by JORDAN CHONG  

December 1st 2020

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MARCH

The brutal reality of COVID-19 was realised this month, when IATA released two updated forecasts on the global airline industry’s expected losses. Read More »

The first, in early March, said Asia-Pacific carriers were forecast to lose US$57.3 billion in revenue in a “worst-case scenario”. Three weeks later, the IATA estimate had jumped 54%, to US$88 billion.

“The figures speak for themselves. The air transport industry is in its deepest crisis ever,” IATA director general and CEO, Alexandre de Juniac, said at the time.

As airlines dramatically scaled back flights in response to the sharp decline in demand, the calls for assistance became louder and more frequent. IATA said rules for take-off and landing slots needed to be suspended for the entire northern hemisphere summer season. The association argued slot relaxations would allow airlines to respond to market conditions with appropriate capacity levels and avoid running empty services to retain slots.

Regulators in Europe, Hong Kong, New Zealand, the U.S. and elsewhere answered the call, offering slot relief measures for airlines.

In Hong Kong, Cathay Pacific Group chairman, Patrick Healy, spoke for many when he said it was difficult to predict when the tide would turn for the aviation industry. The oneworld alliance member reported a 28% drop in net profit in a “turbulent year” in calendar 2019 when political unrest in Hong Kong and escalating global trade concerns pushed the Special Administrative Region into recession and led to a sharp drop in demand for travel.

Thai Airways International (THAI) and Philippine Airlines (PAL) also reported losses. SIA, which had kept capacity levels higher than a number of its peers to date, finally took the axe to its route network, cutting capacity by 96% and grounding all but 11 of the 196 aircraft in its fleet. It also secured funding of S$19 billion (US$14 billion) to survive the pandemic.

Virgin Australia (VA) stood down 80% of its 10,000 staff as it slashed capacity by 90%, ended international flying and suspended operations at its LCC, Tigerair. VA Group CEO, Paul Scurrah, said there had “never been a travel environment in Australia as restricted as the one we see today”.

HK Express and Singapore-based Jetstar Asia stopped flying and the Indian government suspended domestic flights. Jetstar Japan and Jetstar Pacific cancelled international flights and reduced domestic operations.

Several aircraft lessors were nervous because their client lists included some highly leveraged Asia-Pacific LCCs. At the time, AirAsia Group co-founder, Tony Fernandes, conceded cash flow was tight for the group, but said it was in discussions with debtors about refinancing of aircraft leases and deferring aircraft deliveries.