Welcome to London Air Travel’s Monday Briefing for the week beginning 2 March 2020.
To borrow a well-worn political phrase, a week is a long time in aviation. This time last week, most airlines thought the impact of Coronavirus was contained to operations in Asia.
It is now clear that the impact of the virus on aviation is very uncertain. Airlines are facing weeks, if not months, of reduced demand. “No show” rates are up. Forward bookings are down. Many events, including the travel trade show ITB Berlin, have also been cancelled.
Airlines are seeking a dispensation from the “80/20” rule on slots at airports such as London Heathrow which would result in significantly higher tactical cancellations.
Whilst airlines are now not giving any guidance on the financial impact of Coronavirus, some such as IAG which announced its annual results last week are keen to emphasise their resilience.
Should this evolve in to a crisis for the industry close to the scale of 11 September 2001 or the 2008 financial crash, here are some indications based on precedent, as to what might happen.
If there’s one positive that may come from this is that aviation won’t be seen as an expendable luxury as it has been in climate change debate.
Flybe Pleads For State Support
The Chancellor Of The Exchequer, Rishi Sunak, is due to give his first budget next week, Wednesday 11 March 2020.
This will no doubt be selectively leaked to the papers this coming Sunday. There has been a conspicuous silence from the Treasury about Flybe’s attempts to secure a reduction in Air Passenger Duty and a Government backed “commercial” loan.
The latter appears to have stalled over how the Government should rank above other Flybe creditors should the airline collapse.
Sky News has obtained a “leaked” letter from Flybe to the business secretary Alok Sharma in which Flybe pleads for reform to APD with a new lower band of the duty for domestic flights. Flybe also calls for more UK domestic routes to be designated Public Service Obligation routes with public subsidy.
Willie Walsh, in characteristically blunt fashion, said of Flybe last week that its business model “does not work” and its shareholders “have copped on to the fact they’ve bought a dog”.
Also of note this week:
The Civil Aviation Safety Authority (CASA) in Australia has approved a new pilot fatigue management system for Qantas.
This allows pilots to fly for more than 20 hours. However, the Australian and International Pilots Association, which is in dispute with Qantas over ultra long-haul flights, has claimed it has not been consulted by the CASA.
This is seen as taking Qantas a step closer to ordering Airbus A350-1000 aircraft capable of flying from London to Sydney non-stop. However, this system will need to be updated for these ultra long-haul flights. (Sydney Morning Herald)
The Business Rescue Practitioners of South African Airways have secured an extension for the publication of their Business Rescue Plan to 31 March 2020.
A draft plan will be provided to the employees committee, the creditors committee and the Department of Public Enterprises, for consultation before publication. A meeting of creditors to approve the plan must be convened within 10 days of formal publication.
Late post publication updates:
[Reserved for updates throughout the day]
IATA has announced that it is contacting aviation regulators worldwide for an immediate suspension of the 80/20 “use it or lose it” rule at over 200 slot restricted airports, up to October 2020.
Evidence cited by IATA includes substantial falls in passenger numbers to regions affected by Coronavirus, falling forward bookings and very high no show rates for some airlines.
Delta has announced it plans to launch a new route from London Heathrow to Seattle from March 2021.
This will complement Virgin Atlantic’s existing service to Seattle, which operates up to twice daily.
This is a clear spoiler for American Airlines’ planned launch of Heathrow – Seattle in March 2021. It could mean up to six daily flights from Heathrow.
British Airways has announced it is waiving change fees for all new bookings made between Tuesday 3 March and Monday 16 March 2020. This will allow passengers to delay travel if necessary. However, the fare difference will still apply if the date of travel is changed.
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