Starting up in a crisis, and Walsh takes reins at IATA

5th April 2021

One of the counter-intuitive features of the pandemic has been how few airlines have gone out of business after a year of travel restrictions and a collapse in passenger traffic. Although the industry’s cumulative losses are being counted in the tens of billions of dollars, the willingness of governments to support their aviation sectors – through direct emergency subsidies or economy-wide job support schemes – has allowed many carriers to hunker through the crisis in a state of semi-hibernation.

Other factors have helped. The lack of belly capacity as a result of grounded passenger flights has meant some airlines – including a number in Asia – have cashed in on high demand for air freight. Lessors and lenders too have often been patient, figuring that losing money in the short term is a better option than forcing out of business a previously well-run customer that has every hope of bouncing back once recovery arrives.

However, an even stranger phenomenon of the past 12 months has been the number of new airlines to emerge. While many of these would have been conceived well before March 2020, the fact that they have launched services during a historic downturn is perhaps remarkable. Among them are South Korea’s Premia – which has just received its first aircraft, a Boeing 787-9 – and Ego Airways of Italy, which operated its first Catania to Parma flight with a single leased Embraer 190 on 30 March.

Willie Walsh – who took over as head of airline body IATA on 1 April – will have to steer the sector through a recovery that could be as messy as the crisis itself, as governments withdraw support and expose cash-strapped to the market. Among the priorities of the former pilot and British Airways boss will be efforts to restore passenger confidence and restart global connectivity – with initiatives such as so-called health passports – as well as delivering commitments on sustainability.

With spring firmly in the air, in the northern hemisphere at least, there were plenty green shoots in evidence this past week. Boeing – dealt the double body blow of the pandemic and the grounding of the 737 Max – saw one of its best customers, Southwest Airlines, affirm its faith in the re-engined narrowbody. It was a deal Boeing had to win. The Texas-based carrier is ordering 100 of the Max 7 variant, with 155 options. It brings Southwest’s firm Max orderbook to 349 jets.

Meanwhile, the FAA certificated the Max 8-200, a high-density version of the single-aisle aircraft designed mainly for Ryanair – Southwest’s closest equivalent in Europe and another 737 loyalist. The Dublin-based airline has ordered 210 of the type, which comes with an extra pair of exit doors to meet evacuation regulations for the increased accommodation of 197 seats. Ryanair expects to receive its first example of the jet this month.

Back in the USA, American Airlines said it would be operating the majority of its fleet in the second quarter, thanks to a stronger-than-expected demand for domestic travel. Despite worries about fresh waves of Covid-19 infections, strong vaccination take-up, a rebounding economy, and possibly a general lockdown fatigue are encouraging Americans back to the skies in droves. American says bookings for short-haul flights are back to 90% of 2019 numbers.

On the other side of the world, a 12-month near-ban on foreign travel has helped keep New Zealand largely Covid-free. However, domestic air routes are thriving, and not just with leisure travelers. Air New Zealand reports business travel returning to 90% of 2019 levels – the airline had been predicting 70%. New Zealand may be an outlier, but the desire of Kiwis to connect in person must give hope to those concerned that corporate customers will be slow to return to their old habits.

And finally, like the other Gulf super-connectors, Qatar Airways has had a terrible past 12 months. With no domestic market, the Doha-based carrier relies totally on international routes, many of which have been impossible to operate because of travel restrictions. However, Qatar Airways says it plans to operate to 140 destinations during the summer season, to cope with a strong rebound in traffic during what it hopes are the last days of the pandemic.