COVID-19: US case growth rate overtakes China: CAPA update 25-Mar-2020

Welcome to the latest edition of CAPA’s daily Coronavirus and Aviation global update. We offer this product to our active CAPA Members, as well as visitors to our website to help our industry navigate through this crisis.

Top news headlines:

- IATA projects USD252 billion industry revenue loss from coronavirus, 38% fall in RPKs for 2020;

- US COVID-19 case growth rate overtakes China;

- WestJet: 6900 staff to leave airline at 90% voluntary rate;

- Virgin Australia stands down 8,000 of its 10,000 staff and Tigerair ceases operation

COVID-19 numbers exceed 415,000; the latest Novel Coronavirus Global Situation

181 countries now affected

Laos was added to the list of countries reporting COVID-19 cases, taking the total to 181.

Confirmed global COVID-19 cases tops 400,000: Cases by day (25-Mar-2020)

More than 370,000 cases have been confirmed across the globe.

It took more than three months to reach 100,000 cases worldwide

- but only 12 days to log the next 100,000;

- an additional four days to reach 300,000;

- and four days to reach 400,000. 

Confirmed COVID-19 cases by day, excluding China (25-Mar-2020)

Italy is days away from overtaking China:
Top ten locations for COVID-19 (25-Mar-2020)

US once again has more new cases diagnosed than any other country:
Top ten highest increases in infections by location (25-Mar-2020)

Global cumulative cases top 415,000 (25-Mar-2020)

Italy's growth rate not slowing:

Global mortality rate (yellow line) vs. key locations mortality rate (25-Mar-2020) 

COVID-19 US case growth rate overtakes China 

The growth rate of the COVID-19 virus has differed greatly between countries depending on the measures in place to combat the spread.

Aggressive containment in countries like Japan and Singapore has slowed the pace of spread of the virus.

The comparison below shows the growth rate per selected country once each has reached 100 cases, so there are different start dates e.g. that threshold was reached first for Japan, so that country was 27 days in.

Daily increase in COVID-19 cases, selected countries : Day 1 = 100 case threshold

Aggressive containment appears to slow the growth rate (daily counting starts once the country reaches 100 cases)

Air Capacity Update: Canada responds to 33% jump in cases overnight

Canada' twp major airlines, Air Canada and WestJet, have both announced immense capacity cuts in response to increasing COVID-19 cases over the last two weeks.

Air Canada announced plans to suspend the majority of its international and transborder services by 31-Mar-2020, while WestJet suspended all scheduled international and transborder services for 30 days from 22-Mar-2020.

Overnight, Canada saw a spike in COVID-19 cases with a jump of 33%. Further restrictions are expected in order to minimise the spread.   

Canada weekly total international seat capacity w/c 23-Mar-2020 (ignore the dotted line)

Aviation & Travel Industry news updates

1. Global

IATA projects USD252 billion industry revenue loss from coronavirus, 38% fall in RPKs for 2020

IATA revised (24-Mar-2020) its estimate of the revenue loss to the airline industry, projecting passenger revenues could plummet by USD252 billion, down 44% year-on-year.

This more than double IATA's 05-Mar-2020 estimate of USD113 billion, as recently as three weeks earlier, and is based on a scenario in which severe travel restrictions last for up to three months, followed by a gradual economic recovery later this year.

Under this - relatively optimistic - scenario, full year passenger demand (RPKs) would decline 38%.

Industry capacity (ASKs) in domestic and international markets would declines 65% during 2Q2929, but recover to a 10% decline in 4Q2020. Regional estimates are:

  • Global: 38% decline in RPKs, USD252 billion in revenue lost;
  • Africa: 32%, USD4 billion;
  • Asia Pacific: 37%, USD88 billion;
  • Europe: 46%, USD76 billion;
  • Latin America: 41%, USD15 billion;
  • Middle East: 39%, USD19 billion;
  • North America: 27%, USD50 billion. [more - original PR]

IATA: "The airline industry faces its gravest crisis. Within a matter of a few weeks, our previous worst case scenario is looking better than our latest estimates. But without immediate government relief measures, there will not be an industry left standing. Airlines need $200 billion in liquidity support simply to make it through. Some governments have already stepped forward, but many more need to follow suit," Alexandre de Juniac, director general and CEO. Source: IATA, 24-Mar-2020.

2. Asia

China: China State Council outlines measures to improve air cargo capacity

China's State Council highlighted (24-Mar-2020) shortcomings in China's international air cargo capacity, with a significant decline in bellyhold capacity as a result of reduced passenger operations due to the coronavirus pandemic. The council outlined the following measures to improve international air cargo capacity:
  • Strengthen international cooperation and provide policy support for international cargo routes;
  • Encourage aircraft leasing, purchase and other methods to support freighter fleets;
  • Support the development of all air cargo market entities;
  • Encourage the joint restructuring of air cargo and logistics companies;
  • Support the development of networks by express delivery companies;
  • Improve the air cargo hub network, including lifting airport restrictions on freighter operations during peak hours;
  • Implement 24 hour customs clearance at international hub airports in Beijing, Chengdu, Chongqing, Guangdong, Hebei, Hong Kong, Macau, Tianjin, and the Yangtze River Delta;
  • Improve airfreight systems, promote the simplification of processes and support paperless documentation;
  • Establish a shared logistics information platform for airlines, postal courier services and cargo terminals;
  • Strengthen logistics services, including customs clearance, freight forwarding and warehousing;
  • Support the upgrade and reconstruction of existing airport facilities and improve cold chain and express sorting facilities;
  • Promote the construction of cargo airports. [more - original PR - Chinese]

Australia/New Zealand: Australia implements 'do not travel' ban

Australia's Prime Minister Scott Morrison implemented (24-Mar-2020) a 'do not travel' ban on Australians travelling overseas under the Biosecurity Act 2015, to help avoid travellers returning to Australia with coronavirus and the risks of spreading coronavirus to other countries.
Exemptions will be managed by the Australian Border Force and will apply to a range of categories of travellers, including for those citizens ordinarily resident overseas, where travel is essential or necessary, travel is of national interest, and on compassionate and humanitarian grounds. The prohibition is aligned with the Government's decision to raise Smartraveller Travel Advice 'to Level 4 - Do Not Travel' overseas. [more - original PR]

Virgin Australia stands down 8,000 of its 10,000 staff and TIgerair suspends all services

Virgin Australia Group reported (25-Mar-2020) it temporarily stood down 8000 out of 10,000 staff members until at least the end of May-2020. During the stand down, team members will access accrued leave entitlements as well as leave without pay. Tigerair Australia will temporarily suspend all services effective immediately. [more - original PR]

Philippines: Philippine Airlines to suspend all services from 26-Mar-2020 to 14-Apr-2020

Philippine Airlines announced (23-Mar-2020) plans to suspend all remaining international services from 26-Mar-2020 until 14-Apr-2020. All domestic services were cancelled on 17-Mar-2020. [more - original PR]

3. Middle East:

Egypt extends suspension of air traffic due to coronavirus outbreak

Egypt's Minister of Information Osama Heikal stated the country will extend the suspension of air traffic for an additional two weeks from 01-Apr-2020, as a precautionary measure against the spread of coronavirus (Reuters/Ahram Online, 24-Mar-2020).

4. Europe:

Heathrow urging airlines to maximise use of cargo hub to transport medical equipment

London Heathrow Airport reported (24-Mar-2020) cargo movements are forecast to increase by 53% compared to the weekly average as logistics companies import equipment including coronavirus testing kits.
The airport has urged carriers and freight companies to maximise the use of the hub's quieter schedule to keep supply lines open and transport time critical goods. Heathrow handles 41% of the UK's pharmaceutical products and 34% of the UK's overall cargo. [more - original PR]

5. North America:

WestJet: 6900 staff to leave airline at 90% voluntary rate

WestJet, via its official blog, gave (24-Mar-2020) notice to 6900 staff, "confirming early retirements, early outs and both voluntary and involuntary leaves". 90% of staff are leaving voluntarily, and WestJet will now continue operations with a remaining workforce of 7100.
Previously, the carrier implemented cost cutting measures that included laying off more than 80% of contract staff, stopping all non essential travel and training, suspending any internal role movements and salary adjustments, instituting a hiring freeze and suspending more than 75% of capital projects, as well as requesting a reduction or delay in payment to suppliers.
The carrier's executive team has likewise accepted a 50% pay cut, and VPs and directors have taken a 25% pay cut. The carrier is now working with unions and employee associations to negotiate necessary levels of voluntary leaves and pay cuts. [more - original PR]

6. Latin America:

Azul reduces payroll costs by 65% in Apr-2020

Azul CFO Alex Malfitani, in a conference call about the COVID-19 pandemic, commented (24-Mar-2020) on the carrier's progress in reducing costs, stating "In April, the reduction [in payroll costs] will be 65%, that's a significant reduction, almost BRL100 million (USD19.6 million) just in payroll".
Azul CEO John Rodgerson stated: "I would challenge another company in the world that can do that, as quickly as we have done". The carrier reported that over 7,500 personnel have adhered to the voluntary unpaid leave programme. Azul is seeking a total of 9000 adherents.

7. Africa

South African Airways suspends domestic services until 16-Apr-2020

South African Airways (SAA) suspended (24-Mar-2020) all domestic services, effective 27-Mar-2020 to 16-Apr-2020, in support of the 21 day lock down announced by South Africa's Government to counter the spread of coronavirus.
The airline will support passengers who wish to change their travel plans to commence their journeys before the lock down. Passengers may also defer travel until after the lock down.
The carrier will close its call centres for the duration of the lock down. SAA previously suspended all regional and intercontinental services until 31-May-2020. [more - original PR]

The above is a selection of more than 150 news updates specifically on COVID-19, from today’s CAPA Membership coverage, which also covers traffic data, route and frequency announcements, government advisories and more. For more information about CAPA Membership, please click here.

Additional Analysis (please click on the headings to go to the full story)

Ryanair CEO Michael O'Leary has summarised the priority for his airline, which applies equally to all airlines currently: to preserve cash.

"If we have to operate for three, six, nine, maybe even 12 months, with no flights and no revenues how do we survive?", he said (Financial Times/Reuters, 21-Mar-2020).

The main tool at airlines' disposal for preserving cash is to make drastic cuts to capacity.

Total seat capacity in Europe has dropped by 59.1% year-on-year for the week commencing 23-Mar-2020, according to the latest schedules data from OAG combined with CAPA Fleet Database seat configurations. Domestic capacity has almost halved, reduced by 48.3%, and international capacity has been slashed by 62.9%.

Italy has the biggest percentage cut – reduced by 87.5% year-on-year – while Finland, Spain, Germany, Denmark, Greece and Belgium are also shrinking capacity by more than 70%. Of Europe's top 20 airline groups, 18 are showing cuts, and most of them very substantial.

However, data for some still do not appear to reflect full details of some recent announcements. The rate of reduction is certain to increase. At some point, zero capacity could even become a reality for European aviation.

Bristol Airport (UK): expansion plans halted for a second time

During 2019 the focus was very much on environmental opposition to airport expansion as part of the response to ‘climate change’, and also on the air transport business’ tardiness to react cohesively to spokespeople for the environment. In the space of a few short weeks this year the entire ball game has changed, as dodging the COVID-19 coronavirus has become the priority.

But environmental issues remain important, even while the travel and tourism industries are doing their best to stay in one piece and to avoid the loss of aviation companies – airlines, airports, supporting infrastructure – and of millions of jobs.

In some cases the environmental issues are paramount. One such place is Bristol, UK, where local councillors won’t even let the airport build a new car park while public transport access is inadequate.

Qantas cuts deep, but well placed to weather COVID-19

Like almost every airline around the globe, Qantas has been blindsided by the freight train that is the Covid-19 outbreak.

The abruptness of the airline’s change in outlook has been dramatic. A few months ago Qantas was comfortably on track and focusing on new aircraft orders; on 20-Feb-2020 its share price rose almost AUD1.00 to AUD6.67 following its 1H results announcement and its forward looking plans to combat the threat; by 19-Mar-2020 that price had slumped to AUD2.14.

Now the airline is announcing previously implausible measures as it cuts back its network, fleet and workforce.

The carrier has acted swiftly and has not been afraid to make drastic moves – a hallmark of the current management in everything from crisis management to labour relations.

International operations will be suspended completely, with domestic capacity cut by 60%. About 150 aircraft will be grounded, and two thirds of the carrier’s 30,000 employees will be stood down.

Tough measures, but in the circumstances – entirely judicious.

The above is a selection of in-depth insights on the latest developments in the aviation and travel industry related to the COVID-19 outbreak. CAPA Membership includes a range of reports featuring accurate data and independent commentary from our global team of analysts, who offer a unique perspective and actionable insights to help improve decision making. For more information about CAPA Membership, please click here.

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