The global aviation industry is currently facing its most turbulent period in multiple years, following the worldwide spread of the coronavirus outbreak. Airline stocks have fallen around the world as fears about the spread of the coronavirus added to worries about travel demand and the broader economy, despite a drop in fuel prices.
Air travel demand globally is set to fall for the first time since 2009, costing airlines some $29bn — mostly in the Asia-Pacific region — in revenue, the International Air Transport Association warned last week.
It’s dominating air travel business to such an extent that there’s very little anyone in aviation is discussing given the concerns over the rapid spread of the outbreak.
Two-thirds of China’s passenger planes have been grounded — but it’s not just Chinese airlines suffering. In Europe, Lufthansa Group confirmed it had grounded 13 longhaul, widebody aircraft due to the coronavirus outbreak leading to the cancellation of several routes. Here in the Middle East, Oman, the UAE, and Kuwait have suspended all flights to/from Iran. Kuwait will deny entry to any non-citizen passenger who was recently in Italy, South Korea, Thailand, Iran, or Iraq. Qatar Airways suspends all flights to Mashhad, Shiraz and Isfahan, in Iran — but will continue to fly to Tehran on a reduced frequency basis. Furthermore, the Qatari flag carrier airline will only accept passengers from South Korea who are transiting via Doha, it will not allow entry in to State of Qatar. Jordan’s national airline, Royal Jordanian Airlines has suspended all flights to Italy until further notice, and is consolidating several flights from Amman to destinations in Far East, bringing the average of cancellations of weekly Asian operations to up to 50%.
In Asia, Chinese carriers have already been forced to refinance their fleets as a result of the virus outbreak, and smaller airlines will face cash flow issues depending on how long the coronavirus crisis lasts. Beijing has already put forward a series of relief measures for airlines including VAT exemptions and waiving carriers’ payments into the civil aviation development fund (which goes towards the construction of the country’s infrastructure).
But tax cuts would cover less than a third of the losses from cancelled flights between January 20 and February 10, according to a senior official at Spring Airlines, a low-cost Chinese carrier which admitted “We are preparing for the worst.” Asian airlines could lose $27.8bn in revenue, according to the latest IATA forecast, and Chinese airlines in domestic markets $12.8bn.
Airlines at Asian transit hubs, such as Singapore Changi, Hong Kong International Airport and Seoul Incheon, have suffered immensely as passengers choose to avoid a stopover in affected countries.
Has Asia — and indeed the world — witnessed this before? During the height of the Sars outbreak in April 2003, passenger demand in Asia plunged 45%, according to the International Air Transport Association, and cost airlines more than $10bn in revenue.
During Sars, it took around nine months to return to pre-crisis levels of international passenger traffic, according to IATA. But almost 20 years later, our world is a much smaller place. We’re more globalised, more integrated, and far better connected… adding to the complications the industry now faces to recover from this turbulent period.
Air France-KLM Group and Australia’s Qantas Group have separately warned of a potential financial hit. Qantas said that the coronavirus could reduce its profit for the fiscal year that ends June 30 by $66mn to $99mn, while Air France-KLM estimated a hit to earnings of as much as $216mn between February and April this year.
Hong Kong-based Cathay Pacific has been hit hardest, cancelling 90% of flights to the Chinese mainland bar the biggest cities. About 30% of its network capacity has been cut, and it has asked its 27,000 employees to take unpaid leave to help it stay afloat.
The complexities of new travel bans is — like so many other examples of global crisis — throwing aviation to the very forefront of the situation. Airport staff are having to effectively stop passengers who booked to fly on super-connector airlines, for example, Emirates, on a Seoul-Dubai-Amman ticket from travelling, given the multiple travel ban against visitors who’ve been to those countries, such as the ban imposed from Jordan.
For some countries with a ban, pilots and cabin crew are exempt from various entry bans about recent travel to China, South Korea, Iran, etc. However, for other countries with a ban, it’s a case of no ifs, no buts: no entry if there’s been recent travel to those countries. But are immigration officers at airports worldwide checking crew travel history upon their arrival? In most cases, no — they’re not.
The complications are endless. Singapore Airlines has stopped inflight sales and removed magazines from the back of the seats in a bid to battle the spread of the outbreak. In an e-mail to customers, the airline says its inflight sales service has been suspended alongside its traditional hot towel and post take-off drinks service to ensure the safety of travellers during the outbreak.
Now, the industry is bracing for the first fall in global air travel in more than a decade. In IATA’s initial assessment of the impact, the organisation said it expected global demand for air travel to fall by 4.7% in 2020, the first overall decline since the global financial crisis in 2008-09.
Alexandre de Juniac, CEO of IATA admitted: “This will be a very tough year for airlines.”

* The author is an aviation analyst. Twitter handle: @AlexInAir
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