Cancelled flights could lead to reduced capacity and higher rates for air freight
Similar to what happened in Asia when COVID-19 impacted air travel from China, we could see mass cancellations of passenger flights from Europe and the U.S. in response to the novel coronavirus that may reduce air freight capacity in coming weeks.
On Mar 11, U.S. President Donald Trump announced a 30-day travel ban, blocking travelers from Europe from visiting the U.S. in an attempt to slow the spread of COVID-19.
The travel ban applies to people who are not U.S. citizens and have been in the Schengen Area of Europe within the last two weeks. It will take effect on midnight Friday, Mar 13.
On Mar 14, President Trump added UK and Ireland to the list of countries on the travel ban.
Updates from airlines are still coming in, but here is what we know so far.
Impacts on EU air services
Lufthansa, Air France, others cancel passenger flights
German airline Lufthansa, whose brands include Eurowings, Austrian Airlines, and Swiss, announced on Mar 11 that it is cancelling 23,000 flights, a 50% reduction, between the end of March through mid-April. According to the announcement, its "capacity adjustments mainly affect Europe, Asia and the Middle East." However, the number of cancellations could likely increase once the travel ban from the U.S. is in place.
Air France-KLM also announced that it is cancelling 3600 flights. While the affected flights are mainly intra-EU, we are anticipating further cancellations spreading to flights to and from the U.S. due to the travel ban. Capacity on the airline’s long-haul network will be reduced by 13%, while its European network capacity will be slashed by 25% and the company’s overall network will be cut by 17%, Barron's reported.
Norwegian Air canceled 3,000 flights scheduled for mid-March to mid-June, reducing its capacity by 15%, CNN Business reported. Qantas also slashed nearly a quarter of its flights over the next six months.
Non-Schengen countries have the ability to continue operating. However, many of the passengers typically on non-Schengen routes originate in other countries. Once passenger demand declines, so do air services. We anticipate there will be significant disruption in the next few days/weeks.
European countries in the Schengen Area include: Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherland, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and Switzerland.
European countries that are not part of the Schengen Area include: Albania, Andora, Armenia, Azerbaijan, Belarus, Bosnia & Herzegovina, Croatia, Cyprus, Georgia, Ireland, Kosovo, North Macedonia, Moldova, Monaco, Montenegro, Romania, Russia, San Marino, Serbia, Turkey, Ukraine, The United Kingdom and Vatican City.
Impacts on U.S. air services
Airline execs say they will cut flights in coming weeks
Though flights are operating normally as of today, several top executives at major U.S. airlines said they are planning to cut capacity in coming weeks as passenger demand drops due to coronavirus fears, CNN Business reported.
- American, the world's largest airline, said it would cut its international capacity by 10% this summer compared to the current schedule, and eliminate 7.5% of its domestic flights in April.
- Delta Air Lines said it will slash its international flights between 20% to 25% and trim domestic flights by 10% to 15%.
- Spirit Airline also announced it would cut capacity by 5% in April, and it could possibly make deeper cuts in May.
- United said that new bookings to Asia and Europe have essentially been wiped out by canceled reservations to those destinations. It has suffered a 70% drop in net bookings on domestic flights when taking canceled reservations into account.
- JetBlue confirmed that it would take action in response to the coronavirus, including a plan to reduce capacity by an "initial" 5% "in the near term."
"As testing expands in the [United States], many more cases are likely to turn up in many more communities around the country. As such, we're planning for domestic bookings to deteriorate further in the weeks to come," said United's president, Scott Kirby.
We expect many passenger flights will be cancelled in coming weeks. If and when that happens, all of the freight that normally moves on passenger flights will be booked on cargo aircraft. Airlines that have the ability may add additional air freighters each week, but this added capacity may not be enough to meet the demand.
In case you didn't know, some air cargo moves on passenger flights. It typically costs less to send cargo via passenger flights because income from passenger tickets offsets the costs to operate the plane, whereas cargo that is moved on air freighters can cost more since there is no passenger income. Reduced passenger flights mean more cargo will be shipped via air freighters, thus taking up more capacity and forcing the rates higher.
Capacity will be at a premium when this occurs and we anticipate higher air freight rates as a result.
We will continue to update this article as more information comes in from the airlines. If you have any questions, please contact your local UWL customer service representative.