The world’s largest airlines including Air Canada have banded together to call on governments to help offset soaring losses due to the new coronavirus outbreak.
In a joint open letter the oneworld, SkyTeam and Star Alliance members, which include nearly 60 airlines, urged governments and regulators “to evaluate all possible means to assist the airline industry during this unprecedented period.”
“The unprecedented circumstances triggered by the coronavirus outbreak pose an existential threat not only to the airline industry but more generally to global trade and commerce, and social connectivity,” said Jeffrey Goh, chief executive of Star Alliance which includes Air Canada. “As airlines stretch their limits to manage the crisis, it is equally critical for governments and stakeholders to avoid further burdens and step up with measures, as some have, that will ensure the future of the travel industry.”
The letter came as airlines slashed flights and halted service to cope with the spread of the virus. On Monday, International Airlines Group, which owns British Airways, cut the number of seats available by 75 per cent for April and May. EasyJet also cancelled much of its service, and, in a statement Monday, the company’s chief executive Johan Lundgren said European aviation “faces a precarious future.” Over the weekend, Scandinavian Airlines temporarily halted nearly all of its flights and laid off 10,000 employees, or 90 per cent of its total work force. Europe’s largest airline, Ryanair, also announced on Monday that it was reducing its seat capacity by up to 80 per cent and added that “a full grounding of the fleet cannot be ruled out.” Meanwhile, Virgin Atlantic has called on the British government to offer financial support.
Shares of major airlines plummeted on European stock markets Monday morning with EasyJet down as much as 31 per cent on the London Stock Exchange in early trading and IAG off 19 per cent. “The airline sector is in a precarious position,” said Russ Mould of the London-based investment firm AJ Bell. “Ever-increasing restrictions on travel are forcing the industry to ground planes and dramatically reduce capacity. This will put significant pressure on airlines to cut costs as quickly as possible in order to survive what could be one of the hardest ever years for the industry.”
The International Air Transport Association, which represents nearly 300 airlines, has said that the virus could slash revenues by US$113-billion this year. The recently announced travel restrictions on flights between Europe and the United States imposed by U.S. President Donald Trump could cost the industry US$20-billion in lost revenue, according to the airline alliances.
In a blunt assessment released Monday, the Centre for Aviation, an industry analyst, said that by the end of May, 2020, "most airlines in the world will be bankrupt.” It added that “co-ordinated government and industry action is needed now if catastrophe is to be avoided.”
Airlines got some relief over the weekend when the European Commission, the executive arm of the European Union, granted temporary suspension of its “use it or lose it” rule for airport slots. Under the rule, airlines had to continue to operate their slot for at least 80 per cent of the time or risk losing them. The Commission has suspended the requirement until June.
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