Connect with us

Coronavirus (Covid-19)

Global aviation in acute crisis

The Thaiger

Published 

 on 

Global aviation in acute crisis | The Thaiger
  • follow us in feedly

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.

Keep in contact with The Thaiger by following our Facebook page.



Find more SE Asian News courtesy of The Thaiger.

Broke? Find employment in Southeast Asia with JobCute Thailand. Rich? Invest in real estate across Asia with FazWaz Property Group. Even book medical procedures worldwide with MyMediTravel, all powered by DB Ventures.

If you have story ideas, a restaurant to review, an event to cover or an issue to discuss, contact The Thaiger editorial staff.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Coronavirus (Covid-19)

New rules for Thai cinemas to re-open in Phase 3

Jack Burton

Published

on

New rules for Thai cinemas to re-open in Phase 3 | The Thaiger
PHOTO: Yahoo News

As part of Phase 3 of the easing of Emergency Decree restrictions enacted to fight the spread of Covid-19, cinemas will be allowed to reopen on June 1 (though many operators are unlikely to do so as food and drink are their main revenue source and the movie companies say there are currently no new movies to release…)

The Centre for Covid-19 Situation Administration has released the rules for the reopening, designed to help encourage social distancing and prevent any possible spread of the virus

The rules are…

  • No eating or drinking in the movie theatre. Patrons can eat concession food outside the viewing room, but the cinema must have a properly spaced eating area that encourages social distancing, with partitions
  • A maximum of 2 people can sit next to each other. Others must be spaced out at least 3 seats apart. People must not be seated directly in front or behind others
  • Film festivals and nonstop screenings are prohibited
  • Cinemas must be fully sanitised and cleaned after every viewing
  • Masks must be worn at all times during a film
  • Cinema staff will be asked to enforce the rules about eating, drinking and social distancing

SOURCES: The Pattaya News | Nation Thailand

Keep in contact with The Thaiger by following our Facebook page.
Continue Reading

Coronavirus (Covid-19)

6 guidelines issued for schools to re-open in July

Jack Burton

Published

on

6 guidelines issued for schools to re-open in July | The Thaiger
FILE PHOTO

The government is considering allowing schools in Covid-19 infection-free areas to open in July, and the Public Health Ministry has issued 6 guidelines to schools nationwide on how to guard against the spread of virus among students and faculty once they reopen. The Department of Health’s director-general made the announcement yesterday.

“The first point that must be emphasised is preventing the spread of Covid-19 and other germs by setting up screening checkpoints at all entrances to check for fever and other symptoms. Furthermore, schools must stick to strict rules on wearing face masks and washing hands frequently, as well as providing adequate alcohol gel or handwashing stations.”

She says that classes should have no more than 20-25 students in order to maintain a distance of at least 1 metre between students.

“This will pose a challenge for schools as normally each classroom has around 40 students. Schools may employ an alternate study schedule where half of the students study online at home while the other half attend the school, and then switch at a suitable interval.”

“The second point is to prepare lessons and learning materials that are suitable for both classroom and online learning, to ensure that no student’s education is hindered during the Covid-19 crisis. The third point is to give underprivileged and disabled children the same learning opportunities as other students by providing suitable protection equipment or specialised tools to facilitate their education both at home and in school.”

The fourth point is to protect the health and welfare of children from families who have fallen ill with or are under investigation for the virus. Measures must be taken to ensure that affected students are not excluded from their peer groups.

The fifth point is to provide infrastructure to prevent the spread of the virus in schools, including additional handwashing sinks, partitions in cafeterias, and rearrangement of classrooms, hallways and communal areas to maintain social distancing.

“The sixth point that school should focus on is administration of their budgets, as these measures will increase the financial burden on the school and possibly on parents. Schools must make sure they are financially sound before reopening so they can ensure uninterrupted operation until the end of the semester.”

SOURCE: Nation Thailand

Keep in contact with The Thaiger by following our Facebook page.
Continue Reading

Coronavirus (Covid-19)

Phuket officially reopens Monday, but with restrictions

Jack Burton

Published

on

Phuket officially reopens Monday, but with restrictions | The Thaiger
PHOTO: hotels.com

Phuket is scheduled to reopen to outsiders on Monday, to coincide with the start of Phase 3 of the easing of Emergency Decree restrictions enacted to fight the spread of Covid-19. It will also be a pleasant respite for the islanders who have been cooped up on the island since the last week of March.

Phuket’s outgoing governor says his administration has sought approval from the Civil Aviation Authority of Thailand to reopen Phuket International Airport to domestic flights, and will resume marine services at 24 of the island’s piers from Monday as well.

Permission to reopen the airport has not been given at this time.

Sarasin Bridge, Phuket’s only land connection to the mainland, will also be fully reopened for access to and from the island. Since the start of May there has been restricted access across the bridge where some 50,000 people registered to depart the island.

Some restrictions will remain in force: visitors to Phuket from Bangkok, Nonthaburi, Narathiwat and provinces where new infections have been reported in the past 28 days, will be required to enter 14 day home quarantine, unless the they plan to remain in Phuket for fewer than 3 days.

The provincial prison will also reopen for visits from June 8.

SOURCE: Thai PBS World

Keep in contact with The Thaiger by following our Facebook page.
Continue Reading

Trending