Commentary

More Major Carriers Cut Flights As Stay-At-Home Fever Spreads

As campaign rallies for the Democratic presidential candidates were called off at the last minute, major trade shows and concerts were canceled or postponed and a one-mile circular section of New Rochelle, New York, was declared a “containment area” by governor Andrew Cuomo, airlines around the world are adapting to the mounting stay-at-home zeitgeist caused by the fear of spreading and/or catching COVID-19.

“American Airlines Group and Delta Air Lines joined United Airlines Holdings on Tuesday in slashing the number of flights across their networks, with some cuts extending through the summer, as cancellations overtake new bookings in some markets because of passenger fears about traveling,” Alison Sider reports  for The Wall Street Journal.

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“The virus’s rapid impact on demand has sent airlines reeling. Most carriers in the U.S. have withdrawn their financial guidance for the year and suspended share buyback programs, among other measures. Airlines are now preparing for the prospect that recovery could take months, rather than the quick bounce-back many had initially anticipated,” Sider continues.

“American, the world’s largest airline, said it would cut its international capacity by 10% this summer compared to the current schedule, and eliminate 7.5% of its domestic flights in April. Delta Air Lines said it will slash its international flights between 20% to 25% and trim domestic flights by 10% to 15%,” Chris Isidore writes  for CNN Business.

“Discount carrier Spirit Airline also announced it would cut capacity by 5% in April, and it could possibly make deeper cuts in May,” Isidore adds.

As bad as it may sound, however, “the industry is prepared to suffer the blows,” writes  Niraj Chokshi for The New York Times. “That’s what a parade of chief executives from the major carriers said Tuesday at an online-investor conference convened by J.P. Morgan, even as they announced deep cuts to flights, spending, hiring and their own salaries.”

A critical difference between this crisis and the 2008 global financial crisis or the Sept. 11 terrorist attacks in 2001 is how quickly the industry has responded, according to Helane Becker, managing director and senior airline analyst at Cowen, Chokshi reports.

“This is what they’ve prepared for. Every CEO that’s running an airline today was involved in the airline industry in some capacity in 2001 and 2008,” Becker said.

“While U.S. airlines are generally in good shape financially, large international carriers such as Delta and American will be particularly hurt by a decline in corporate travel, said George Ferguson, a senior analyst with Bloomberg Intelligence,” Bloomberg’s Richard Clough writes  for Yahoo News.

“High-margin business travel hurts the most when it comes off,” Ferguson said.

Meanwhile, “European airlines have been running near-empty flights in order to retain valuable airport slots, drawing sharp criticism from climate activists as the coronavirus outbreak dramatically reduces passenger demand. A so-called ‘use-it-or-lose-it’ rule, enshrined under EU law, states airlines must fly 80% of their flights on a slot in order to safeguard their presence at major hubs for the next season,” Sam Meredith writes  for CNBC.

“It has led to a situation whereby many airlines are thought to be operating so-called ‘ghost planes’ with almost no passengers onboard,” he continues.

“It’s absurd to fly empty planes and cause planet-heating emissions that are completely unnecessary,” Doug Parr, chief scientist at Greenpeace U.K., told Meredith via email.

“The ‘use it or lose it’ slot rules were relaxed during the financial crisis, and in times of reduced demand such as now, it would make complete and common sense. On Tuesday the EU Commission said it would make a move to prevent ghost flights, but few details have yet been revealed,” James Asquith writes for Forbes.

As airline executives and government officials grappled with the larger and longer-term issues, travelers faced more immediate crises.

“The coronavirus outbreak has created worldwide airline chaos, leaving many people either stranded abroad or frustrated or confused about their travel plans due to canceled flights or suspended routes to and from coronavirus-affected countries,” Tasneem Nashrulla writes  for BuzzFeed.

After detailing the travails of Alitalia customers trying to travel to and from Italy, Nashrulla also observes that “potentially thousands of Italians are expected to be stranded in the U.K. -- while many British tourists are stuck in Italy -- after British Airways and Ryanair were among several airlines to halt flights to and from Italy following the countrywide lockdown and the U.K.’s warning against all but essential travel to Italy.”

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