TWTWTW 27 July to 31 July
On Monday it became clear how much havoc Boris Johnson’s UK government was causing. Nope, not because of Brexit. Because of its surprise announcement that it had removed Spain from its so-called travel corridors. Boom. Without any pre-warning and less than three weeks after travel between the two countries was re-established, the British government imposed a two-week quarantine on those returning from Spain and advised British nationals against all but essential international travel amid rising numbers of Covid-19 infections in the country. The decision threw Europe’s largest aviation market —more than 40 million passengers per year flew between the UK and Spain before the pandemic— back into freefall, before it had time to recover. The UK government was not totally heartless though, people already in Spain could stay for the remainder of their holiday. Neither was it the first to re-impose a quarantine requirement on travellers returning from Spain, Norway passed a similar order one day earlier and some other countries had marked selected regions in Spain as a red zone. The World Tourism Organization tried to do some damage control and warned that “unilateral actions can cause confusion and produce unnecessary consequences.” But to no avail. The UK nor Norway changed their policy, and a spike of new confirmed Covid-19 cases across Europe unlocked a new roller coaster of diverging travel restrictions from east to west, and north to south. Even the Re-Open EU portal https://reopen.europa.eu/en could not keep up with the frequency of the updates by national or regional authorities, forcing staff to admit it had to partly rely on automatic machine translations to provide the information in a timely fashion in the promised number of languages –24!
Tuesday saw IATA deliver another set of bad news, joined up by a renewed call on governments to continue with relief measures “financially or otherwise,” meaning a full Northern Winter season waiver on the 80-20 use-it-or-lose-it slot rule. “Airlines are planning their schedules. They need to keep sharply focused on meeting demand and not meeting slot rules that were never meant to accommodate the sharp fluctuations of a crisis,” reasoned IATA’s director-general, Alexandre de Juniac. In some countries, airlines have obtained that waiver, he said, admitting that “in Europe, we are struggling to have this obtained before September.” But apparently, he is not worried: “We are confident that we will have it everywhere.” This is something we wrote about in our Aviation Intelligence Reporter this month.
Now the bad news: the recovery in global passenger traffic has been slower than had been expected because international markets –which in the “old normal” accounts for close to two-thirds of global air travel– remain largely closed, in many parts of the world infections are still rising while in other parts, such as Europe, there is a resurgence of pockets of Covid-19, and lastly, passenger confidence is depressed. Global passenger traffic, measured in revenue-passenger-kilometers (RPKs), in June were down by 86.5% compared to the year-ago period. While that was better than the April low point, when RPKs were down by 94.1%, it was a lower than anticipated improvement from the 91% contraction in May. The June load factor set an all-time low for the month at 57.6%, and just 38.9% on international routes. The recovery is “disappointedly and surprisingly weak,” observed IATA chief economist Brian Pearce. IATA is now forecasting that global enplanements will fall 55% in 2020 compared to 2019; the April forecast saw a 46% decline. A full recovery of passenger numbers and RPKs to 2019 levels will take one year longer than predicted earlier, and is is not expected until 2023 and 2024 respectively. “And this could slip further if we have setbacks in containing the virus or finding a vaccine,” de Juniac asserted.
Bearing in mind its own guidance that a state-backed voucher guarantee scheme could swing more travelers to opt for a voucher rather than a reimbursement in money for a cancelled package travel, the European Commission on Wednesday approved a €165 million Dutch measure to support the five Dutch Travel Guarantee Funds that operate package travel guarantee schemes in the Netherlands. The support, which will take the form of subsidised loans, aims to ensure that the five funds have sufficient liquidity to guarantee all payments made by travellers for package tours that had to be cancelled due to the coronavirus outbreak. The measure also mitigates the severe liquidity shortage that the Dutch travel industry is facing, the Commission noted.
Thursday was not a good day for Airbus. As if reporting grim financial results for the first half of the year –including a 39% drop in consolidated revenues to €18.9 billion, a net loss of €1.9 billion against net income of €1.2 billion in the same period last year, and 145 passenger aircraft it had completed but could not deliver because of the pandemic– was not enough to depress investors, management and staff (BTW, some 15,000 jobs or 11% of its total workforce, will be cut), the UK’s Serious Fraud Office (SFO) charged an Airbus subsidiary and three individuals over claims the company arranged multimillion pound bribes to secure a $3.3 billion military contract with the Saudi Arabian government. ICYMI: Airbus in January agreed to pay €3.6 billion to prosecutors in France, the U.K. and the U.S. to settle bribery and corruption allegations spanning its aerospace business in more than a dozen countries. SFO’s allegation involving GPT Special Project Management are not part of that deal.
On Friday ACI Europe, A4E and IATA Europe organised a deep dive in their respective address books and sent a joint letter to Prime Ministers, Transport, Health and Home Affairs Ministers across the EU, Schengen and the UK lamenting their failure to implement coherent and science-based approaches to travel restrictions. Member states thus far have ignored the industry’s and the European Commission’s repeated calls to take measures that are compatible, coordinated and mutually accepted across borders and between regions. Maybe this letter will change their attitude. We are not hopeful, but like Thomas Edison said: “Our greatest weakness lies in giving up. The most certain way to succeed is always to try just one more time.”
The TWTWTW team is taking a break. We will be back with our weekly blog in September. Stay safe, stay healthy.