Jakarta (Bloomberg): The novel coronavirus has broadsided the aviation industry, particularly at its epicenter in China. Tens of thousands of flights in and out of the country have been canceled or removed from schedules completely as airlines cut capacity to try to survive the crisis.
Big players like Cathay Pacific Airways Ltd., China Southern Airlines Co. and Hainan Airlines Holding Co. have put staff on unpaid leave, while embattled Hong Kong Airlines Ltd. is axing 400 jobs. Those with weak balance-sheets are likely to face a cash crunch as dwindling passenger loads may not cover high fixed costs, though state-owned airlines should get some financial support.
Nearly 86,000 domestic and international flights in and out of China were canceled from January 23 through February 11, accounting for 34 per cent of scheduled services, according to air-travel analytics company Cirium. The number of scheduled flights in the country has dropped by about 63 per cent in less than three weeks.
Air Macau Co. and Cathay Dragon have the biggest proportion of their international route capacity exposed to the mainland China market, according to data from OAG Aviation Worldwide. They both have nearly 60 per cent of available seats dedicated to serve cities in China.
China Southern has canceled nearly 22 per cent of its scheduled flights, according to Cirium. Xiamen Airlines Co. and Lucky Air Co., also canceled more than 20 per cebt of their flights. China’s three biggest airlines slashed international seat capacity by between 60-80 per cent from January 20 to February 10, leaving budget operator Spring Airlines Co. as the country’s largest international carrier as it only cut capacity by 6 per cent, according to OAG Aviation.
Airline stocks have been weighed down by the virus, with the Bloomberg Asia Pacific Airlines Index sliding 12 per cent in the past month. The “Big Three” - Air China Ltd., China Southern and China Eastern Airlines Corp. - have all plunged at least 15 per cent in Shanghai in that time. The only airline stock on the index to have risen in the past month is InterGlobe Aviation Ltd., the operator of India’s IndiGo Airlines, which has eked out a 1.4 per cent gain.
The International Air Transport Association has mapped out how major outbreaks in the past have affected airlines’ passenger traffic in the region, with the biggest hit coming from SARS in 2003. This coronavirus could have a greater impact - the falling numbers now are “certainly some of the most dramatic” ever seen, according to OAG Aviation.