Coronavirus tops air transport in the midst of crisis and paralyzes hiring

The coronavirus is shaking the world economy, although there are sectors that are suffering from it as a special intensity, such as air transport. Airlines around the world have canceled their flights to China and are reorganizing their routes. In Europe this happens at a delicate moment for the sector, which already foresaw a fall in air demand due to the cooling of the economy and the commercial war. So far, hiring has been slowed and some airlines "are considering low incentives," say sources in the sector.

This impact on employment is not only due to the fact that flights to China have been canceled. The alarm is making people travel less for fear of infection and that will break the initial calculations of the airlines. According to the aforementioned source, "it is now when many of the contracts for the summer occur, but everything is stopped." This is the case of airlines like Easyjet; Lufthansa or Ryanair, for example, as listed.

Yesterday, Lufthansa suspended part of its flights to Italy and Asia yesterday (it had already canceled China) and will reduce the frequency of those operating within Germany. Specifically, Lufthansa, the Swiss Swiss and Austrian Airlines have canceled part of their flights in March and April to Italy (European country with the most affected), Hong Kong and South Korea. Ryanair also announced that it suspends one in four flights to Italy between March 17 and April 8 for the coronavirus. Delta and American Airlines flights have also canceled this country.

Impact levels

"There are several levels of impact: there is the immediate one, which will have a rapid recovery if the foci can be isolated. Another layer is the damage to the economy and how this can affect the demand for passengers," says Romà Andreu, professor at the EAE Business School and expert in the sector.

The sample of the damage of the coronavirus in the airline companies is the collapse that suffered yesterday in the IAG Exchange, conglomerate that groups British Airways, Vueling and Iberia, among others. Its shares were left at 13% and it was the company that fell the most from the Ibex 35. British and Iberia were among the first airlines to cancel their flights to China (today they have done more than 70) and the group has left in the air its forecast of benefits for the coronavirus.

Flex the rules

The International Air Transport Association (representing more than 260 airlines) expects a revenue decrease of $ 29.3 billion (€ 27.150 million) throughout the sector in 2020 due to the outbreak. Yesterday he asked aviation authorities around the world to make the rules for allocating time slots at airports more flexible. Many airports in the world have coordinated time slots. Airlines must respect them at least 80% so as not to lose their right to a strip that corresponds to them in the following season. IATA believes that this rule can be relaxed given the circumstances.

According to Romà Andreu, the coronavirus can have a big impact on IAG, owner of Iberia, if for example it begins to have spread in Brazil, which is "its most important market between South America and Spain". This would jeopardize Iberia's plans to buy Air Europa and thus gain a presence in the Latin American market.

IAG airlines have already said that they do not rule out closing routes to Italy if the situation is complicated and they have reorganized the capacity of the connections to adapt to the demand of travelers, which is much smaller now because of fear.

Less tourists

The impact on tourism is also palpable. 70% of tourists who visit us come by plane. In January, month in which the cases of the coronavirus were known in China and flights to the Asian country began to be canceled, 1.4% less tourists arrived in our country, according to data published yesterday by Frontur. In the EU as a whole, the losses are quantified in 1,000 million euros per month , which is the money that is being stopped entering because the Chinese travel less and those overnight stays in the hotels are lost, according to the European commissioner of the Internal Market, Thierry Breton.

"The airlines are in constant contact with the regulatory authorities at the regional, state and international levels to take the necessary measures based on the guidelines and recommendations indicated by them," they say from the Airline Association (ALA)

An industry expert believes that Norwegian and Ryanair could be greatly affected if the coronavirus crisis is prolonged. To this uncertainty is added the intention of the Government to approve a new air transport tax for its high levels of pollution. The sector has criticized it, because it considers that it is "a punishment" that will increase its costs and harm tourism. " The coronavirus has made many consider traveling by plane, has had almost more impact than Greta Thunberg," says one of these sources.

ATA notes that "experience shows that applying a tax on the use of air transport is not the solution, not only because it is not effective for the objective of reducing emissions, but also because of the negative impact it will have on tourism, main engine of growth of our economy. "

The Spanish Confederation of Hotels and Tourist Accommodations (CEHAT) considers it irresponsible to propose "in these moments of uncertainty" this rate. For the president of hoteliers in Spain, Jorge Marichal, it is "a recklessness" to propose a new fiscal figure to tax a sector, that of air transport. "It seems that more than a measure of environmental protection, a large and rapid collection is sought, given the volume of passengers that moves the air sector in Spain and especially that linked to the tourism sector," he explains.

According to the criteria of The Trust Project

• China
• Italy
• Spain
• Iberia
• Lufthansa
• Europe
• European Union
• Ryanair
• Vueling
• Hong Kong
• South Korea
• British Airways
• Asia
• Germany
• economy

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