The scenario of how it returns to service depends on how the coronavirus and demand play out.International Society of Transport Aircraft Trading (ISTAT) Americas Conference & Exhibition “Those aircraft not being there has allowed airlines to reduce capacity and manage their capacity. “Max unavailability for airlines at the moment is a positive,” Cirium’s Morris said. Obviously, this is causing some sort of near-term global recession.”Īs for last year’s “black swan” event – the grounding of the global Max fleet – the absence of expected aircraft from airlines’ fleets has eased some of the pain from the sudden drop in customer demand. Fast-forward to 2020, and we’re dealing with the coronavirus. “And that’s when economy was still pretty good. Streeter said: “Last year in 2019, we had a record number of airlines globally fail, and a record number of aircraft subject to the bankruptcy process. “The industry would be doing a lot better if you cut out the 20 largest loss-making airlines.” “Let’s face it, every year for the last 10 years we’ve had at least five airlines ,” he said. Negline, putting the human cost aside, suggested that a shakeout of some airlines as demand continues to drop globally would not necessarily be a bad thing for aviation’s appeal to investors.
Streeter’s concerns about survivability rests more with some low-cost European and US airlines. And the offset in the US from fuel costs is very significant.” So you have, right now, this massive hit to revenue. “In Asia and Europe hedging is still the more common practice. US majors will also most likely benefit from their practice of not hedging fuel prices, he added. The extreme profitability in North America relative to the rest of the world gives the US airlines a much stronger ability to weather the storm.” “If we look at the IATA figures for global profitability, US airlines make up about 20% of global capacity, yet 65% of global profits have been in North America. Streeter said he was “feeling still pretty good” about the ability of major US airlines to manage their way through the crisis. “In the current market, it is all about the coronavirus,” said another panelist, Mark Streeter, credit analyst at JP Morgan, emphasising that other issues threatening aviation’s growth, such as the grounding of Boeing’s 737 Max and expanding trade barriers between nations were now of secondary concern, if that. will come back fairly quickly as the demand is restored and the virus is hopefully controlled.” It might make sense for them to err on the side of caution if need be and shut down a bit more capacity than maybe is justified. Until we know the extent of all of that we might not know how active the airlines need to be. “We know now that there are problems with the spread of the virus here in the United States. “How bad can it get? It’s very hard to put specific numbers on it,” said Peter Negline, head of strategy and market research for BOC Aviation, at the same event. The overarching questions for the global aviation industry are: how much further will demand and capacity drop, and which airlines might not survive the crisis?
There are no significant airline failures as of today but who knows what tomorrow will bring.” They’re getting ready to just survive a disaster and hopefully come out on the other side. Airlines are hunkering down and are moving into disaster recovery. “The word, I think, for the scenario today is chaos. “The black swan has flown in,” Morris said.Īirlines facing the biggest threats are those that are exposed to the Chinese market and have large portions of their fleet leased and, consequently, have greater difficulty raising capital, he said. That was before the coronavirus spread in China and, ultimately, across the globe. IATA had forecast on 19 December 4.7% growth in global airline capacity for full-year 2020. By the time Morris took the stage in Austin the morning of 2 March, this slipped to 2.8%. Through the week ended 1 March, global capacity had declined by 2% year-over-year, Cirium schedules data shows. Global airline capacity in 2020 has declined by nearly 3% as of 2 March compared to the same period in 2019, Rob Morris, global head of Ascend by Cirium, disclosed at an ISTAT event today. Decade of Airline Excellence Awards 2020.
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