels through Sept. 30. A company with more than 25 weekly flights would be able to scale back to only five. On some routes, the drop in service could be about 90%. The regulations open the door to major service reductions as airlines gird for a lean summer, when planes are usually jammed and the industry collects its largest profits. Underscoring the urgency of the cuts, the number of people flying in the US dropped to below 100,000 on Tuesday, 95% below the level a year ago. “The airline companies are hurting badly,” Transportation Secretary Elaine Chao said. “But there are still people that need to get to, for example, New York to California. They can’t spend three days driving.” The DoT is trying to balance all-but-nonexistent demand amid the pandemic with maintaining a semblance of normality in airlines’ domestic operations. <br/>
The government will buy 500,000 flight tickets directly from the city’s airlines as part of a stimulus worth billions of Hong Kong dollars to the crippled aviation sector. In the biggest package of financial support for the industry to date, firms will also be able to tap into the government’s new scheme that subsidises monthly pay packets by up to HK$9,000 under a wider US$18b package to shield Hongkongers from the devastating economic impact of Covid-19. “We recognise some sectors are particularly hard hit,” CE Carrie Lam Cheng Yuet-ngor said Wednesday, naming aviation among those. “Hong Kong International Airport is almost closed.” Hong Kong’s leader said she was saddened that passenger traffic had collapsed and acknowledged the “severity of the situation” faced by 75,000 employees in the airport community. The Airport Authority Hong Kong, which runs HKIA, will fund a HK$2b purchase scheme for half a million air tickets, as well as buying back airport services equipment, bringing the total package of AAHK support to HK$4.6b.<br/>
Hong Kong’s Airport Authority is in talks with banks for a HK$20b loan to help fund the city’s third runway, according to people familiar with the matter. The five-year facility, which is also meant for general corporate purposes, offers an interest margin of 72 basis points over the Hong Kong interbank offered rate and a top-level all-in of 82 basis points, said the people who are not authorized to speak publicly and asked not to be identified. A spokesperson for Airport Authority said Wednesday it faces a “significant shortfall in revenue because of the traffic plummet” and “will go to the financial market in the next two months to raise the necessary funds, in order to maintain its own liquidity for funding the airport operation and the committed capital projects.” The loan will also be used to finance a new relief package of up to HK$2b aimed at easing liquidity pressure for airlines and aviation support service operators, according to the release.<br/>
In a bid to limit the spread of Covid-19, Hong Kong International Airport has extended the suspension of transit / transfer services at the airport. This move follows the government announcement stating that the anti-epidemic measures, which came into effect on 25 March, will be implemented for the foreseeable future. The measures include the suspension of air transit / transfer, cross-boundary land transport and cross-boundary ferry transfer. In addition, all residents of Hong Kong arriving from foreign countries by air will not be permitted to enter Hong Kong. Residents of Mainland China, Macao and Taiwan who have visited any foreign country 14 days before arrival can also not enter Hong Kong.<br/>
Airbus is cutting aircraft production by a third in a move expected to trigger a wave of job losses across the global aerospace supply chain as airline customers fight to survive the impact of a virtual halt to international air travel. The European aerospace group has confirmed it will slash production of its popular A320 single-aisle jet from 60 to 40 a month. It will also cut production of the A350 midsized twin-aisle from about 10 a month to six, and produce only two a month of the A330 family of widebody aircraft against previous expectations of a total of 40 a year. Investors watch production rates closely as a guide to future profits and cash flow. Guillaume Faury, CE, said the group had cut production to reflect the reality of demand and measures, such as deferring investment, would be taken to preserve cash. “We are ramping down and protecting the balance sheet of the company,” he said. <br/>
Coronavirus is impacting everyone's travel plans. One of the top questions frequent fliers have for travel industry executives is: "What's going to happen to my elite status?" There are clearly far more important things to worry about at the moment but with frequent fliers among the many people stuck at home for weeks, this is clearly something they're pondering. In previous high-profile travel disruptions like 9/11 or the 2003 SARS outbreak, airline loyalty programs automatically extended elite status or relaxed minimum qualifications. However, these are unprecedented times. Up until a few days ago, US airlines were taking a "wait and see" approach in regards to how frequent fliers can earn elite status in 2020/21. While there are ways to earn airline miles that don't involve flying, the best course of action, at the moment, is to wait and hear from the airline. As flight curtailments continue through the spring travel season airlines may take one of these approaches: Extend current loyalty status for up to 12 months; Relax the annual minimum qualifications; Offer status points at a discount to keep your ongoing loyalty. Asian carriers began taking measures to protect fliers' elite status back in February. For example, Cathay Pacific was offering relief to Marco Polo Club members and Club benefits were also extended up to six months at current tier level. Story has more details.<br/>