every international seat lost,
some six domestic seats were
removed from the Chinese
market.
From an international
perspective, China Eastern
and China Southern were the
worst affected carriers, having
both reduced capacity by over
200,000 seats a week.
Despite cancellations
from the Premier League
and Formula 1, Japan still
hoped to host the Summer
2020 Olympics at the time of
going to press, which would
help bring an estimated 40m
visitors to the country by 2021.
It was thus the worst affected
market in the fi rst four weeks
from January 20, seeing a 60%
fall in passenger capacity.
As overseas carriers took
their services to China offl ine
until the end of March or later,
some Asian governments began
offering loans or rebates to
cover airport fees to alleviate
the fi nancial burden for airlines.
The European Commission has
also granted IATA’s request to
suspend the 80/20 slot rule, to
protect airlines from losing slots
while unable to operate their
full schedules.
The news went from bad
to worse on March 14 when
President Trump levied a 30-
day US ban on inbound fl ights
from the EU, expected to affect
some 7,000 international
fl ights. The ban was then
extended to include the UK
and Ireland from March
17, with BA, among others,
subsequently anticipating job
cuts and grounded aircraft on
an unprecedented scale.
Offi cial word
In February, IATA released
an initial assessment of the
but this was largely unaffected by the virus, which didn’t hit until
the third week of January.
Said IATA Director General Alexandre de Juniac, “The turn of
events as a result of COVID-19 is almost without precedent. In
little over two months, the industry’s prospects in much of the
world have taken a dramatic turn for the worse. It is unclear how
the virus will develop, but whether we see the impact contained
to a few markets and a $63bn revenue loss, or a broader impact
leading to a $113bn loss of revenue, this is a crisis.”
De Juniac called the situation “extraordinary times” and
fl agged up the extreme measures being taken by airlines to stay
afl oat as they cut capacities and routes, urging governments to
consider offering relief on taxes and slot allocation. The ASA
joined the list of industry bodies demanding drastic action
by regulators in mid-March, starting with the waiving of
burdensome charges.
Consequences for cargo
Air cargo relies heavily on uninterrupted connectivity for trade
to fl ow smoothly. The substantial reduction in passenger fl ights
has naturally had a knock-on effect for belly cargo, whilst cargo
airlines have also cut freighter services amid health concerns
and depleted demand. Air cargo performance in 2020 is now
looking uncertain at best.
Although China’s manufacturing industry is slowly
resuming operations, shippers have struggled to gain access
to limited airfreight capacity out of China to Europe and the
US, and the alternative option of charter fl ights is proving to
be unpredictably expensive owing to the surge in demand.
Some shippers have predicted rates will easily pass US$10
per kilogramme before the end of March (having hit US$6/7
already) and are observing price fl uctuations that continue up
until the moment cargo is loaded on to the aircraft. Intra-Asian
air cargo rates have also spiked as production has picked up.
The 30-day ban on fl ights into the US from over 26 countries
is likely to cause transatlantic freight rates to skyrocket too, and
capacity to plummet, with as much as 80% of cargo moving across
the Atlantic in the bellies of passenger aircraft. With a growing
number of US international fl ights to be affected, IATA has said
that it expects the economic fallout to be broad. The worst affected
airlines are expected to be Delta and United Airlines.
Charter space
While it has undoubtedly been an obstacle for scheduled air
cargo operations, the state of medical emergency has in some
cases generated more business for charter airlines, whose ad
hoc services have been more in demand than ever – although
operators of both types of fl ights have largely stayed tight-lipped
on the subject.
Some insight comes in from Russia, however. While the
Russian Federal Air Transport Agency temporarily limited air
passenger traffi c to China from February 1, there are no current
impact of the outbreak,
estimating a potential 13%
full-year loss of passenger
demand for Asia-Pacifi c
carriers and total global lost
revenue of US$29.3bn. But the
exponential spread of the virus
saw IATA revise its forecasts
soon after, more than doubling
these fi gures. IATA now
predicts 2020 global revenue
losses for the passenger
segment of between US$63bn
and US$113bn, based on a
The industry’s
prospects... have
taken a dramatic
turn for the
worse
Alexandre de Juniac, Director General,
IATA
limited versus a more extensive
geographic spread of the virus,
with the latter scenario looking
increasingly likely as time goes
by. In both cases, markets in
Asia account for the majority
of lost revenue. All of these
estimates would equate to the
fi rst overall decline in demand
since the SARS crisis of 2003.
Airline share prices have
fallen by nearly 25% since the
outbreak began, meanwhile,
exceeding the drop associated
with SARS. IATA has not yet
released any estimates for the
impact on cargo operations,
although it did report the
tenth consecutive month of
decline in global demand
in January 2020 (of -3.3%
compared to January 2019),
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