The past few weeks have underscored the fluctuating nature of the COVID-19 pandemic’s impact on the aviation industry. There’s a regular stream of good news and bad news, although more progress is being made.
The Good News
On the positive side, we saw an increase in global airline capacity as led in two regions. Specifically, the week of May 19th recorded a 6% increase in global airline capacity fueled by the increase in Indian domestic travel and a 120% increase of seats in South Asia. The week before, Ryanair noted that, effective July1st, it would initiate a 40% increase in its capacity with the caveat that government restrictions on Intra-European flights would be lifted and that the airports it serves implement key safety measures. Under its projected plan, Ryanair plans 1,000 flights per day covering 90% of its geographic network.
Other airlines too indicated plans to increase their services. Among them were: British Airways looking at a 50% capacity starting in July, Lufthansa planning to operate 80 aircraft in June contingent on the German government’s $9.78 billion bailout of Lufthansa Group, and Indonesian airlines Garuda Indonesia, Lion Air, Wings Air and Batik Air, having already resumed domestic service. Qatar Airways, which continued flights to 30 of its destinations during the pandemic, indicated plans to increase to 80 destinations in Europe, the Americas, the Middle East, Africa and Asia, by the end of June.
There’s further positive news for the airlines relating to further financial support reported by various governments. For example, Russia ordered the distribution of over $315 million in state funds to help airlines in distress due to COVID-19, and in United States, the Department of Transportation (DOT) eased the airlines’ financial obligations under its “Coronavirus Aid, Relief, and Economic Security (CARES) Act.” It allowed the airlines to exempt 5% of the locations in their service obligations list or five locations (whichever is greater), if their request was made before the DOT’s May 18th, 2020 deadline.
It is also encouraging to see that many of the airlines have continued to step up their safety measures. Cleanliness initiatives have been implemented by many of the airlines. Even the manufacturers and airports are being proactive. Boeing, for example, established its “Confident Travel Initiative” to be led by a 30-year company veteran. Under the program, Boeing will work with its industry partners and other cleanliness/safety experts to improve cleaning procedures and determine other measures to mitigate the risks associated with airborne illness transmission. In New York, Long Island MacArthur Airport installed continuous pathogen reduction technology to kill airborne pathogens in its terminals, and AirAsia has installed contactless payment systems and touchless kiosks in the airports it serves.
The Not as Good News
The pandemic is driving some measures that the industry does not necessarily want. The U.S. Transportation Security Agency (TSA) is considering a plan whereby TSA agents would check passengers’ temperatures at various airports; a measure already underway in India, China, South Korea and Russia. In India, the government indicated it might require travelers to prove their health status using a mobile app. The European aviation safety authority, in concert with the European Centre for Disease Prevention and Control, has been developing a new health and safety protocol for air travel which would impose new ventilation, air filtering and cabin procedures among others.
To address fiscal concerns, various airlines have continued to cut personnel including Brussels Airlines which stated plans to cut 25% of its staff and 16 aircraft in order to help quell its losses exceeding $1 million per day. United also reported its plans to cut staff after the “CARES Act” relief period ends. These airlines are hardly alone in their losses. The International Airlines Group (IAG) reported operating losses of $577 million for the first quarter of 2020.
Finally, a move which many believed sounded the bell tolls for the aviation industry was prominent American investor, business tycoon and Chairman and CEO of Berkshire Hathaway Warren Buffet’s recent act in disposing all of his airline investments totaling billions of dollars. At the time, he said the CEOs of United, Delta, American and Southwest airlines were “excellent” and not to be faulted for the industry’s financial downturn.
Europe: Regional Airlines Taking Flight
If you think you’re hearing more planes in the air in Europe, you’re right. There has been a slow, but steady increase in European regional airlines’ flights. This has not come without controversy as many industry observers are concerned about how safety measures are and will be executed.
For some of these airlines, a restructuring of their fleets has been necessary. airBaltic, for instance, is now operating as an all Airbus A220 airline, now flying to the Baltic cities of Riga, Tallinn and Vilnius and planning to add other European destinations to its schedule. By restructuring its fleet, airBaltic is expected to benefit from more efficient, streamlined operations.
The question is, will other regional carriers follow suit and adjust their fleets accordingly? Given that single-aisle aircraft will not be needed for the near future, it is likely that many other regional airlines and low cost carriers will be reviewing their schedules, adopting a slow build-up, and evaluating their current fleets in order to optimize performance in the months ahead leading out of the COVID-19 period.