Leaders of some the largest airlines in Europe believe that the coronavirus will only have a limited impact on demand for air travel on the continent.
Speaking at the A4E aviation summit in Brussels on 3 March, IAG’s outgoing chief executive Willie Walsh acknowledged that the group had seen a significant reduction demand on travel in Asia, focused on China where it has cut back its routes. Until recently, it had only seen a small impact on demand in Europe, although that changed in late February when the virus began spreading rapidly in Italy, highlighting the “fast-moving” and “dynamic” nature of the outbreak.
But he rejects the notion that the situation could be compared with the aftermath of 9/11 when passenger aircraft were grounded across the globe. “If [demand] follows the pattern [that was] seen in Asia, it will stabilise in the coming weeks,” says Walsh. IAG is meanwhile seeing large reductions in demand from a fall in business travellers as companies tighten up their foreign travel policies and large events are cancelled.
Walsh also argues that the situation does not warrant any state aid, noting that several airlines were seeking government cash even before the coronavirus hit.
Ryanair group chief executive Michael O’Leary says the budget carrier is seeing a reduction in leisure demand, but does not see the impact lasting beyond the summer – and perhaps may fade even earlier. Demand will fall for roughly three weeks and “then people will get bored with coronavirus”, he suggests. Ryanair is not currently seeing cancellations for the Easter break, and O’Leary expects May/June demand to be normal.
“Bookings through summer are relatively robust,” he notes.
Air France-KLM chief executive Ben Smith is similarly dismissive of the notion that the industry may face another downturn along the lines of that post-9/11, although he does assess the coronavirus outbreak’s effects to be worse than SARS – something he partly attributes to the heightened profile of social media that is generating anxiety among travellers. While his airline group is seeing problems in Asia and in Europe, he notes that the virus’s impact on traffic to African, South American and transatlantic destinations has been “muted”.
He recalls that when he was with Air Canada during the SARS epidemic – and Toronto was the centre of that outbreak in North America – travel bounced back strongly once the situation was brought under control. “[Demand] was relatively quick [to return] once there was an understanding of the virus,” he says.
Smith does, however, believe that the financial pressure that the virus is placing on the industry could encourage further consolidation in Europe and Asia.
