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Global aviation hit as airlines cut capacity as high as 90%

Amidst the Covid-19 pandemic, countries have shut borders, issuing visas and welcoming any travellers temporarily. This scenario has drastically reduced the demand for air travel. The aviation players globally are now cutting its capacity bases on alarmingly low seat factors and travel restrictions.

Singapore Airlines (SIA) is suspending additional services across its network and the airline will operate only 50 per cent of the capacity that had been originally scheduled up to end-April. Given the growing scale of the border controls globally and its deepening impact on air travel, SIA expects to make further cuts to its capacity.

Goh Choon Phong, CEO, SIA, said, “We have lost a large amount of our traffic in a very short time, and it will not be viable for us to maintain our current network. Make no mistake – we expect the pace of this deterioration to accelerate. The SIA Group must be prepared for a prolonged period of difficulty.”

Cathay Pacific and Cathay Dragon carried a combined total of 1,008,644 passengers in February 2020, or 4,735,301,000 RPKs (revenue passenger kilometres), a decrease of 54.1 per cent when compared to February 2019. Passenger load factor decreased by 28.6 per centage points to 53.1 per cent. The airline is set to reduce capacity by 90 per cent.

Ronald Lam, Chief Customer and Commercial Officer, Cathay Pacific Group said, “We are facing an unprecedented challenge as the COVID19 pandemic continues to cause widespread disruption to our operation and business. In February alone, we made a significant unaudited loss of more than HK$2 billion at the full-service airline level (Cathay Pacific and Cathay Dragon). We have already announced around 65 per cent passenger flight capacity reduction for March. Given the expected further drop in travel demand we are planning to only operate a bare skeleton passenger flight schedule for April, which represents up to 90 per cent capacity reduction. If we do not see a relaxation of travel restrictions in the near future, we expect the same arrangement will have to continue into May.”

Also, Lufthansa has reduced flight schedules of its passenger airlines for the period from March 29 to April 24. The flight cancellations will be implemented successively in the booking systems, and affected passengers will be informed of the changes and rebooking options as of today.

A statement from Lufthansa said, “For all passenger airlines in the Group, a total of 23,000 flights must be cancelled. Further cancellations are expected in the coming weeks. The capacity adjustments mainly affect Europe, Asia and the Middle East.”

Also, Austrian Airlines from the Lufthansa Group will temporarily suspend scheduled flight operations as of March 19, 2020. Initially Austrian Airlines will cancel all flights until March 28th 2020, and passengers who have booked a flight with Austrian Airlines during this period will be rebooked on other airlines if possible.

Overall, the Lufthansa Group's seating capacity on long-haul routes will be reduced by up to 90 per cent. A total of 1,300 weekly connections were originally planned for summer 2020.

Carsten Spohr, Chairman of the Executive Board of Deutsche Lufthansa AG, said, "Now it is no longer about economic issues, but about the responsibility that airlines bear as part of the critical infrastructure in their home countries.”

Air New Zealand has decided to further reduce capacity across its network. On its long-haul network, Air New Zealand will be reducing its capacity by 85 percent over the coming months and will operate a minimal schedule to allow Kiwis to return home and to keep trade corridors with Asia and North America open.

Greg Foran, Chief Executive Officer, Air New Zealand said, “The resilience of our people is exceptional and I am consistently amazed by their dedication and passion for our customers. We are a nimble airline with a lean cost base, strong balance sheet, good cash reserves, an outstanding brand and a team going above and beyond every day. We also have supportive partners. We are also in discussions with the Government at this time.”

Finnair is set to cut capacity by 90 per cent from April 1, maintaining what it calls "critical air connections for Finland". As of April 1, Finnair will temporarily operate only approximately 20 routes and will start transitioning to the limited network immediately, cancelling between 1,500 to 2,000 flights by March 31.

Topi Manner, CEO, Finnair said, “The coronavirus epidemic has decreased air travel dramatically, but we want to maintain the most critical air connections for Finland also in this exceptional situation. We continue to follow the situation closely, adding routes and frequencies to the traffic program as demand returns. We are extremely sorry about the disruption and uncertainty the situation is causing to our customers and their travel plans. In this situation, the capacity cuts are unavoidable – we cannot fly customers in a situation where we may not be able to fly them back home.”

United Airlines has announced that due to the continued drop in travel demand as a result of the COVID19 outbreak and government mandates or restrictions in place prohibiting travel, the airline has cut its US and Canada schedule in April by 42 per cent and its international flights by 85 per cent.

A statement from United Airlines said, “However, it should be noted that this is a rapidly changing situation and the airline is closely monitoring demand as well as changes in state and local curfews and government restrictions across the U.S. and will adjust its schedule accordingly throughout the month.”

Virgin Atlantic will reduce its schedule by approximately 80 per cent in terms of flights per day by March 26th. The move comes following a rapid acceleration of the impact of Covid-19 on global aviation and tourism. As a direct consequence Virgin Atlantic said it would be grounding three quarters of its fleet by the end of the month.

A statement from Virgin Atlantic said, “At points in April this could go up to 85 per cent. The situation is deteriorating at pace and the airline has seen several days of negative bookings, driven by a huge volume of cancellations as customers choose to stay at home.” 

 

Further updates to continue....

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