Issue No. 768
Covid's Paradox: The Losers are the Winners
Pushing Back: Inside This Issue
Airlines are just going to have to learn to live with the virus. Might there be a miracle vaccine before 2020 ends? Or a miracle cure? Not impossible. But also not the likeliest scenario. Some say the plague could linger as a public health crisis for years. Worryingly, even some countries that thought they had the pandemic under control, like South Korea, are now seeing a second wave of cases.
So airlines are pinning their scaled-back revival hopes on efforts to relieve traveler anxieties, on governments easing international travel restrictions, on better testing and tracing of the virus, and on segments of the population that are ready, willing, and able to travel despite the health risks and despite the crumbling world economy.
Four months since airlines began suspending flights to Wuhan, and two months since the pandemic caused much of the world to close its economies and borders, carriers are starting to add back flights again. They hope to salvage something from the peak summer season, in what some call the “Great Restart.” Italy, for one, an early victim of the virus, plans to reopen its borders to the rest of Europe next month. Europe’s Baltic states will create the world’s first post-crisis open travel zone, or “travel bubble.” Many Florida beaches are open again. Other places like the U.K. though, are taking a more cautious approach, imposing two-week quarantines on all air arrivals. Hawaii is sticking to its strict quarantine policy through the end of June at least.
For an intercontinental champion like Singapore Airlines, not having a domestic market could stall its recovery. But armed with a mountain of new capital, it’s sure it can survive through the crisis, and then thrive after it. Korea’s airlines are in a more precarious condition. Government cash transfusions will keep them alive. But when the time comes to finally leave the hospital, they’ll walk out in crutches.
In Brazil, where the virus is spreading rapidly, Azul sees no risk of running out of cash. In the U.S., meanwhile, Allegiant’s mouth is watering as it sees what’s happening to used aircraft prices. Ryanair sees opportunity in the aircraft market bust as well. Everyone agrees though: Demand for air travel won’t get back to 2019 levels anytime soon, and that means lots of unpleasant capacity cuts, cost cuts, pay cuts, and job cuts.
"In my own family, I have those who don’t want to come out… Others are ready to rumble looking to get back out and resume their lives. If one were to choose a 100-person sample, perhaps 40 to 50 would want to return to normal times, while the balance do not. We, as an airline, have to be able to cope with this level of uncertainty, be able to rightsize ourselves to service those 40 or 50 looking to rumble in the coming months and hopefully see the remaining 50 return later this year and in 2021."Allegiant CEO Maurice Gallagher
Mondays With Skift Airline Weekly
Join Airline Weekly Editor Madhu Unnikrishnan and special guest Ty Osbaugh, who leads architecture firm Gensler's aviation practice, for a discussion on how airport architecture will evolve to handle this and future pandemics. Tune in this Monday at 11:30 a.m. Eastern for a livestream broadcast. Can't make it? We'll post a replay after the event every week at airlineweekly.com. Registration is free for subscribers here, at forum.skift.com.
January-March (3 Months)
- Singapore Airlines: -$522m/$24m*; -2%
- Korean Air: -$581m/-$131m*; -2%
- Asiana: -$461m/-$235m*; -18%
- Jeju Air: -$83m; -28%
- Azul: -$1.4b/-$57m*; 6%
- Allegiant: -$33m/$33m*; 13%
- Air Arabia: $19m; 7%
- Chorus/Jazz: -$13m/$16m; 13%
October-December 2019 (3 Months)
- El Al: -$59m; 0%
Net result in USD/*Net result excluding special items/ Operating margin