It’s time to PANIC. At least, that’s what appears to be happening with the coronavirus that has begun spreading around the world. Governments and airlines have reacted quickly and dramatically. The airline response, at least, isn’t an overreaction. It’s just not a reaction to the virus itself. The reaction, instead, is due to the near complete disappearance of demand for flights to China.
When the virus first showed its ugly head around Wuhan, the Chinese government was determined not to look flat-footed in its response. After all, that’s what happened during the SARS outbreak, and there was widespread criticism. This time, it used the nuclear option.
China effectively shut down all of Wuhan and the surrounding regions. Transportation was suspended and 50 million people were trapped overnight. We can debate the merits of that kind of reaction, but this is an airline blog, so that’s beyond the scope here.
What we do know is that, obviously, airlines had to cancel flights to Wuhan since the government had shut everything down. No US airlines fly there, but partner airlines do. Chinese airlines have mostly just issued a blanket waiver saying that anyone can refund any flights that touch Wuhan, and that’s pretty extraordinary. From what I’ve seen, it looks like it can now be done for travel on any date, even months in advance.
But this was just the tip of the iceberg. Like the virus, the flight cancellations have begun to spread beyond Wuhan, and governments worldwide are restricting entry and transit.
Singapore, for example, won’t allow anyone to come into or through the country if they’ve visited the area around Wuhan in the last two weeks. Italy, on the other hand, is allowing people in, but all general aviation flights from China have to land at either Milan/Malpensa or Rome/Fiumicino for further special handling. No flights to other airports are permitted.
With the possible exception of Singapore, most of what we’ve seen countries outside China doing is sensible. If you see what the airlines are doing, however, then you might think they’ve lost their minds. British Airways has been getting headlines for canceling all flights to China with a hazy planned resumption date. That’s a daily flight to both Beijing and Shanghai that’s gone for the near future. But it’s far more than that.
Lufthansa Group (including Austrian, Lufthansa, and SWISS) is cutting all flights to China (excluding Hong Kong) through February 9, but it isn’t taking bookings for flights through the end of February. Finnair is a big player in China, but it is ditching three flights per week to Beijing and two per week to Nanjing until the end of March.
The list goes on. Air India is stopping Shanghai through February 14th. IndiGo is done in Chengdu until a week after that. Flights between Hong Kong and mainland China have been slashed in half. There’s a good chance there will be more between the time I wrote this and the time it gets published.
But if we look at US airlines, we can really see the motivations here. American spokesperson Curtis Blessing had this to say:
Given the significant decline in demand for travel to and from China, American Airlines will suspend travel between Los Angeles International Airport (LAX) and Shanghai Pudong Airport (PVG) as well as LAX and Beijing Capital International Airport (PEK) from Feb. 9 through Mar. 27, 2020.
And United put out a very detailed memo detailing 24 flights it would cancel between the US and China through February 8. In its statement, United said:
Due to a significant decline in demand for travel to China, we are suspending some flights between our hub cities and Beijing, Hong Kong and Shanghai beginning Feb. 1 through Feb. 8. We will continue to monitor the situation as it develops and will adjust our schedule as needed.
You could be forgiven for thinking I had just pasted the same thing twice if you only read the first sentence. Both airlines very clearly didn’t blame this on the coronavirus. They blame it on public reaction which is leading to a massive drop in demand.
To be fair, for American this is an awfully convenient excuse to cancel two terribly-performing flights. I’m not suggesting that American is hiding behind the coronavirus, not at all. It’s just that the threshold for canceling these flights has to be pretty low because they are underperformers.
United has gone with a more surgical strike, but these seem like the tip of the iceberg. The virus will continue to spread and there will be more cases. Until it has run its course, people will be afraid to fly to China. Government warnings and restrictions only help feed the fear and compound the problem for airlines.
Once we know more about the virus, we may learn that it’s not as deadly as people fear and restrictions can ease. (At least, that’s what I hope we will hear.) But if we’ve learned anything from the past, even if things are given the all clear, it will take time for demand to recover. Right now, we’re in a downward demand spiral.