Ryanair CEO Michael O’Leary has summarised the priority for his airline, which applies equally to all airlines currently: to preserve cash.
«If we have to operate for three, six, nine, maybe even 12 months, with no flights and no revenues how do we survive?», he said (Financial Times/Reuters, 21-Mar-2020).
The main tool at airlines’ disposal for preserving cash is to make drastic cuts to capacity.
Total seat capacity in Europe has dropped by 59.1% year-on-year for the week commencing 23-Mar-2020, according to the latest schedules data from OAG combined with CAPA Fleet Database seat configurations. Domestic capacity has almost halved, reduced by 48.3%, and international capacity has been slashed by 62.9%.
Italy has the biggest percentage cut – reduced by 87.5% year-on-year – while Finland, Spain, Germany, Denmark, Greece and Belgium are also shrinking capacity by more than 70%. Of Europe’s top 20 airline groups, 18 are showing cuts, and most of them very substantial.
However, data for some still do not appear to reflect full details of some recent announcements. The rate of reduction is certain to increase. At some point, zero capacity could even become a reality for European aviation.
Europe: 11.7 million seats vs 28.6 million a year ago, a fall of 59%
Total European seat capacity is scheduled to be 11.7 million in the week of 23-Mar-2020, compared with 28.6 million a year ago. This comprises 3.8 million domestic seats, versus 7.4 million last year; and 7.9 million international seats, versus 21.2 million.
The 59.1% year-on-year cut this week is a rapid increase in the rate of decline compared with -19.0% in the previous week and just -6.0% in the week before that. Growth in Europe had slowed from 4.7% in 1H2019 to 2.2% in 2H2019.
It turned negative in the week of 13-Jan-2020, before the virus impact became significant, but the fall in capacity remained less than 2% until the week of 9-Mar-2020.
Italy has biggest percentage capacity cut, down almost 90%. Russia has smallest, among Europe’s top 20 countries, at 13%
All of Europe’s top 20 countries (ranked by total seat capacity for the equivalent week a year ago, i.e. commencing 25-Mar-2019) recorded heavy reductions this week. The total cut for the top 20 countries in aggregate is 60.8%, a little more than the 59.1% cut for Europe as a whole.
Among the top 20 countries, Italy has the biggest year-on-year percentage capacity cut scheduled this week, with an 87.5% reduction.
Six other top 20 countries have cuts of more than 70% (Belgium, Greece, Denmark, Germany, Spain and Finland). Six are undergoing cuts of between 60% and 70% (Poland, Turkey, Sweden, Switzerland, Portugal and Austria).
A further six are cutting seat count by between 30% and 60% (Romania, Netherlands, France, Norway, UK and Ireland). The smallest cut in percentage terms is in Russia, where capacity has fallen by 23.9%.
Airlines have been announcing ever greater capacity cut plans
Although these cuts are vast and without precedent, the full impact of recent airline announcements does not yet appear to be fully reflected in the OAG schedules data for the week of 23-Mar-2020. This may be partly due to some inherent lags in the system of filing the data, but also the result of some flights to bring customers back from international destinations that remain in service for now.
Even during last week (the week commencing 16-Mar-2020) most European airline groups, including all the larger ones, had already announced capacity cuts of 75% to 90% from late Mar-2020.
In recent days a number of European airlines have announced even deeper cuts, or at least confirmed cuts at the lower end of previously expressed ranges.
EasyJet will ground the majority of its fleet from 24-Mar-2020. It will operate a minimal schedule of essential services on some routes, with a maximum of 10% of usual capacity, mainly on routes to/from/within the UK.
Ryanair is operating a severely reduced schedule from 25-Mar-2020. Mr O’Leary said he and his employees will undergo a 50% pay reduction and the company is operating on a best case scenario of two to three months of grounded services, however «honestly none of us have any idea».
Turkish Airlines is to suspend most international services from 27-Apr-2020, retaining only New York, Washington, Hong Kong, Moscow and Addis Ababa. It will continue with domestic services, but at reduced frequencies.
TAP Portugal has announced «significantly reduced operations»…