10 Mar 2020

Coronavirus: Qantas cuts almost quarter of flights

5:03 pm on 10 March 2020

Australia's Qantas airline is making deeper cuts to its flights, with Asia and the United States hit the hardest.

A Qantas Boeing 737, left,lands as a Qantas Q-400, right, prepares to take off at Sydney International Airport in November 2011.

Qantas will use smaller planes instead of its Airbus A380s over the next few months. Photo: AFP

The company said it would reduce international flights by nearly 25 percent as it sees demand fall from passengers worried about the Covid-19 coronavirus.

Qantas and its budget airline Jetstar will reduce operations for the next six months.

It is the latest carrier to make cutbacks, aimed at weathering the storm from a sharp drop in passengers.

Yesterday, Air New Zealand scrapped its financial forecasts for the current year, cut more services, froze hiring and its chief executive took a pay cut, as it responds to the Covid-19 threat.

Qantas will ground eight of its 10 double-decker Airbus A380s and replace them with smaller planes while reducing the frequency of flights.

"We expect lower demand to continue for the next several months, so rather than taking a piecemeal approach we're cutting capacity out to mid-September," Qantas chief executive Alan Joyce said.

He said he will forgo some of his A$24m ($A24.9m) salary while other Qantas executives will take a 30 percent pay cut during the downturn.

The widespread airline cuts follow the spread of the coronavirus into Europe and the US which has resulted in a significant drop in demand.

US carriers have been slashing flights, following the lead from Asian and European airlines. As the industry struggles, it is introducing hiring freezes and asking staff to take unpaid leave along with grounding planes.

The International Air Transport Association, a trade body, estimates the virus could reduce passenger revenue globally this year by between $US63 billion ($NZ99.7b) and $113 billion ($NZ178.9b).

UK-based Flybe was the first casualty, going into administration last week. Analysts warn others could follow.

Virgin Atlantic admits flying near-empty planes

Virgin Atlantic has confirmed it has been forced to operate some near-empty flights after bookings were dented by the coronavirus outbreak.

It is operating the flights to try to retain take-off and landing slots at major airports such as Heathrow.

Under European law, if flights are not operated, slots have to be forfeited.

UK Transport Secretary Grant Shapps has written to the European Commission, asking for rules on slot allocation to be relaxed during the outbreak.

Other carriers are thought to be taking similar steps - even reportedly flying so-called "ghost planes" with no passengers on board at all in order to safeguard their presence at major hubs.

Virgin Atlantic Airways Airbus A350-1000 aircraft as seen on final approach arriving and landing at JFK John F. Kennedy International Airport in NYC, New York, USA.

Virgin Atlantic is worried it will lose landing rights at several airports if it cancels too many flights. Photo: AFP

'Use it or lose it'

On some routes passenger numbers have halved and carriers have been cancelling services.

However, this could cause them a serious problem, particularly if they fly out of large or heavily congested airports. Under international guidelines, which are enshrined in European law, take-off and landing slots at these airports are limited.

In the UK, the rules apply to Heathrow, Gatwick, Stansted, Manchester, London Luton and London City.

Slots are granted according to historical rights at these airports. If, for example, a carrier operated a particular schedule through the summer season last year, it retains the right to those same slots this summer.

But there is a catch. Under the "use it or lose it" rule, slots have to be used at least 80 percent of the time. If an airline fails to reach that threshold, the slots are put back into a pool and allocated to other carriers.

Although they are technically granted for free, there is a thriving secondary market on which the most desirable slots can change hands for significant sums - tens of millions of pounds across a season. So airlines are very reluctant to lose them.

The rule has already been suspended on routes to China and Hong Kong, but still applies elsewhere.

"Passenger demand for air travel has dramatically fallen due to Covid-19 and in some instances we are being forced to fly almost empty planes or lose our valuable slots", said Shai Weiss, chief executive of Virgin Atlantic.

One UK carrier has said that unless the rules change, it will have to operate 32 flights over the next two weeks with only 40 percent of the aircraft occupied. That would leave more than 5000 seats empty.

'Wasting money and fuel'

Airlines are now lobbying hard for the rules to be relaxed.

Tim Alderslade, chief executive of the industry body Airlines UK, said: "It makes no sense whatsoever under these unique and challenging circumstances to force airlines to fly empty aircraft, wasting money and fuel and creating carbon emissions".

He added: "We urgently need a temporary suspension of the rule - as happened during the financial crisis - to allow airlines to respond to demand and use their aircraft efficiently."

However, if the rules are to be relaxed, the decision will have to come from Brussels. Although the UK has officially withdrawn from the European Union (EU), an EU regulation on slot allocation still applies.


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