COVID-19

COVID-19 – the new name of the current coronavirus
outbreak – is a previously unknown strain of coronavirus that causes severe respiratory syndrome in some patients.

Initial reports of a new disease went relatively unnoticed by the world’s media, with news cycles focusing on the devastating impact of the Australian bushfires, Brexit and the US presidential primaries.

However, in early January, the World Health Organisation (WHO) confirmed that a new (novel) virus had taken hold in Wuhan, China. Known then as 2019-nCoV (2019 Novel Coronavirus), the word ‘coronavirus’ was catapulted to headline status around the world.

On 9 January, the first death from COVID-19 was reported. A few days later evidence that the virus had spread internationally was found, with the disease detected in Thailand.

During the early weeks of January, little was known about the virus; how it spread or its lethality. Throughout this time, global travel continued unrestricted.

However, in China, the situation quickly became more severe as the number of infected people rose. It was clear that COVID-19 was both spreading and posed a serious health risk, particularly for those with
pre-existing medical conditions.

As a result of the spread, Wuhan – a city of 19 million people – was placed into lockdown. This move led to a drastic and immediate suspension of transportation in and out of the city, with the suspension of rail, road and air links.

While Wuhan isolated, passenger traffic on international services to other Chinese cities also started to dwindle. Chinese carriers immediately felt the pressure due to decreased demand.

Further afield, global airlines were also noticing a decline in demand for flights to Chinese cities. The worsening health situation was by now well embedded in the news cycle, leading to business and tourist travellers reconsidering their travel to China well ahead of government travel restrictions.

Service suspensions
China’s economy has enjoyed tremendous growth over the past decade, as the nation urbanises. Global aviation has been a significant beneficiary of this growth. China’s airlines have spread their wings to all corners of the globe, while foreign airlines have increasingly looked to China as part of their growth strategies.

But on 29 January, British Airways was among the first major global airlines to announce the suspension of all flights to Mainland China. Cancellations covered the airline’s daily service to Beijing and Shanghai.

This move by BA was seen as something of a turning point for the coronavirus crisis, highlighting how far reaching the impact might be for global transportation and trade.

And British Airways was not alone in its decision to suspend its Chinese services, with a host of international airlines announcing similar measures by the end of January. These included US carriers United Airlines and American Airlines as well as Britain’s Virgin Atlantic, Germany’s Lufthansa and Finnish flag carrier Finnair.

By the end of January the health crisis had worsened, leading WHO to declare COVID-19 a Public Health Emergency of International Concern.

In response, the Australian government updated its travel advisory to level four, ‘Do Not Travel’, while on 1 February the government announced Australia would deny entry to anyone who had left, or transited, mainland China (with the exception of Australian citizens or permanent residents and their immediate families).

New Zealand’s government made similar announcements, revealing on 2 February that its borders were closed to foreign travellers coming from, or transiting through, mainland China.

This move had a knock-on effect to the economies of both Australia and New Zealand, with tourism being particularly hard hit.

Chinese travellers have made up the largest single source of tourists in Australia for the past two years, according to ABS data reported by Austrade. Similarly, New Zealand has enjoyed a significant boost in tourism spending thanks to surging Chinese travel, with Chinese visitors to the nation eclipsed only by Australians.

The US, Singapore, Israel, the Philippines and Italy all announced similar travel restrictions within days of the WHO declaring the virus a Public Health Emergency of International Concern.

The increasing travel restrictions were quickly followed by Qantas’ announcement that it would suspend flights to mainland China from 9 February.

Qantas said at the time that the decision to suspend flights comes as travel restrictions imposed by countries such as Singapore and the US “impact the movement of crew who work across the Qantas international network”.

‘The best the industry can hope for now is a quick resolution to the crisis, which will enable it to enter into recovery mode’

Restrictions on China spread

During the following days, a host of other global airlines cancelled or significantly reduced their presence at Chinese airports, with Qatar, Emirates and Etihad among the larger carriers to suspend or significantly reduce flights.

Qatar axed all flights to mainland China from 3 February, citing “significant operational challenges caused by entry restrictions imposed by a number of countries”, while UAE carrier Etihad slashed its Chinese network, curtailing all services except those to Beijing.

Emirates suspended flights to Guangzhou and Shanghai. The carrier’s Beijing flights were maintained, but with Boeing 777s replacing the higher-capacity Airbus A380s on the route.

With air connections in and out of China dwindling and travel restrictions in place, governments across the world were faced with the prospect of repatriating citizens stranded in China.

Of particular concern were those people isolated in Wuhan, the epicentre of the outbreak. With that city being under lockdown, and with medical services stretched, it fell on the Australian and New Zealand governments to negotiate a series of rescue flights to return citizens home.

To support this effort, the Australian government turned to Qantas, which sent Boeing 747-400ER to the once-bustling hub of Wuhan Airport on 3 February. The aircraft successfully carried the first group of Australians to Exmouth in Western Australia. They were later transferred to Christmas Island for quarantine.

New Zealand has undertaken similar repatriation flights, with the first taking off in the early hours of 5 February. An Air New Zealand Boeing 777-200 ferried both Australians and New Zealanders to Auckland.

Meanwhile, the unfolding situation is causing havoc for international airports across the globe. Hong Kong International Airport had suffered throughout 2019 due to ongoing protests that led to mass disruption of air services at the airport in August. With coronavirus concerns escalating, the airport – which typically handles over 427,000 movements and 74.3 million passengers – faced dwindling passenger numbers and eerily vacant terminals.

This situation was exacerbated when American Airlines pulled its daily services to Hong Kong. Initially only impacting flights from 9 February to 20 February, the airline has since extended this suspension through to late April.

Fellow US carrier, United Airlines, followed suit, with similar cancellations enacted. Revealing its decision on 5 February, the airline cited “the continued drop in demand” as a contributing factor for the decision.

Yet the problems at Hong Kong International Airport are overshadowed by the difficulties facing airports in mainland China, with ICAO estimates showing over 130 airlines have reduced or cancelled international services since January.

Revenue hits and cancellations

The situation led the Airports Council International (ACI) to warn that revenue at Asia-Pacific airports will face “tremendous pressure” due to the impact of COVID-19.

“Airport revenue generation and growth are directly linked to traffic levels. We can therefore expect declines of significant proportion for airports in affected markets in the first quarter. However, the ripple effect will be felt across many airports beyond our region,” commented Stefano Baronci, director general of ACI Asia-Pacific
in a prepared statement.

Meanwhile, the cancellation of major events in recent weeks is causing knock-on effects for businesses and the global economy. A spike of coronavirus cases in Singapore led to the 11 February Singapore Air Show launch being a sombre affair, with notable exhibitor cancellations including US firms Lockheed Martin, Raytheon and Honeywell.

Further afield, the world’s largest mobile phone conference, Mobile World Congress, to be hosted in Barcelona, was cancelled. Additionally, Facebook announced on 27 February it was shelving its developer conference amid coronavirus concerns; making it one of the biggest brands to curtail large-scale public gatherings.

A continued drop in global travel has seen airlines slash their route networks and frequency. Singapore Airlines, for example, has cut the equivalent of 670 flights from its network. Virgin Australia prematurely pulled out of Hong Kong, while Hong Kong Airlines has reduced its workforce and asked employees to work part-time.

Meanwhile, Cathay Pacific has appealed to its 27,000-person workforce to take three weeks of unpaid leave to help it weather the storm, while in the UK, a reduction in travellers has led to Flybe collapsing into administration.

At the recent Qantas AGM – where the impact of coronavirus was discussed – chief executive Alan Joyce hinted at a similar strategy being employed by the Australian flag carrier, telling reporters: “The way we’ll manage it is to ask across the 30,000 (staff), for people to take annual leave, long-service leave and use their leave balances, which are quite considerable.”

It is too early to tell what the long-term impact of COVID-19 will be for the global aviation industry. Concerns of the virus becoming a pandemic are gaining momentum, fuelled by infection spikes in Italy, Iran, Japan and South Korea.

The best the industry can hope for now is a quick resolution to the crisis, which will enable it to enter into recovery mode. But with so many unknowns, when that recovery will commence remains to be seen.

The best the industry can hope for now is a quick resolution to the crisis, which will enable it to enter into recovery mode. But with so many unknowns, when that recovery will commence remains to be seen.