By Scott Hamilton
March 2, 2020, © Leeham News, Austin (TX): The global impact of COVID-19, the coronavirus, was the dominant talk on the sidelines of an aviation conference here.
Industry professionals predict the reduction in airline service will only grow and could grow dramatically. Aircraft groundings could escalate sharply. Carriers are already seeking payment relief. Lessors are gearing up to repossess airplanes.
And universally, these professionals think the worst is yet to come.
Dire comparisons already have been made of COVID-19 with SARS and 9/11, when the airline industry was decimated across the globe.
Now, some comparisons are also being made with the 1991 invasion of Kuwait by Iraq. The airline industry was unprepared for shock of sharply higher oil prices, dramatically falling passenger demand and fears of terror action threatened by Saddam Hussein.
In the US, 40% of the passenger capacity provided by US airlines at one point operated under Chapter 11 bankruptcy protection. The number of failures took with it Eastern Airlines, Pan Am, TWA, Continental Airlines, Midway Airlines and more.
In 2001, global airlines were hit hard by the 9/11 terror attacks. The US carriers were hit hardest. The government approved a $15bn bailout package. The Air Transportation Stabilization Board (ATSB) was created to administer the bailout. It wound up picking and choosing which airlines survived and which ones died.
The industry barely began its recovery when, in 2003, the SARS virus hit. Like COVID-19, SARS began in China.
COVID-19 is only now causing deaths in the US. The impact here, and globally, will take weeks or months to fully understand.
LNA last week published its first report on COVID-19. This week, LNA begins a series of analysis looking at the impacts so far.