TWTWTW 4 May to 8 May. Quiet before the storm – a week of enlightening ideas and sobering numbers
Just as it is an ill wind that blows no good, it is an ill virus that does not produce revenue opportunities if you look hard enough through the gloom, so Monday saw Vienna Airport find a novel source of income. It has introduced a service ‘for maximum health protection and the best possible travel safety’: on-site Covid-19 tests. For a mere €190 you can get your results of a polymerase chain reaction (PCR) test within two to three hours. If the test is negative, you avoid 14-day self-quarantine. Conversely, positive test results are ‘immediately reported to public authorities’. But that was nothing compared to the revenue Air France had in its sights. The Commission signed off on a lofty €7 billion Covid-19 rescue package for it. This includes a six-year €4 billion loan guaranteed by the French state for 90% of the amount.
But, away from the pandemic, you will be pleased to know that as part of the ‘Shaping Europe’s digital future’ campaign, and notwithstanding that we are still some months away from winter and that most runways are being used as parking lots for grounded aircraft, in case snow arrives in abundancy, Yeti Snow Technology’s robotic snow sweepers can do the job.
Meanwhile, back at the pandemic, Lufthansa’s not-so-low-cost low-cost subsidiary Eurowings launched a competition to make the airline ‘even more customer-friendly’ in the post-Covid-19 period. Even more than what, sadly, was not specified. The criteria are simple: all service or product ideas proposed must bring concrete added value for passengers and should be able to be implemented quickly, if possible within three months. Here is one idea that fits both criteria: block the middle seat and extend the seat pitch, specifically in economy.
On Tuesday, IATA set its lobbying machine up to 11 to stop any such on-board social distancing idea in its tracks. Blocking off middle seats is financially suicidal for airlines and not necessary from a health perspective because evidence suggests that the risk of transmission on board aircraft is low, the trade body explained. The message was either meant only for policy makers or did not get to Atlanta in time. Delta Air Airlines announced it would not only block the middle seat but will go a step further, blocking reservations of certain window and aisle seats to ensure ‘onboard customer spacing’ on its entire operating fleet.
Then to ACI’s latest economic impact assessment. It revealed the size of the calamity for airports. Passenger traffic volumes declined by 90% in April on a global scale, with Europe taking the top spot with a 97% collapse. Airports worldwide are expected to lose more than 2 billion passengers in the second quarter alone and 4.7 billion for the whole of 2020. At least to help fight that large number, EASA published a Safety Information Bulletin giving guidance to aerodromes to prepare for a return to normal operations. This is part of a wider project to offer guidance across the various aviation domains. More on this next week when the European Commission is expected to publish its recommendations—hammered out by DG Move, DG Sante, EASA, and European Centre for Disease Prevention and Control, with consultation but no direct involvement of the industry—on a safe restart of air travel across the bloc.
Wednesday saw IATA shift into an even higher gear. This time on the vouchers-versus-refund issue and the related much-coveted—by airlines, that is—amendment to EU261. IATA, joined by counterparts A4E, ERA and AIRE managed to gain support from some 16 EU member states for such an amendment, which would relieve airlines from their obligation to fully reimburse cancelled tickets in cash for a period of up to 12 months. IATA had a call with Transport Commissioner Adina Valean and sent a ready-to-copy-paste proposal for the amendment to DG Move boss Henrik Hololei, his aviation director Filip Cornelis and Valean’s cabinet member responsible for transport. To no avail. None of this could win over Valean. The Romanian Commissioner intends to send a simple non-binding recommendation to member states to make the vouchers more attractive for passengers, for example by guaranteeing them—an idea not exactly embraced by governments. This is NOT the legal instrument IATA & Co were seeking. Hoping to avoid defeat, IATA urged all EU airlines to do whatever possible to convince the Commissioner of their home country to dismiss the recommendation and impose the adoption of the temporary amendment (which, BTW, IATA & Co believe should be applicable retroactively as of 1 March 2020). We will know how this works out, presumably, as part of the package we expect on Wednesday.
Thursday saw the good old national airline model gain ground. A lot of ground. Just days after Lufthansa Group CEO Carsten Spohr told shareholders the company has fared very well as privately-owned company and that it needs to preserve the entrepreneurial freedom of decision and action, it affirmed that the German state wants a 25% stake as part of a €9 billion bailout. Lufthansa is burning through its cash reserves at a rate of €1 million per hour, so it might have little choice. With a 25% state ownership Lufthansa would be better off than its Italian peer, which is readying itself for a full renationalisation. Alitalia Newco—the third “New” Alitalia since 2009—will launch in June and the Italian government will inject at least €3 billion into the carrier. Thanks to this corona-aid, Alitalia will be able to compete with other airlines on an equal footing, Minister for Economic Development Stefano Patuanelli reasoned during a parliamentary hearing. Perhaps, or perhaps not. Presumably, this Delphic comment foretells of when all airlines are state-owned and operating in a strict nationalistic framework. The logic behind the equal footing sentiment was that the virus has ‘laid waste to the traditional structure of the industry’. We would welcome your help in identifying which of these models is the traditional one. Alitalia was already heavily lossmaking before the coronacrisis and was kept afloat thanks two €900 million and €400 million government loans granted in 2017 and 2019.
It was a busy week for the outrage-o-matic machines. Friday saw the UK air transport industry in complete uproar over rumours that Prime Minister Boris Johnson intends to bring in a 14-day quarantine period for passengers arriving into the UK from any country apart from the Republic of Ireland. The Republic of Ireland remains an exception in the EU also, as it is the only member state that has not followed calls from Brussels to close its external borders. On Friday, the European Commission renewed its calls and ‘invited’ the 30 members sates of the EU+ area to keep their external borders shut for non-essential travel from third countries, until 15 June. The current restrictions are due to end on May 15. Again, maybe next Wednesday will reveal all.