Singapore Airlines slashes flight capacity, grounds nearly all planes in response to coronavirus
- The airline on Monday announced it would cut its flight capacity by 96 per cent until the end of April and ground 185 of 196 aircraft
- It described the outbreak as ‘the greatest challenge in its existence’ and said it was taking steps to ensure liquidity
Fresh industry warnings emerged following the move, with Andrew Herdman, outgoing director general of the Association of Asia Pacific Airlines (AAPA), saying now was the time for government intervention.
“Up until about three days ago the question was should the government intervene,” he said. “Now it is [clear] the government should intervene and act.”
In a statement, Singapore Airlines said it was “unclear” when it would begin to resume normal services “given the uncertainty as to when the stringent border controls will be lifted”.
Globally, flights have been slashed – with no fewer than 65 airlines cutting flights by at least 95 per cent – and it is estimated that Asia’s airlines stand to lose at least US$60 billion in revenue from the cutbacks.
Herdman said the drastic measures showed the industry’s new focus on survival, and estimated that about US$1 billion a day in cash was being burned through currently. The global aviation industry generated US$838 billion in revenue last year.
The world has literally gone into quarantine due to the Covid-19 outbreak
To stop airlines becoming insolvent, Herdman said “the dialogue with governments has to embrace payroll support”, citing measures taken by the UK to pay as much as £2,500 (US$2,900) a month for employers to keep workers in their jobs. “You’re risking a systemic failure of the economy. It is not a time to be picking winners and losers. It’s the entire sector under threat,” he said.
The AAPA said last week governments should offer direct financial support to airlines faced with travel restrictions. It also called for interest-free loans or loan guarantees and the suspension of a variety of government levies, taxes and dues for 2020.
Cathay Pacific last week announced it would operate just 4 per cent of passenger flights in April and May. Qantas also said it would halt all international flights and put 30,000 people out of work temporarily.
“The world has literally gone into quarantine due to the Covid-19 outbreak,” said Emirates chairman Sheikh Ahmed bin Saeed Al Maktoum in a statement.
The International Air Transport Association has said losses as a result of the coronavirus will exceed US$113 billion and carriers will need a US$200 billion bailout.
US airlines including American Airlines, United and Delta are waiting government support worth close to US$60 billion and the British government is reportedly considering aid for easyJet and British Airways among others.
“We are about to experience a virtual total halt in international passenger traffic,” said Brendan Sobie, an independent analyst with Sobie Aviation.
He said Hong Kong and Singapore, which have largely managed to contain the outbreaks within their borders, would likely reopen travel between each other before the rest of the world.
“Even under the best case scenario a full recovery will not occur until the second half of the year,” he said, predicting that China, Hong Kong and South Korea would be some of the first to reopen their borders. “A more likely scenario will not see a full recovery until 2021.”
Purchase the China AI Report 2020 brought to you by SCMP Research and enjoy a 20% discount (original price US$400). This 60-page all new intelligence report gives you first-hand insights and analysis into the latest industry developments and intelligence about China AI. Get exclusive access to our webinars for continuous learning, and interact with China AI executives in live Q&A. Offer valid until 31 March 2020.
