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Welcome to London Air Travel’s Monday Briefing for the week beginning 24 February 2020.
Coronavirus
Two months into the Coronavirus (COVID-19) outbreak, we are beginning to see its impact on airlines outside of regions immediately affected by the virus.
Last week, Singapore Airlines announced network wide tactical cancellations up to 31 May 2020. This includes 23 return trips from London Heathrow to Singapore.
Air France-KLM estimates the outbreak will cost the group €150m -€200m up to April 2020. Approximately 5% of the group’s capacity is to mainland China. Long-haul forward bookings load factors for March 2020 are down 5 percentage points year-on year.
Air New Zealand estimates a cost of NZ$35m – NZ$75m with weaker forward bookings on domestic and Tasman routes. It is also temporarily suspending its route to Seoul from 7 March 2020 to the end of June 2020
Qantas estimates a cost of AUD$100m – AUD$150m due to Coronavirus in the first half this year. Whilst UK and US markets are considered to be largely unaffected, in addition to weakening demand from Asia, corporate and leisure domestic demand in Australia is also softening.
Closer to home, British Airways currently plans to tentatively resume flights to mainland China from mid-April 2020. However, London Heathrow – Hong Kong will remain at one flight a day until June 2020. BA has also taken the Airbus A380 off its terminating service from London Heathrow to Singapore during April and May. More details here.
Whilst BA does have a relatively small exposure to Asia compared to Air France-KLM and Lufthansa, with a much higher long-haul premium seat capacity, it is very exposed to marginal falls in premium demand.
History has shown one of the earliest indications of softening long-haul premium demand is BA turning on the taps of Club World reward seat availability, which now seems to be happening.
Many global events have also been cancelled. Due to the cancellation of Mobile World Conference in Barcelona, which was due to start today, you can buy an economy return from Heathrow to Barcelona on BA this week for less than £100. A similar fare next week will cost in excess of £300.
International Airlines Group Full Year Results
Staying with BA, its parent company IAG announces its annual financial results this coming Friday, 28 February 2020.
IAG has made much of its resilience and its preparedness to deal with any industry crisis. We should at least learn of the impact of Coronavirus on its plans for capacity growth for this year. At its Capital Markets Day last year, IAG had already cut its annual growth plans to 3.2% for 2020, with 3% growth at BA.
It is also Willie Walsh’s last results announcement as CEO. Never short of an opinion, Willie may well have a few things to get off his chest, particularly regarding Flybe and possible state support. We will report any announcements of note on Friday morning.
In case you missed it:
Virgin Atlantic withdraws complimentary ground transfers for Upper Class passengers. (London Air Travel)
Also of note this week:
One for fans of statistics. Assuming they are released on time, the Civil Aviation Authority should publish its annual airport data set for 2019, which include domestic and international passenger numbers by route. (CAA)
In South Africa, The Judicial Commission of Inquiry into Allegations of State Capture has heard evidence on irregular expenditure at South African Airways. A separate legal case brought by Organisation Undoing Tax Abuse (OUTA) and the South African Airways Pilots Association (SAAPA) at the High Court Pretoria to declare former SAA Chair Dudu Myeni a delinquent director is ongoing. Dudu Myeni was Chair of SAA from December 2012 to October 2017. It has previously heard evidence on a failed strategic partnership with Emirates and a failed aircraft swap deal with Airbus. The case is due to resume today. (SABC)
Mark Vanhoenacker on how pilots deal with winter weather. (Financial Times)
Late post publication updates:
[Reserved for updates throughout the day]
The FT interviews Air France-KLM CEO Benjamin Smith who has sought to harmonise labour relations at Air France. (Financial Times)
SWISS on how it selects new short and long-haul routes. (SWISS)
London Air Travel’s Monday Briefing is published every Monday at 06:00 BST. If you have any tips or stories please contact us. You can also follow us on Twitter for breaking news throughout the week.
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