Updated: Mar 12
Airlines around the globe have begun cancelling flights in light of the coronavirus outbreak. Ryanair, Lufthansa, IAG Group and Air France-KLM are among the worst affected, however most of them aren’t exactly worried.
At the A4E Aviation Summit in Brussels on Tuesday 3 March at which AeroNewsX attended, the CEOs joined together in an attempt to call out governments over their lack of action when it comes to the Single European Aviation Market. The airline bosses explained how they’ve done their part in ensuring an environmentally friendly operation and then expressed their distaste towards Europe’s air traffic system. They said the system was still the same as at least 40 years ago and that one single European sky would reduce flight times and therefore reduce emissions. The CEO of the International Airlines Group (which owns British Airways, Iberia and Aer Lingus among others), Willie Walsh, describes it as “a scandal!”
Earlier, Ryanair had publicly revealed that up to 25% of its short-haul capacity would be cut, including to markets such as Italy. In fact, Walsh expressed how customers were refusing to fly to Italy as a whole, rather than just to north Italy where the outbreak is most prominent.
There were similar figures at the Lufthansa Group, CEO Carsten Spohr added. Spohr returned to the carrier’s recent announcement explaining how short and medium haul capacity was down about 25% group-wide. On the long-haul side of things, the CEO confirmed that 23 wide-body planes were grounded and up to 60 weekly frequencies cut on services to Asia.
Both Willie Walsh and Air France-KLM Group CEO, Benjamin Smith, admitted they had been heavily impacted by the coronavirus outbreak.
However, all airlines were optimistic about the future, something according to EasyJet CEO Johan Lundgren, is extremely important when it comes to the aviation industry. Ryanair Holdings CEO Michael O’Leary said he was “reasonably optimistic” about operations returning to normal by June, July or August at the latest.
“I think we’re going to have a very deflated booking environment probably for the next two or three weeks and then people will get bored of the coronavirus and the coverage of the coronavirus,” O’Leary explained.
The CEO continued: “I think by the time we get to June, July or August as long as things have settled down, the I think we will see a pretty massive return to normal travel patterns aided by what will be another wave of seat sales across the industry once we see demand returning to normal.”
The CEO also estimated a 10% drop in traffic for April and May but anticipates a return in demand during the summer months as temperature rises and prices drop.
Meanwhile, Lufthansa is also struggling with the CEO saying its long-haul operating is now “a major concern.” The carrier has adapted capacity, removing one third of its seats to Italy. The CEO said his expectations were in line with what O’Leary had estimated.
The International Airlines Group Chief Executive, Willie Walsh, said that “flights to and from Italy were severely impacted” by the coronavirus outbreak. However, the CEO said the industry is facing the challenge in a “proper” manner.
“This isn’t the first challenge that we’ve faced,” Walsh said.
Air France-KLM Group CEO Benjamin Smith also agreed with O’Leary’s timeline, expecting things to return to normal “by summer”.
Regarding group’s dependance on flights to China, the CEO responded: “We have other sources of traffic should that not come back.”
Government help was another big topic in terms of the coronavirus. The Lufthansa, Ryanair and IAG CEOs were adamant that government help should not be an option.
“This industry is far away from government help. We never ask for help, we ask for less burdens,” Lufthansa CEO Carsten Spohr said, referring to the airlines’ collective request for Single European skies.
Ryanair’s CEO agreed with Spohr and joked about Alitalia’s deteriorating financial condition as an explanation towards why government help would just be “an excuse”.
“The last thing we need is government intervention in this. I’m fairly sure Alitalia is in downtown Rome at the moment looking for another loan on top of the €1.4 billion they’ve already received in illegal state aid.”
Spohr also demanded that the regulations regarding airport slots were changed, at least in light of the coronavirus. He mentioned how, as a result of the significant drop in demand, many planes were flying almost empty making certain routes economically unviable. In order to retain the valuable slots at certain airports, airlines must continue to fly their aircraft whether they’re full or not.
The CEOs also expect further consolidation within the industry “over the next two to three years” according to Michael O’Leary, brought forward by the coronavirus.
Overall, the coronavirus has had a severe impact on aviation. Shares are dropping and costs have seen a sharp rise. The major airline CEOs however, expect things to return to normal by the end of the summer months at the latest, although some were still a bit doubtful.