Asian airlines struggling amidst pandemic | Daily News


 

Asian airlines struggling amidst pandemic

Hanging in the balance amid the global crisis surrounding the novel coronavirus, Asian airlines are struggling to maintain proper operational efficiency.

The outbreak of the virus has limited the globalized movement of people. Although the epicenter of the epidemic has shifted from China to Europe, according to the World Health Organization, regional transmission of the virus has become largely apparent in most of the countries and regions in Asia.

Aside from the public health impact, the damage wrought on business has become more clear as national flag carriers in Asia revealed their February operational data. Thai Airways International reported last week that it carried 1.19 million passengers in February, a sharp drop of 23% compared with the same month a year ago.

The airline’s load factor fell to 70.8% from 81.9% in February 2019. This is barely above the 70% level, which is widely recognized as the lowest level for any routes to maintain profitability. When looking at passenger load by region, Asia’s numbers fell to 58.2% from 78.0% last time, while those in Europe remained as high as 82.5%.

Hong Kong’s flagship airline Cathay Pacific Airways carried 54% fewer passengers in February, with its load factor down to 53.1%. The airline on Friday announced it will cut 96% of its passenger capacity in April and May, following a 65% reduction in March. Its low-cost carrier unit HK Express will go further, grounding all flights from Monday until the end of April.

“We are facing an unprecedented challenge as the COVID-19 pandemic continues to cause widespread disruption to our operation and business,” Cathay Pacific Group Chief Customer and Commercial Officer Ronald Lam said earlier. “In February alone, we made a significant unaudited loss of more than 2 billion Hong Kong dollars ($260 million) at the full-service airline level.”

The load factor of Singapore Airlines in February fell to 67.4%, from 80.4% in the same month a year ago. Its regional subsidiary Silkair had an even larger drop, from 77.8% last time to 60.6%.

Fear surrounding the pandemic has prompted Asian governments to take increasingly severe measures to try to contain it, including city lockdowns or store shutdowns, further interrupting the flow of travelers. Airline companies are emerging as the primary economic victims.

Singapore Airlines on Monday announced that it will be cutting 96% of its capacity until the end of April. As a result, the group will ground 138 of its 147 aircraft. The announcement came a day after the Singapore government said it will bar all short-term visitors from entering or transiting through the country beginning late Monday evening.

To mitigate the impact, the company said it “is engaging in discussions with several financial institutions for its future funding requirements.” It is also negotiating with aircraft makers to defer upcoming plane deliveries.

Two budget airlines based in Thailand are also paring back. Thai AirAsia has suspended international flights through April 25, and Thai Lion Air will suspend international and domestic flights from March 25 to April 30.

Like their regional peers, mainland Chinese airlines have seen their passenger load factors fall off a cliff. China Southern Airlines’ figure dropped to 47.1% in February from 85.2% a year ago. Two other major state-owned carriers -- China Eastern Airlines and Air China -- fared only slightly better, with 50.3% and 51.4% respectively.

The smaller carriers were in a similar state. Shanghai-based Spring Airlines held out relatively well at 63.7%, but passenger load factors for Juneyao Airlines and Hainan Airlines Holding, an HNA Group company with eight domestic airlines under its wing, both dipped below 50% in February.

For all mainland China airlines, the largest fall came from their Hong Kong links, due to the ongoing social unrest in the territory since last summer.

Chinese airlines carry the statistical label of “regional,” which includes services to Hong Kong, Macao and Taiwan, since Beijing considers all these destinations to be domestic -- though in reality they come under separate immigration and customs controls.

The February load factor for the top three airlines under this category, of which Hong Kong occupies a good portion, only reached about 35-36%. The virus has exacerbated their overall poor performance.

China Southern said in a statement on Wednesday that the Guangzhou-based carrier “will strengthen capacity control and explore market demand to closely track market trends” as travel demand remains weak due to the pandemic.

(Nikkei Asian Review)

 


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