Aviation's recovery from the Covid-19 crisis is more likely to be square-root-shaped than V-shaped, and it could take up to seven years for international airline traffic to regain pre-pandemic levels, according to Cowen analyst Helane Becker.
Addressing delegates at the virtual Airline Economics Growth Frontiers New York conference on 14 October, Becker said she expected it to take between five and seven years for international air traffic to reach 2019 levels. With the exception of China, where domestic traffic "appears to be back" to roughly where it was a year ago, it could take three to five years for domestic air transport markets to recover, Becker warns. "The number of people flying every day is akin to what it was 40 years ago," she says, although she adds that each of the US airlines covered by Cowen "has enough cash and liquidity to get through this winter". If an airline's cash position falls to $6-7 billion, "that's the level" at which it could file for bankruptcy protection, Becker suggests, but "I'm not sure that's the solution". Of the US majors that have reported their third-quarter earnings, Delta Air Lines ended September with $21.6 billion in liquidity while United's cash position stood at $19.4 billion. "We expect airlines to raise capital to repay loans," says Becker, as carriers "shift from survival to winning at recovery". However, "it's not going to be a V-shaped recovery – ours is going to look more like a square root". The Cowen analyst expects "widespread deferrals" globally and a continued shedding of older, less-efficient aircraft. "Airlines are looking at this as an opportunity to eliminate older aircraft. They can do a decade's worth of retirements in a year," she says. In addition to deferrals, lessors could see more requests for "less attractive" deals as airlines around the world try to stay afloat until demand begins to return. "Lots of airlines won't have enough money to get through the winter and we're seeing some airlines shift to power-by-the-hour leases, which are less attractive," says Becker. Aeromexico, for instance, last month won bankruptcy-court approval to enter into by-the-hour agreements with 27 lessors covering 82 aircraft and 14 spare engines. Similarly, the Indonesia's Lion Group – whose airlines include Lion Air, Thai Lion Air, Malindo Air, Wings Air and Batik Air – has approached its lessors to ask them to agree to by-the-hour agreements for a duration of 24 months. Despite the long, slow recovery and possible airline failures along the way, Becker is optimistic for the future, predicting that "passengers will learn to live with whatever changes result from this pandemic", in the same way that people adjusted to the extra layers of airport security that followed the 9/11 terrorist attacks. "We will recover from this; it's just going to take a few years," she says. "I'm hopeful that 2021 is going to be a better year."

Source: Cirium

Hong Kong has extended a relief package for the aviation sector for a further two months until the end of 2020. Airport Authority Hong Kong (AA) says it made the move "in response to the ongoing challenges arising from the Covid-19 pandemic". The relief measures include a full waiver of parking charges for idle passenger aircraft and airbridge fees, reduction of passenger aircraft landing charges, as well as fee reductions related to ramp handling, maintenance and airside vehicles.
The full waiver of fees in relation to aircraft maintenance charges and fixed charges for in-flight catering services will also continue until the end of December. The package includes rental reductions for terminal tenants; fee waivers for terminal licensees including ancillary passenger services, commercial services counters and cross-border transport operators; as well as concessions on franchise fees for aviation support services such as into-plane fuelling. AA last extended its relief package in August, until the end of October. It says: "AA will closely monitor the operating environment and provide necessary assistance to the airport community during these challenging times."

Source: Cirium

September figures for Europe’s biggest hub airports show passenger traffic down more than 80% on previous year levels, according to data for London Heathrow, Frankfurt Airport and Paris Charles de Gaulle. Heathrow, Europe’s busiest airport, on 12 October disclosed its passenger numbers fell 81.5% to 1.26 million in September. Domestic and European passenger levels were down 75% and 72% respectively, and by almost 95% on the key transatlantic market. The decline on previous year passenger levels at Heathrow was in line with the reduction reported in August. French airport operator Aeroports de Paris today disclosed passenger numbers at Europe’s second biggest hub, Paris Charles de Gaulle, were down 80% at 1.35 million. Passenger levels were down 60% at its other Paris airport Orly, which had closed totally between April and June at the height of the pandemic, in handling just over a million passengers in September. It was a similar story at Frankfurt Airport, Europe’s fourth biggest airport in 2019. Passenger numbers were down 83% in September compared with the same month in 2019 at 1.15 million. Transatlantic passengers were down 91% in September. The airport’s owner Fraport, which operates or has interests in several airports across the globe, reported some brighter traffic performances in September because of some holiday traffic. Passenger levels were 61% down across its Greek airports - which include Rhodes and Thessaloniki - down 53% at Turkish airport Antalya, 29% lower at St Petersburg and under 10% down at Chinese airport Xi’an in September. Big hubs in Europe have been particularly hard hit by the collapse in demand for business travel, as well as hub and spoke traffic, as travel restrictions to counter the pandemic continue to stifle demand.

Source: Cirium