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Global aviation in acute crisis

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by Andrew J Wood

“…by the end of May 2020 most airlines in the world will be bankrupt.”

Global aviation has been battered and commercial scheduled air traffic remains mostly grounded as countries enforce their lockdowns and travel restrictions. There are few signs that the end is in sight. For the largest of carriers like IAG (British Airways), United, American Airlines, Emirates Lufthansa and many more all have been forced to seek help from their governments (see summary below).

The vital travel and tourism industry – which has often be the driver to a country’s economic recovery following past crises, is keen to see international air travel resume ASAP. The business of tourism which generates 10.3 percent of global GNP is anxious to restart travel.

A post-corona airline industry is going to look very different. Those that survive will have evolved into smaller leaner and debt laden businesses and probably bailed out by governments. Some aviation analysts are predicting that Covid-19 will leave the industry decimated and by the end of May 2020 most airlines in the world will be bankrupt. CAPA analysts have also reported the same, most of the world’s airlines could be bankrupt by the end of May if the situation does not turn around quickly.

One potential solution they propose would be to rescind national ownership rules and allow the industry to merge into global brands.

The post-corona chaos offers a rare opportunity to reset the building blocks of a global airline industry.

Emerging from the crisis will be like entering a battlefield littered with casualties. The field is open for lawmakers and financial markets to make their own demands on an industry that already has a long list – wish lists of ways they should treat customers better, reduce their carbon footprint and adopt more sustainable business practices.

As the impact of the corona virus slashes through our world, many airlines have already been driven into technical bankruptcy. We see cash reserves are running down quickly as fleets are grounded. Forward bookings far outweigh cancellations and each time there is a new government recommendation it is to discourage flying and travel.

“The new normal has not yet arrived at the airport.”

The International Air Transport Association most recent prediction is that European airlines will see demand drop by 55 percent in 2020 compared to 2019 and potential revenue losses will total $89 billion. The association revised its loss prediction of $76 billion made in March as the impact of the corona virus global pandemic on the airline industry continues to hit unprecedented levels.

There has been a 90% drop in regional demand in the last several weeks and IATA has cited the introduction of travel restrictions around the world limiting movement only to essential travel and repatriation of citizens to their home countries as having “a greater impact than previously expected.”

A significant number of European airlines have suspended passenger operations with two of the region’s largest carriers, easyJet and Ryanair, not expecting flights to operate until June.

Airlines will be hoping for corporate travel to bounce back quickly, business travellers probably pay four to five times the average fare on a typical flight – having them quickly back on airplanes is vitally important.

Even if the economy begins to recover in the third quarter of this year, as many economists predict, corona virus fears could lead to a slow recovery as travel struggles to regain its pre-crisis levels.

It could take months for an airline to come back to life. Also if second waves of the disease go around the world and possible hot-spot flare up these may reduce passenger confidence to travel. And while essential maintenance is still happening daily on parked planes, they will all need to be brought back into flying condition before being put back into service.

Demand is drying up in ways that are completely unprecedented. The new normal has not yet arrived at the airport.

The crisis list…

✈️ The US government agreed a $61 billion bailout for the US airline industry as the corona virus pandemic brings travel to a virtual standstill. The grants to major airlines including American, Delta, Southwest, JetBlue and United will probably come with strings attached.

On the 14 April 2020 the International Air Transport Association released updated analysis showing that the Covid-19 crisis will see airline passenger revenues drop by $314 billion in 2020, a 55% decline compared to 2019.

Earlier, on the 24 March IATA had estimated $252 billion in lost revenues (-44% vs. 2019) in a scenario with severe travel restrictions lasting three months. The updated figures reflect a significant deepening of the crisis since then, and reflect:

1- Severe domestic restrictions lasting three months

2- Some restrictions on international travel extending beyond the initial three months

3- Worldwide severe impact, including Africa and Latin America (which had a small presence of the disease and were expected to be less impacted in the March analysis).

Full-year passenger demand (domestic and international) is expected to be down 48% compared to 2019.

✈️ Virgin Australia went into voluntary administration on April 21 due to crippling debts exacerbated by the corona virus lockdowns. At least 10,000 jobs would be at stake if the airline folds. Virgin is carrying about AUS$5 billion (US$ 3.2 billion) in debt and had sought federal help to keep operating but the Morrison government rejected a $1.4 billion bailout.

✈️ Thai Airways similarly to Virgin Australia is seeking a US$1.8 billion restructuring loan from the government. The loan is unpopular as many believe that in its existing state it is doomed to fail. Trust of its management and directors has reached new lows with the Thai PM Prayut Chan-o-cha and the public. Thai Airways must submit a rehabilitation plan by the end of the month if it wants the government to consider a rescue package. Transport Minister Saksayam Chidchob set the deadline amid this rising public sentiment against a state-backed loan.

✈️ IAG (British Airways’ parent company) the group announced in March moves to protect capital and reduce costs.

“We have seen a substantial decline in bookings across our airlines and global network over the past few weeks and we expect demand to remain weak until well into the summer,” CEO Walsh said. “We are therefore making significant reductions to our flying schedules. We will continue to monitor demand levels and we have the flexibility to make further cuts if necessary. We are also taking actions to reduce operating expenses and improve cash flow at each of our airlines. IAG is resilient with a strong balance sheet and substantial cash liquidity.”

Capacity for April and May will be cut by at least 75% compared to the same period in 2019. The group will also ground surplus aircraft, reduce and defer capital spending, cut non-essential and non-cyber related IT spend, and discretionary spending. The company also plans to reduce labour costs by freezing recruitment, implementing voluntary leave options, temporarily suspending employment contracts, and reducing working hours.

✈️ Air Mauritius goes into Voluntary Administration.

✈️ South African Airways Bankrupt. On 5 December 2019, the Government of South Africa announced that SAA would enter into bankruptcy protection, as the airline has not turned a profit since 2011 and ran out of money.

✈️ Finnair returns 12 planes and lays off 2,400 people.

✈️ YOU grounds 22 planes and fires 4,100 people.

✈️ Ryanair grounds 113 planes and gets rid of 900 pilots for the moment, 450 more in the coming months.

✈️ Norwegian completely stops its long-haul activity!!! The 787s are returned to the lessors.

✈️ SAS returns 14 planes and fires 520 pilots… The Scandinavian states are studying a plan to liquidate Norwegian and SAS to rebuild a new company from their ashes.

✈️ IAG (British Airways) grounds 34 planes. Everyone over 58 to retire.

✈️ Ethiad cancels 18 orders for A350, grounds 10 A380 and 10 Boeing 787. Lays off 720 staff.

✈️ Emirates grounds 38 A380s and cancels all orders for the Boeing 777x (150 aircraft, the largest order for this type). They “invite” all employees over 56 to retire

✈️ Wizzair returns 32 A320s and lays off 1,200 people, including 200 pilots, another wave of 430 layoffs planned in the coming months. Remaining employees will see their wages reduced by 30%.

✈️ IAG (Iberia) grounds 56 planes.

✈️ Luxair reduces its fleet by 50% (and associated redundancies)

✈️ CSA abolishes its long-haul sector and keeps only 5 medium-haul aircraft.

✈️ Eurowings goes into Bankruptcy

✈️ Brussels Airline reduces its fleet by 50% (and associated redundancies).

✈️ Lufthansa, the German federal government agreed on a €9 billion ($9.74billion) rescue package and plans to ground 72 aircraft.

✈️ Air France KLM Chief Executive Ben Smith said that voluntary redundancies would be part of the airline’s initial cost-cutting plans, and that costs at its ‘HOP’ arm were not viable as things stood. In an interview just hours after Air France KLM secured 7 billion euros ($7.6 billion) in French government aid, he also said that it could take two years, or possibly “even a bit longer,” before things returned to normal in the aviation and airline industry.

Global aviation in acute crisis | News by The Thaiger

About the author…

Andrew J Wood was born in Yorkshire England, he is a professional hotelier, Skalleague and travel writer. Andrew has 48 years of hospitality and travel experience. He is a hotel graduate of Napier University, Edinburgh. Andrew is a past Director of Skål International (SI), National President SI Thailand and is currently President of SI Bangkok and a VP of both SI Thailand and SI Asia. He is a regular guest lecturer at various Universities in Thailand including Assumption University’s Hospitality School and the Japan Hotel School in Tokyo.

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Coronavirus (Covid-19)

Thai people hope Covid-19 vaccine will help end pandemic – survey

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Thai people hope Covid-19 vaccine will help end pandemic – survey | The Thaiger
PHOTO: Wikipedia

A Bangkok University poll indicates that around half of the Thai population are holding out hope that the Covid-19 vaccine will help end the pandemic. But the same respondents fear the vaccines’ side effects.

The poll was conducted on January 18-20 on 1,186 people nationwide, aged 18 and over. A bare majority, 50.1% say their jobs and incomes would be affected if the pandemic continues without the masses being inoculated. About 27% said the most worrisome effect of the continued pandemic would be getting infected by the virus. 15% said they would be most worried about travelling. The rest of respondents said the availability of necessities and food, expenses for protective gear, children’s education topped their lists of worries.

Asked if vaccines would help curb or end the pandemic in the country, 51.3% said they are moderately hopeful, with a smaller percentage, 32.8%, very hopeful, and almost 16% had little or no hope. When asked about their concerns surrounding vaccines, almost 40% chose side effects.

Almost 13% said they were concerned about new vaccines being needed to fight new Covid-19 variants, with the same amount worried they wouldn’t receive free vaccines. About 8% worried about receiving smuggled vaccines without the Food and Drugs Administration’s approval.

The biggest lessons Thais say they learned from the Covid-19 outbreak during the past year focused on the illegal entry of migrants – 40.2%. About 20% say they learned that hiding information could put other people at risk, while about 18% said recklessness on the part of some people could put the majority at risk.

SOURCE: Bangkok Post

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State Railway of Thailand furloughs 57 locals trains from Tuesday

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State Railway of Thailand furloughs 57 locals trains from Tuesday | The Thaiger
PHOTO: Baolau

Thailand State Railway governor says that cancellations will affect 13 local services on the northern line, 18 on the northeastern routes, 12 in the southern region and 14 eastern trains.

“Most of the cancelled trains will start at Hua Lamphong station, including trains that are popular with tourists, including services to Kanchanaburi and Hua Hin.”

Niruj Maneepun says the move is to support the Centre for Covid-19 Situation Administration’s effort to curb the virus’ spread by maintaining travel restrictions.

“Already all sightseeing and most long-haul trains have been temporarily cancelled due to Covid-19.”

Thailand has logged 13,500 confirmed infections and 73 deaths since the start of the pandemic in January 2020. The current outbreak that began on December 20, with the epicentre centred around seafood markets in coastal Samut Sakhon, has spread to 63 Thai provinces.

Recently, Bangkok has allowed the reopening of 13 types of businesses as long as they follow strict guidelines surrounding safety measures to prevent the spread of Covid-19.

Businesses allowed to reopen under these measures…

  • Banquet venues, which will need authorisation from BMA for events with over 300 participants
  • Beauty salons, tattoo and piercing shops
  • Fitness centers, but personal trainers and communal steam rooms are not allowed
  • Game Arcades; but all points of contact must be regularly disinfected and facemasks worn at all times.
  • Internet cafés
  • Senior nursing homes, but with limited activities
  • Sports venues, except for boxing rings and race tracks, but no audiences allowed
  • Spas, Thai massage shops, excluding massage parlours
  • Gymnasia and boxing venues for training only
  • Bowling alleys and ice skating rinks, but no competitions or audiences allowed
  • Dancing academies
  • Martial art schools, but no tournaments or audiences allowed
  • Amulet shops and markets

Other provinces in Thailand, such as Chonburi, are waiting for the green light to reopen businesses and travel. Chonburi has reported 0 cases of Covid for 3 days in a row, prompting locals to become frustrated with the strict measures that won’t ease up until at least the end of the month.

SOURCE:Bangkok Post

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Thai researcher details her Covid-19 vaccination experience

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Thai researcher details her Covid-19 vaccination experience | The Thaiger
PHOTO:Aecc Global

“General post-vaccination symptoms include a mild fever, headache, muscle pain and shivering.”

A Thai post-doctorate researcher at the University of Chicago is detailing her Covid-19 vaccination experience and offering insight into its effects. Siriruk Changrob has received 2 doses of the Pfizer-BioNTech vaccine but says just the vaccine won’t immunise people from getting Covid.

Siriruk says a person who is inoculated with the vaccine can still become infected and should continue to practice social distancing and wearing a mask until a herd immunity is developed by 60% of the population, or the virus dissipates. She says she received the first vaccine about 20 days ago and upon arriving for the 2nd dose, a nurse asked her about any side effects and whether she had tested positive for the virus in the past 90 days.

She says she didn’t feel anything until about 8 hours after the 2nd injection, when she started to feel feverish and some pain at the injection site. She noted that all her colleagues warned her that the 2nd injection would give her more painful symptoms.

The Pfizer vaccine requires 2 doses that must be administered at least 21 days apart. But Sriiruk warns that if you can’t get the 2nd injection within the recommended time frame, to hold off from the injection until the time frame can be followed. She also said that anyone who requires daily medication to treat other ailments should consult their doctor before being vaccinated, to ensure that the efficacy of the vaccine will not be affected by that medication.

She says the general post-vaccination symptoms include a “mild fever, headache, muscle pain and shivering”, positive signs that the body is developing an immunity. She warns that taking medication to prevent such symptoms as a fever, is not recommended as the vaccine only protects a person from developing symptoms, rather from being infected by the virus.

SOURCE: Thai PBS World

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