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Coronavirus: Why do airlines resist the virus and fly planes without passengers

Coronavirus: Why do airlines resist the virus and fly planes without passengers? - By Ahmed Haouaria

09 Mars 2020
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To comply with European legislation, Airlines continue to fly their planes, even if there are no or few passengers inside.

With the increasing spread of the coronavirus, airlines find themselves in an obligation to operate several of their flights empty or almost empty. A situation that strongly intrigues, especially on social media. In reality, airlines comply with very specific legislation. Whether in the United States or Europe, the companies benefit from very specific time slots.

It has been almost 20 years since the aviation industry is confronted to such a serious threat. After the terrorist attacks of Sept. 11, 2001, it took years for airlines to fully recover their considerable losses. Today there are worries that COVID-19 could have an equally terrible economic effect.

From September 11 to the 2008 financial crisis, passing through SARS, a difficult endurance exercise

To keep these slots from one year to the next, European legislation obliges companies to make at least 80% of the flights that are scheduled on their schedules, under penalty of seeing these "slots", redistributed. to others, it is the hard law of "use-it-or-lose-it".

Right now, all of that still applies. This is the reason why empty planes continue to pierce the sky and consume thousands of tonnes of fuel, for ghost passengers. So, faced with this situation, the authorities begin to react. The International Air Transport Association (IATA), for example, asked for a waiver in early March to be able to circumvent this law. Derogation still awaiting a response.

According to European regulations, this obligation can indeed be suspended under certain conditions. For good reason, the "non-use" of these slots can be justified by several "unforeseeable and irresistible circumstances". Among them, the legislation mentions “a serious disruption of operations at the airports concerned, including the series of slots at other Community airports with regard to routes which have been affected by this disruption, during a game important of the relevant hourly planning period ”. A situation that could apply to the coronavirus crisis.

Few times have been relaxed on this legislation. SARS, at the beginning of the century, the attacks of September 11th or the 2008 crisis, in particular, had led to such measures.

Since the beginning of the coronavirus crisis, the aviation sector has been in great difficulty. IATA estimated last week that losses in the sector could reach $ 113 billion, according to a catastrophic scenario. Another scenario envisioned suggests an upcoming loss of at least $ 63 billion. One company, Flybe, has also been particularly victim of the virus since it was filed for bankruptcy late last week. Suspended routes, paralyzed travelers and event cancellations: the Covid-19 epidemic could cost air transport more than $ 100 billion, plunging the sector into an "almost unprecedented" situation, the International Association of air transport (IATA).

"In just over two months, the prospects for the sector in most regions of the world have radically darkened," said IATA director general Alexandre de Juniac, in a statement released after a meeting in Singapore.

He called on governments to lower taxes and charges. He also asked for the relaxation of the requirements vis-à-vis the companies concerning their landing and take-off slots, which in normal times they risk losing if they fall below an 80% usage threshold.

Financial losses equivalent to the 2008 financial crisis

IATA, which brings together 290 airlines, has estimated the loss of turnover of airlines for passenger transport between 63 billion dollars, if the spread of the virus is contained, and 113 billion if the new coronavirus continues to spread. This estimate does not take into account freight transport losses.

The most critical scenario represents a 19% drop in global passenger air transport revenues, a sector that generated $ 838 billion in sales last year.

The African, Latin American and Caribbean regions are currently excluded from this market study due to the very low number of contamination cases. "From a financial point of view, this would be equivalent to what the sector suffered" during the last global financial crisis of 2008-2009, notes the organization.

Flybe, declared business collapse, other companies resist despite the difficulties

 

Severe acute respiratory syndrome (SARS), which caused a deadly epidemic in 2002-2003, has so far been the event linked to an epidemic that had the greatest impact on traffic volumes. Since the end of January, dozens of airlines have suspended or reduced their service to China, the cradle of the epidemic, then to Italy. The movement of declining reservations then spilled over, now reaching all destinations, including those that are slightly affected by the disease.

Bookings to Europe from the American, Asian and African continents collapsed by 79% in the last week of February, the specialized company Forwardkeys said on Thursday.

"We have recorded, in the last few days, a significant decline in demand and an increase in travel cancellations linked to the fears associated with the Covid-19," said the American company Southwest, which values ​​between 200 and 300 million dollars, on Thursday. the shortfall in his accounts.

Flybe had been in bad shape for several months. The company had already escaped bankruptcy in mid-January thanks to a fiscal boost from the government of Boris Johnson, which had accepted the deferral of tax payments, and after another rescue last year by the Connect Airways consortium.

But the coronavirus will have signed its death warrant, the epidemic has greatly reduced air traffic.

“We are in shock, Flybe was really a very well-known company. It had existed for 40 years. We really tried to do everything we could to support her at the start of the year. And unfortunately, because of the coronavirus epidemic, this already weakened business could not survive, "said Grant Shapps, the British secretary of transport.

The British airline Flybe, therefore, ceased operations, unable to cope with the drop-in air traffic linked to the epidemic.

Norwegian Air Shuttle, which was betting on a return to the green in 2020, returned on Thursday to its forecasts, a consequence of the new coronavirus which accentuates the difficulties of the low-cost company. Lufthansa has immobilized 150 aircraft and suspended all flights to Israel.

The airlines have already announced savings measures with the hiring freeze, salaries, and promotions, the reduction of administrative expenses, unpaid leave, non-compulsory training or temporary technical unemployment.

The only good news, for now, is the drop-in oil prices since the start of the year which could lower the price of kerosene, according to IATA.

The virus puts the economy and business tourism in a turbulent zone

Large companies and institutions are trying to limit the economic impact of the coronavirus. Like the European Central Bank, which has decided to reduce the non-essential business travel of its employees.

Similar decisions from Google, Unilever, Nestlé, Goldman Sachs, Unicredit, Nestlé and L'Oréal. The employees of these multinationals are invited to postpone their domestic or international flights. A real punch for the airline industry.

"There will be more airline bankruptcies in the next two weeks," warns Ryanair CEO Michael O'Leary. It’s obvious when you see most of the airlines affected by lower bookings today, until 'at 20 or 25%. "

In response, airlines and hotels are revising the cancellation fees they usually charge. Most major airlines have suspended flights to mainland China until the end of April. They often reimburse canceled flights or let the customer use the amount spent on a future trip. In the hotel industry, large chains also waive cancellation fees for people traveling to or from areas affected by the coronavirus.

About Airlines Slots

The time slot corresponds to the agreement obtained by the airlines to operate their flight program to and from a given airport. It is very vital for the carrier in that it allows them to offer the best flight program (in terms of arrival and departure time), connections (with other airlines and partners). It is subject to authorization by civil aviation after receipt of the flight program. Civil aviation consults with other entities to ensure that the program does not create traffic jams for landings and takeoffs. The airport slot determines the entire flight schedule of the company to give it a competitive advantage and generate revenue. A bad slot obtained leads to more charges than revenue and becomes a major challenge. Sometimes, failing to get the right slot, some companies choose alternative airports that are not always attractive. Often, the national or airport-based airline is treated as a priority over the others and can influence the obtaining of competitors' slots over partners of an airline alliance.

 

 

 

 

 

 

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