At an award ceremony hosted by the Royal Aeronautical Society in Washington DC on Monday 9th, Sir Richard Branson of the Virgin Group urged ‘faith’ in the airline industry. He made the valid point that the airline industry had weathered past crises such as the financial disaster of 2008/9 and the 11th September terrorist attacks in the US, and said in reference to the coronavirus outbreak, ‘I’m sure we’re going to overcome this.‘
Branson, the founder of the Virgin Group which includes airlines, holiday companies, hotels, gyms, and cruise ships went on to say ‘I would beg people not to stop flying because the airline industry could come to a grinding halt fairly quickly if people are not brave enough to get on planes.’
In common with many other operators Virgin Atlantic last week announced that it would not charge fees to change bookings made before 4th March for travel during March and tickets issued between 4th and 31st March can be changed for travel until 30th September. We have reported that Virgin has been obliged by EU rules (soon to be changed) to fly empty aircraft to retain airport slots.
As a result of the outbreak, IATA has estimated that the loss to commercial aviation could exceed $100 billion. One industry casualty in recent weeks has been Flybe in the UK, a part-owner of which was Virgin who declined to inject further funding partly due to the epidemic. Also suffering is Virgin Australia amid a lack of demand for China and other Asian countries. The airline plans to cut 750 jobs by June and cutting its capacity in the second half of 2020.
Branson advised people to wash their hands and take precautions rather than giving up on air travel.
While there can be no argument against Sir Richards’s comments, it seems the main concern—rightly or wrongly— is that of contracting the virus rather than a lack of faith in the airline business. In any event, it appears much damage has already been done. The question now is when (rather than if) passenger volumes and hence airline incomes will recover. For some operators, it cannot come too soon.