The coronavirus crisis marks another dangerous moment for airlines, which are already facing multibillion-dollar revenue losses as the disease hits demand. Carriers around the world are cutting routes, freezing pay and using smaller aircraft to cope with slump in bookings. British Airways and Ryanair announced flight cuts, with BA dropping 432 flights between 16 March and 28 March, including one flight a day between London and New York as well as services to Italy, France, Germany and elsewhere in Europe. Ryanair, Europe’s biggest short haul carrier, said it was also cutting hundreds of services by cutting a quarter of its flights to and from Italy between 17 March and 8 April.
Globally, airlines took five years to return to profit after the 2001 terror attacks, losing more than $40bn (£30.7bn), mainly in the US, in that time. The industry plunged back into negative territory in 2008, losing an aggregate $8bn as the financial crisis struck. This time, the industry has hoped to stay in the black overall, according to the International Air Transport Association forecasts. But an Iata spokesman said the organisation’s estimate of almost $30bn in lost revenues, made 11 days ago, was already seriously outdated, with the outbreak now affecting bookings in new regions of the world.
With fears growing that years of unusually rosy financial health could be ending, airlines called for the suspension of normal “use it or lose it” rules on valuable airport slots. Iata said it was contacting aviation regulators worldwide and requesting the usual rules governing the use of takeoff and landing slots be put on hold.
About 43% of airline passengers worldwide fly from airports where airlines lose rights to takeoff and landing slots if they fail to use their allocation at least 80% of the time. Regulators can waive the rules in exceptional circumstances, and some have done so already for airlines flying to China.
However, Iata’s director general, Alexandre de Juniac, said: “Iata research has shown that traffic has collapsed on key Asian routes and that this is rippling throughout the air transport network globally, even between countries without major outbreaks of Covid-19.
“We are calling for regulators worldwide to help the industry plan for today’s emergency, and the future recovery of the network, by suspending the slot-use rules on a temporary basis.” De Juniac said airlines were “on the frontline of the challenge” to prevent the spread of Covid-19 while keeping the global economy functioning.
Iata said one carrier had taken a 26% reduction in passenger numbers across its entire operation, and a major carrier had reported bookings to Italy collapsing to zero and customers demanding refunds.
Among the latest efforts to cut staff costs, the US carrier United Airlines said it was offering pilots partially paid leave, and Emirates joined Cathay in encouraging its staff to take time off. The German airline group Lufthansa has grounded a number of large planes and said it was extending flight cancellations to Iran and China routes until late April. The Dutch carrier KLM has extended its flight ban to China.
BA’s owner, IAG, reported that it could no longer offer profit guidance for the year after the drop in bookings following the quarantining of parts of north Italy. EasyJet has also cancelled hundreds of flights to Italy.
Andrew Charlton, an aviation analyst, said airlines were having to react on three levels. “The first is their staff … they can’t risk flying them somewhere where they might get sick. The second is the market. Demand for Venice and Milan has fallen through the floor, and there’s no point in trundling around with empty aeroplanes. The third is watching out for if a pandemic is declared – there will be all sorts of legal obligation to what they can and can’t do.”
