Airline analysts warn ‘the hardest part’ is yet to come

Airlines are struggling through their worst crisis since the first commercial service began flying passengers just over 100 years ago. In the past week alone, American Airlines said it would cut 19,000 jobs, Qantas announced it would shed thousands more jobs and Norwegian Air Shuttle warned it needed another rescue package — only months after securing a bailout. Analysts warn worse is yet to come as the prospect of second waves of infection and tough government rules on quarantine cripple airlines’ ability to forecast demand. The uncertainty is jarring to an industry that thrives on being able to predict long-term passenger demand with mathematical precision and adjust its schedules accordingly. “You are getting airlines going from zero to 70% capacity in the blink of an eye then having to ramp back down,” said Mark Manduca, an aviation analyst at Citi. Domestic passenger numbers in some markets have slowly started to recover from lockdown lows, especially in Asia. Air travel in China has fully returned from its pre-Covid-19 levels, with about 15m seats scheduled in the week to August 30, illustrating the pace of the country’s economic rebound. Japan too has resumed normal service. Domestic travel is not subject to the same level of restrictions as cross-border flights, leaving it well positioned to lead any recovery, analysts at Moody’s said this week. Yet international travel remains adrift, with many markets operating well below the levels they enjoyed before the pandemic. The US has scheduled only a fifth of the seats used at the start of the year, while Vietnam has reduced capacity by 90%.<br/>