There have been growing suggestions that the global airlines alliances are a thing of the past and are no longer relevant in the changing airline industry of the modern day. This week’s communication from oneworld, SkyTeam and Star Alliance on behalf of their member airlines, calling on governments and stakeholders to take action to alleviate the unprecedented challenges faced by the global airline industry amid the COVID-19 pandemic, showed they still have a role to play supporting the industry through its current crisis.
In a stand of solidarity, the three global alliances, which represent almost 60 airlines around the world that contribute more than half of global airline capacity, are strongly supporting a request by the International Air Transport Association (IATA) for regulators to suspend slot usage rules for the northern summer 2020 season as the airline industry suffers from extraordinary reductions in passenger demand.
The alliances welcome the moves in recent days by some regulators who have suspended slot regulations temporarily and urge others to follow suit promptly. They also request that regulators consider extending the suspensions for the entire operating season.
The impact of COVID-19 on the airline industry is significant, with IATA estimating up to USD 113 billion in revenue losses for global passenger airlines. The impact is expected to have a ripple effect through the value chain that supports the airline industry.
This forecast was significant but the revenue loss scenario was calculated before many global travel restrictions were imposed, notably in the past week by the Trump administration in the US. The US restriction on passengers from the Schengen Area will place pressure on the US-Schengen market, valued at over USD20 billion in 2019. You then have the cost of the extension of the restriction to cover the UK and Ireland, home to the regularly reported USD1 billion route of British Airways between London Heathrow and New York JFK.
To alleviate the immense pressures faced by airlines in the current operating environment, and in support of IATA’s own statements, the three alliances urge governments worldwide to “prepare for the broad economic effects from actions taken by states to contain the spread of COVID-19,” and to also “evaluate all possible means to assist the airline industry during this unprecedented period.”
The alliances also call on other stakeholders to provide support. For example, airport operators are urged to evaluate landing charges and fees to mitigate the financial pressure faced by airlines due to a severe decline in passenger demand.
Member airlines of the three global alliances have implemented urgent measures to address the impact of COVID-19, such as very significant capacity reductions, cost-saving initiatives, enhanced cleaning procedures and customer support outreach.
While they are responding proactively to mitigate further impact in face of rapidly-changing policy scenarios, the joint communication from the alliances says “it is imperative they are supported by governments and stakeholders who can play a vital role in alleviating the unprecedented pressures faced by global airlines amid these extremely challenging times”.
Here’s what the leaders of the three alliances had to say:
“During such times of difficulty and uncertainty, it is important that the airline industry works even closer with stakeholders to mitigate adverse impacts from the virus and collaborate in areas within our control. Governments must implement the measures they consider necessary to contain the spread of COVID-19, and must be prepared for the widescale economic implications that will result from those measures.”
oneworld CEO Rob Gurney
“The human and financial impact that the COVID-19 outbreak is having on the aviation industry is unprecedented. SkyTeam, with its alliance partners, and on behalf of member airlines, is urging all involved institutions and industry stakeholders to face these extraordinary times with exceptional measures. This includes action such as slot relief, airport and overflight fees reduction.”
SkyTeam CEO and Managing Director Kristin Colvile
“The unprecedented circumstances triggered by the coronavirus outbreak pose an existential threat not only to the airline industry but more generally to global trade and commerce, and social connectivity. As airlines stretch their limits to manage the crisis, it is equally critical for governments and stakeholders to avoid further burdens and step up with measures, as some have, that will ensure the future of the travel industry.”
Star Alliance CEO Jeffrey Goh