Asian Governments Respond to COVID-19 Virus Impact
Reeling from the decline in visitorship and traffic from China because of the COVID-19 outbreak, governments in the region are rolling out measures to help airlines suffering from the slump.
South Korea’s government has offered a KRW 300 billion ($250 million) loan to local airlines, especially for the seven LCCs, allowing them to delay the payment of airport fees and help airlines change their business plans and set up alternative routes.
Due to weak demand, Singapore Airlines and its regional subsidiary SilkAir have announced capacity cuts, most beginning in May. Forty-eight return flights across the entire network will be canceled.
Singapore’s minister of finance has confirmed that the government will also introduce handling and landing fee rebates as well as a property tax rebate for Changi Airport to assist the aviation industry. The government will contribute about S$4 billion ($2.87 billion) to help all sectors affected by the epidemic.
Except for cases of the virus on the Diamond Princess cruise ship docked in Japan, Singapore reported the highest number of confirmed cases outside of China and airlines such as Thai Airways have adjusted their schedules to Singapore.
Japan, Thailand and South Korea, saw capacity between China plunge 74.6%, 76.9% and 69.3% respectively as carriers suspend flights to mainland China due to poor demand, according to OAG.
There has been an 80% reduction in seats to 1.7 million seats and forecasted 10.4 million fewer seats in domestic China compared to Jan 20, before the outbreak started.
Operating statistics are expected to be grimmer in February just as the three major Chinese carriers release their January numbers.
Despite the COVID-19 outbreak escalating late in January, the untimely coincidence with Lunar New Year traffic saw all three major state-owned carriers suffering massive dents in their January operating numbers.
The country’s largest carrier, China Southern Airlines, saw its total passenger carriage drop 4.61% year on year (YOY) to 11.4 million. Passenger growth, measured as revenue passenger km (RPK), slid 2.4% YOY although capacity increased by 2.3%, likely in anticipation of the New Year demand.
With the exception of the international market, all segments saw decline in numbers, most significantly in the regional sector where RPK fell as much as 44% YOY, along with available seat miles by 32%. Load factors were at 61%.
The pattern was also seen at China Eastern Airlines and Air China.
China Eastern’s RPK and passenger carriage numbers were down 1.3% and 5.4% YOY, respectively, while the flag carrier’s passenger growth and carriage declined 2.9% and 4.1% YOY respectively.