The world’s three largest global airline alliances have appealed for “extraordinary support” in the face of mass fleet groundings around the world.
The British Airways-backed Oneworld grouping, SkyTeam and Star Alliance, which contribute more than half of global airline capacity, have demanded government action to “alleviate the immense pressures” caused by the coronavirus pandemic.
The collective call for action to counter the “unprecedented challenges” faced by the global airline industry came as the largest carriers in the US called on Washington for more than $50 billion (£41 billion) in state aid.
Virgin Atlantic, whose US partner is SkyTeam member Delta Air Lines, last week called for UK government support for the sector including emergency credit of up to £7.5 billion.
This came as carriers announced plans to ground most of their fleets amid a warning by research firm Centre for Aviation that many airlines in the world will be bankrupt by the end of May without financial support.
The organisation said: “Co-ordinated government and industry action is needed – now – if catastrophe is to be avoided.
“As the impact of the coronavirus and multiple government travel reactions sweep through our world, many airlines have probably already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants.
“Cash reserves are running down quickly as fleets are grounded and what flights there are operate much less than half full.
“Forward bookings are far outweighed by cancellations and each time there is a new government recommendation it is to discourage flying.
“Demand is drying up in ways that are completely unprecedented. Normality is not yet on the horizon.”
Iata has estimated up to $113 billion in revenue losses for global passenger airlines prior to the US imposing restrictions on flights from Europe, with US-Schengen area flights valued at more than $20 billion alone before the UK and Ireland are added to the equation.
Transport secretary Grant Shapps said the government understood it was dealing with a crisis like never before.
“We know that aviation of course is at the forefront in many ways because the first thing that stops is travel internationally,” he told Sky News yesterday.
“We want to make sure that companies … who are in a good state are able to continue.
“I’ll be discussing them with the chancellor and the prime minister later today and those discussions with the sector are ongoing.”
The three alliances urged governments worldwide to prepare for the “broad economic effects” from actions taken by states to contain the spread of Covid-19, and to evaluate all possible means to assist the airline industry.
The impact is expected to have a ripple effect through the value chain that supports the airline industry.
The alliances also called on airports to evaluate landing charges and fees to mitigate the financial pressure faced by airlines due to a severe decline in passenger demand.
Star Alliance chief executive Jeffrey Goh said: “The unprecedented circumstances triggered by the coronavirus outbreak pose an existential threat not only to the airline industry but more generally to global trade and commerce, and social connectivity.
“As airlines stretch their limits to manage the crisis, it is equally critical for governments and stakeholders to avoid further burdens and step up with measures, as some have, that will ensure the future of the travel industry.”
His Oneworld counterpart Rob Gurney said: “During such times of difficulty and uncertainty, it is important that the airline industry works even closer with stakeholders to mitigate adverse impacts from the virus and collaborate in areas within our control.
“Governments must implement the measures they consider necessary to contain the spread of Covid-19, and must be prepared for the widescale economic implications that will result from those measures.”
SkyTeam chief executive and managing director Kristin Colvile added: “The human and financial impact that the COVID-19 outbreak is having on the aviation industry is unprecedented.
“SkyTeam, with its alliance partners, and on behalf of member airlines, is urging all involved institutions and industry stakeholders to face these extraordinary times with exceptional measures. This includes action such as slot relief, airport and overflight fees reduction.”
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