News Update: Emirates reverses decision to suspend all passenger flights

Courtesy AFP

Emirates Airlines reversed an earlier decision to suspend all passenger flights, which was supposed to take effect from March 25.

The Gulf carrier said it had “received requests from government and customers to support the repatriation of travellers.”

It will continue to fly to Australia, Canada, Hong Kong, Japan, Malaysia, the Philippines, Singapore, South Africa, South Korea, Switzerland, Thailand, the United Kingdom and the United States. This is greatly reduced from its usual 159 destinations.

Singapore Airlines has announced it will cut capacity by 96 per cent to end April, previously planned at 50 per cent.

Jetstar Asia will be grounding its entire fleet from March 23 to April 15.

Quick changes across the globe are expected, demonstrating the uncertainty that is gripping the industry.

Emirates suspends all passenger flights: Will the global industry grind to a standstill?

Courtesy Reuters

Emirates Airlines becomes the first carrier to announce complete suspension of all passenger flights. This will take effect on Wednesday, March 25 when its entire passenger fleet will be grounded. The airline has already cut back capacity by 70 per cent.

It is not just that more people are refraining from travel for fear of contracting the coronavirus, more countries are beginning to ban travel by foreigners into their ports. Consequently airlines are flying empty seats. And especially for airlines which rely on transiting and connecting traffic such as Emirates, this takes a heavy toll on their business.

Emirates chairman Sheikh Ahmed bin Saeed al-Maktoum said: “As a global network airline, we find ourselves in a situation where we cannot viably operate passenger services until countries reopen their borders and travel confidence returns.”

Is this a sign of more airlines following suit, notwithstanding those which are already teetering on the line facing bankruptcy?

Other major carriers which rely heavily on similar traffic as Emirates include Singapore Airlines (SIA) and Cathay Pacific.

SIA has reduced capacity by 50 per cent to the end of April. Further reduction is not off the table. The airline attributed this to “the growing scale of border controls”. SIA CEO Goh Choon Phong said: “We have lost a large amount of our traffic in a very short time, and it will not be viable for us to maintain our current network.”

Cathay too has made deep capacity cuts, particularly to mainland China as high as 90 per cent.

For the premium Hong Kong carrier, it is a double whammy as it moves from an embattled 2019 into an uncertain 2020. Profits plummeted in 2019 caused by the political unrest in the latter half of the year. The full year profit was HK$1.7 billion (US$220 million), down by 26 per cent from HK$2.3 billion in 2018.

Looking ahead, the airline said in a statement that “the outbreak of COVID-19 since January 2020 has resulted in a challenging operational environment, and will adversely impact the Group’s financial performance and liquidity position.” Cathay chairman Patrick Healy added, “We expect to incur a substantial loss for the first half of 2020.”

While some carriers may fall by the wayside, it is however unthinkable that the global airline industry will grant to a halt. Some governments are already promising reliefs to help them pull through. Nobody can say for sure when normalcy will return while acknowledging it is anything but foreseeable.

B737 Max compliance: FAA lives up to its role as overseer

Courtesy Getty Images

Having been criticized for oversight laxity, the Federal Aviation Administration (FAA) is re-asserting its authority and not taking any chances as far as safety is concerned.

It is surprising that Boeing should propose no modification to the B737 Max’s wiring bundles except for the new planes awaiting delivery. This has been rejected by the FAA.

While Boeing sees no safety threat since the planes in use before the grounding had not experienced any hiccup concerning the wiring, the FAA together with the European Union Aviation Safety Agency have identified it as a potential problem.

According to the FAA, a short circuit in the wiring bundles could lead to pilots losing control of the plane.

It will be hard to restore customer’s confidence if Boeing continues to sidestep issues identified as potentially problematic, no matter how remote that possibility might be.

Indeed, isn’t there a lesson to be learned from the Lion Air and Ethiopian Airlines crashes in October 2018 and March 2019 respectively?

The FAA is making it clear that the Max jet “will be cleared for return to passenger service only after the FAA is satisfied that all safety-related issues are addressed.”

Indications are that if all goes according to plans, the Max will be back in service in mid-year.

However, with the Covid-19 outbreak that has led to many airlines drastically cutting capacity, there is less of an urgency for now.

How Covid-19 is changing the way we fly

https://www.todayonline.com/commentary/how-covid-19-way-we-fly-airline-SIA-Scoot-airport-travel

A bleak year for airlines

It looks quite certainly a bleak year for airlines as Covid-19 keeps people away from travelling. The outbreak has become more extensive than anticipated, short of being classified as pandemic by the World Health Organization.

Cutting capacity

Many airlines are cutting back or suspending services not only to destinations in China where the outbreak started but also across the world.

Among them are:

Courtesy Singapore Airlines

Singapore Airlines, which has cancelled almost 700 flights across its network through to May. Its low-cost subsidiary Scoot has cancelled all flights to China.

Cathay Pacific, which so far has seen flights reduced by more than 75 per cent till the end of March, with hints of more to be scrapped.

Qantas, which has reduced capacity to Hong Kong and suspended flights to Shanghai and Beijing. It is also reporting weak demand for seats on flights to Singapore and Japan as well. Capacity to Asian destinations will be reduced by 15 per cent until the end of May. Its low-cost subsidiary Jetstar is also adjusting capacity as a result of the weaker domestic market.

Air France, which has taken out flights to China until the end of March.

British Airways, which has cancelled not only flights to China but also more than 200 flights from London to destinations in the United States, Italy, France, Austria, Belgium, Germany and Ireland in the latter half of March.

Ryanair, which will cut up to 25% of flights in and out of Italy from 17 March to 8 April..Ryanair chief Michael O’Leary said: “There has been a notable drop in forward bookings towards the end of March, into early April.”

EasyJet, which is cancelling some flights because of “a significant softening of demand and load factors into and out of our Northern Italian bases”.

United Airlines, which has suspended flights to China and axed flights to South Korea, Japan and Singapore as demand across the Pacific has fallen by as much as 75 per cent. Delta Air Lines has also cancelled flights to China.

Air Canada, which has cancelled all flights from Toronto to Hong Kong until the end of April.

Middle-east airlines, which are affected by action taken by the Gulf authorities. Iran as the epicentre of the outbreak in the region has seen flights to its airports cancelled by neighbouring United Arab Emirates (UAE), Bahrain, Oman, Jordan, Kuwait, Iraq and Saudi Arabia.

Events cancelled

The threat of the disease spreading easily at public events has led to many of them being cancelled, which in turn will affect the airlines which would have enjoyed a boon in carriage numbers.

Courtesy United Airlines

United Airlines for one has scaled back additional flights between San Francisco/Newark and Barcelona planned for the Mobile World Congress which has been cancelled.

Now all eyes are on the 2020 Summer Olympics to be staged in Tokyo.

Business travel, as noted by British Airways chief Willie Walsh, has been affected by the cancellation of large conferences. Some large corporations are also restricting executive travel.

International cruises, which pose a similar threat following the outbreak of the disease on the Diamond Princess docked at Yokohama, have also suffered from reduced patronage or cancellations, and this in turn reduces feeds from airlines from across the globe to the ports of call.

Reduced profitability

Expectedly airlines are predicting reduced profitability although some of them are optimistic about the impact as not being as drastic as it seems.

Air France-KLM warned its earnings would be affected by as much as €200 million (US$224 million).

Qantas said the COVID-19 outbreak would cost the airline up to A$150m (US$99m).

Air New Zealand expects the impact to be in the range from NZ$35 million (US$22 million) to NZ$75 million as travel demand to Asia drops.

Finnair is expecting a significant drop in operating profit this year.

Airlines which rely heavily on Asian traffic are naturally more affected, even more so budget carriers such as AirAsia and its long-haul arm AirAsiaX. Particularly vulnerable are airlines which are struggling to stay afloat, such as Norwegian Air Shuttle, which is cutting back on long-haul operations, and Hong Kong Airlines, which is 45 per cent owned by Hainan Airlines of the HNA Group, which itself is facing a sell-off by the Chinese government.

Cost cutting

Besides reducing or cutting capacity, expectedly many airlines are looking at cutting cost.

EasyJet is looking into reducing administrative budgets, offering unpaid leave, and freezing recruitment, promotion and pay rises.

Singapore Airlines is implementing paycuts of 10 to 15 per cent for senior executive management. General staff will be offered a voluntary no-pay leave scheme.

Cathay Pacific is asking employees to take unpaid leave.

Courtesy Airbus

Perhaps the impact is most felt at Hong Kong Airlines which has slashed in-flight services to a bare minimum and dismissed staff, targeting 400 of them.

What’s next?

While the industry contnues to grapple with the prolonged saga of the B737 Max jet predicament, the coronavirus outbreak could not have come at a worse time on its heels. In both cases, it is the uncertainty that poses the biggest problem. Soem airlines are pessimistic that the threat will blow over by the end of March, which is unlikely, while others are more cautious in their forecast, looking at the end of May. It is this uncertainty that makes one wonder if any of them might not survive the wait.

Protecting the consumer rights of air travellers

This article was published in Today, 25 October 2019.

https://www.todayonline.com/commentary/protecting-consumer-rights-air-travellers

Are airlines treating passengers of disrupted flights fairly?

Courtesy Reuters

IF you were travelling on Singapore Airlines (SIA) out of London and your flight is delayed or cancelled, you may be compensated up to €600 according to European Union (EU) regulations. However, if it is an outbound flight from Singapore, what compensation a passenger may receive, if any, will depend on the policy of the airline.

This is because EU regulations do not apply to non-EU carriers arriving at an airport in member countries although it covers all departing flights of both EU and non-EU carriers.

The regulations have recently been extended to include connections even if these are operated outside the EU by non-EU airlines. The ruling states that “an operating air carrier that has performed the first flight cannot take refuge behind a claim that the performance of a subsequent flight operated by another air carrier was imperfect.” It is therefore obliged to offer passengers alternative transport for the disrupted flight, in addition to monetary compensation.

Over in Canada, the Air Passenger Protection Regulations introduced by the Canada Transportation Agency require airlines affected by flight disruptions to meet certain obligations which will apply to all flights to, from and within Canada, including connecting flights. Passengers whose flights are delayed or cancelled will be compensated up to C$1,000 depending on the size of the airline and length of the disruption. Non-compliance carries a fine of up to C$25,000.

Countries elsewhere do not generally legislate on mandatory fiduciary compensation of a stipulated amount for flight disruptions. In the United States, airlines are obliged to compensate passengers who are bumped off a flight due to an overbooking situation (as in the EU and Canada), but there are no federal regulations requiring them to do the same thing for passengers whose flights are delayed or cancelled.

Consumer rights groups have long been pushing for fairer treatment of travellers under these circumstances. Besides arranging meals and hotel accommodation in the event of a long delay, some airlines hand out in-flight gift vouchers, but most do not make any form of financial payment. In many cases the affected passengers get not much more than an apology while they wait to be put on the next available flight.

The International Civil Aviation Organization (ICAO) recognises the vulnerability of passengers and supports “due attention… (which) could include rerouting, refund, care and/or compensation”, but it stops short of spelling out specifics and making them industry standards. The International Air Transport Association is however concerned that airlines may be adversely affected, advocating “an appropriate balance between protection of consumers and industry competitiveness.”

Affected passengers therefore by and large can only rely on the goodwill of the airlines, whose policies differ across the industry. Many of them have come to realise that to take the matter further on their own – including bringing an airline to court – can be tedious, frustrating and, more often than not, futile. What they need is the support of an authority who can enforce compliance within a legal framework.

Yes, even with mandatory compensation in place in the EU and Canada, there have been complaints that the airlines are not forthcoming in meeting their obligations, citing extraordinary circumstances that do not render them liable or delaying payment indefinitely. Still, in the context of good governance, what the EU and Canada have introduced is a significant step forward in recognition of the uphill challenge passengers face in their battle with the airlines for fair compensation.

Some airport authorities fine airlines for flight delays or operating off-schedule because it disrupts and causes less-than-optimal resource allocation that can be costly to the airport’s operations. By the same argument, passengers of disrupted flights deserve to be fairly compensated. The disruption can be costly in terms of making alternative arrangements, staying in some place longer than planned, and losing opportunities as in failing to make a business deadline. Above all, it causes anguish and distress.

The amounts recommended by the EU and Canada are miniscule compared to the fines of up to US$27,500 per passenger imposed by the US Transportation Department for planes left on the tarmac for more than three hours (or four hours for international flights) without taking off. American Airlines and Southwest Airlines share the honour of holding the record fine of US$1.6 million, the former in 2016 and the latter in 2015.

Non-US airlines that have been penalised by the US Department of Transportation (DOT) include Japan Airlines which was fined US$300,000 for two incidents in 2018 in which passengers were made to wait more than four hours on the tarmac before they could deplane.

All these measures serve the common goal of encouraging airlines to ensure their flights operate as scheduled and hopefully too that they become more conscientious about how they treat their customers. However, the fines imposed by DOT do not directly benefit the passengers who are the very reason why an airline is in business.

An example of how an airline may take the EU regulations seriously is when British Airways, faced with the threat of strike action by its pilots recently, informed its customers as early as two weeks of cancellations of some flights to avoid paying compensation.

However, do not expect similar regulations to be introduced any time soon in other parts of the world. For one thing, consumer rights groups do not appear to be as aggressive, and many countries especially Asia are less prone to industrial action. Besides major Asian carriers known for good customer service are more responsive to feedback and complaints and may already be offering some form of compensation even if they are not as generous.

But as the number rises, there is a greater need to ensure that affected passengers are fairly treated. The powers that be can ensure that. According to aviation data and analytics experts at Cirium, about 3.9 million flights or 10,700 a day were delayed by over 30 minutes or cancelled worldwide in 2018. Take a typical day on 5 August 2019.there were 22,386 delays and 1,107 cancellations globally, of which 29 per cent of the combined total occurred in the United States, 26 per cent in Europe, and 34 per cent in Asia Pacific.

Until then, here’s a poser for SIA and the likes: Will they accord the same level of comnpensation to all passengers even if they are not bound by regulations, for no better reason than simply one in the name of fairness?