COVID-19: Fallout continues to spread through aviation industry as death toll passes 3,000

(PHOTO: Shutterstock)

The global aviation industry continues to feel the dire effects of the COVID-19 coronavirus with hundreds of planes parked or reassigned to different routes, thousands of employees being asked to take unpaid leave and airports being turned into virtual ghost towns as companies and vacationers cancel or defer their travel plans. China, where the virus originated, has been hardest hit. Domestic carriers saw their capacity gutted in February, but recent data appears to show that capacity, at least within China, is recovering slightly.

Aviation data provider OAG said China domestic capacity was on the way up, but cautioned some of the increase might be “smoke and mirrors”. OAG said on 24 February that their data “appeared to show the first signs of recovery with week-on-week capacity picking up by some 1.3 million or over 25 percent, which would represent quite a significant turnaround”. OAG said the recovery in capacity appears to be entirely driven by a recovery in domestic capacity, which it said, while one would expect to see this market return quicker than the international capacity, “it is also the market where last minute capacity adjustments are more likely”.

Don Mueang International-Airport in Thailand is unusually quiet because travellers are cancelling plans to come to Asia. (PHOTO: Shutterstock)

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A screenshot of the virus tracking site at Johns Hopkins University in the US shows more than 3,000 people have died globally. Click on the photo above to go to the site. (PHOTO: Matt Driskill)

Air China would appear to be the most optimistic of the domestic airlines, adding back some 306,000 seats, almost a doubling of the previous week’s capacity while China Eastern will be putting back another 200,000 seats week-on-week. International capacity continues to decline although with only some 25,000 fewer seats scheduled than the previous week with some 422,000 scheduled seats planned. The largest week-on-week losses has been to Japan with another 10,000 seats dropped. In total capacity to Japan has fallen by a quarter of a million seats per week since the crisis and with Chinese travellers recognised as high retail spenders at airports the damage to commercial revenues at Japanese airports will be significant.

Departing capacity from Hong Kong has fallen by some quarter of a million seats a week; falling from the 29th to 48th largest international market in six weeks. Major markets to have been impacted include Japan (-46,000 seats from 29 January), Australia (-17,000 seats), Singapore (-26,000 seats) and the United Kingdom (-7,000 seats), OAG said.

Cathay has been suffering through the double whammy of anti-government protests for much of 2019 and now the coronavirus. (PHOTO: Shutterstock)

Meanwhile, the South China Morning Post is reporting that Hong Kong flag carrier Cathay Pacific has around half its fleet, or 120 planes, parked at any one time now and has cut three-quarters of its weekly flights for March. Cathay has been suffering through the double whammy of anti-government protests for much of 2019 and now the coronavirus. The airline announced last week that 75 percent of its staff, or around 25,000 employees of the entire group, will take unpaid leave to help the airline deal with the fallout.

Another victim of the virus, although some might say a victim of its own success, is China’s HNA Group, a huge conglomerate with massive investments in aviation. The government of Hainan, the province where HNA is based, has appointed an executive chairman for the company and set up other groups within the company to contain the fallout from the virus. HNA started as a regional airline about 30 years ago and has been selling assets to deal with its debt load. Before the virus hit, HNA was returning to its aviation roots, and in November the group announced it would divide its businesses into airlines, aviation leasing and airports, with the rest being lumped under its “non-aviation asset management” unit. The focus on aviation and tourism backfired as the coronavirus epidemic hit.

The chart from ForwardKeys shows the decline in bookings around the world. (CHART: ForwardKeys)

In the US, United Airlines said it was cutting flights to Japan and South Korea and had cancelled its investor day presentation. The airline also withdrew its 2020 guidance due to uncertainty over the duration and spread of the virus. It warned that near-term demand to China has almost disappeared, with demand for the rest of its trans-Pacific routes down by 75 percent. The company said it is “temporarily” reducing flights from the US mainland to Tokyo, Osaka, Singapore and Seoul and extending the suspension of US flights to mainland China and Hong Kong through 30 April.

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Matthew Driskill is the Editor of Asian Aviation and is based in Cambodia. He has been an Asia-based journalist and content producer since 1990 for outlets including Reuters and the International Herald Tribune/New York Times and is a former president of the Foreign Correspondents Club of Hong Kong. He frequently appears on international broadcast outlets like CNN, Al Jazeera and the BBC and has taught journalism at Hong Kong University and the American University of Paris. Driskill has received awards from the Associated Press for Investigative Reporting and Business Writing and in 1989 was named the John J. McCloy Fellow by the Graduate School of Journalism at Columbia University in New York where he earned his Master's Degree.


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