First it was China and Hong Kong, then South Korea and two cities in Italy. Now Delta Air Lines, Inc. (NYSE: DAL) is reducing service to and from Japan as the coronavirus suppresses travel demand.
Meanwhile, All Nippon Airways is scaling back its domestic flight schedule between multiple cities in Japan. And United Airlines said it is shrinking its overall schedules for April and May.
The developments are the latest evidence that corporate and leisure travel bookings are evaporating, forcing airlines to rapidly reduce costs in the face of steep revenue declines and putting profitability for the year in jeopardy. Many industry conferences have also been canceled, costing organizers millions of dollars and airlines more passenger traffic.
Nearly 41 million fewer seats are in circulation across the airline industry during the first four months of the year compared to the same period in 2019, according to OAG Aviation Worldwide, an air travel analytics firm.
The reduction in passenger capacity also means less cargo space for shippers, pushing more business to all-cargo carriers.
Overall, global travel appears to be down about 25% and any recovery will likely be gradual, Cowen equity analyst Helane Becker said in a client note. Between the coronavirus and the grounding of the Boeing 737 MAX, it will be 2022 at the earliest before the market becomes more normal.
"We expect that travel to Asia will take longer to recover than travel elsewhere in the world, but travel to Europe might not recover until after the peak summer months, depending upon the duration of the virus in the US. For example, will it run its course as the flu does once the weather warms up, or will it continue through the summer?"
Rather than simply idle planes from their Asia-Pacific networks, the Big Three U.S. carriers are pulling widebodies into the domestic market. An OAG analysis shows American Airlines, Delta Air Lines and United Airlines have redeployed widebody capacity to major city pairs for March and April compared to the prior two months or the same months in prior years.
OAG said the Chinese domestic aviation market is beginning to bounce back with the introduction of 2.9 million scheduled seats, as the coronavirus outbreak appears to be slowly subsiding in that nation.
Delta (NYSE: DAL) said Wednesday it will scale back daily flights between Portland, Oregon; Detroit; and Honolulu in the U.S. and Tokyo, Nagoya and Osaka in Japan to three times per week. Daily Atlanta-Tokyo and Minneapolis-Tokyo flights will go down to five times per week, and Detroit and Honolulu service to Nagoya will be three times per week. Osaka-Honolulu will drop to three times per week.
The changes apply March 7 through April 30.
The seasonal service between Osaka and Seattle will be suspended for the entire summer and resume in 2021.
On Tuesday, Delta said it is temporarily suspending daily flights between New York-John F. Kennedy International Airport and Milan and that summer seasonal service between JFK and Venice, previously scheduled to begin April 1, will now begin May 2. Daily flights between Rome and both JFK and Atlanta continue to operate as scheduled.
United Airlines on Wednesday said it will reduce its international schedule by 20% in April and is planning similar reductions in May. The adjustments include previously announced reductions in Asia and suspensions to China. United Airlines last week pulled down many flights to Korea, Japan and Singapore.
The Chicago-based carrier also said it will reduce its domestic schedule for the U.S. and Canada by 10% in April and May because of the decline in bookings and lower demand among U.S. travelers.
In a message to United employees, CEO Oscar Munoz said the company is offering voluntary, unpaid leave of absence or reduced work schedules, has suspended all hiring through June 30, except for critical roles, and will postpone new-hire training classes. Additionally, all merit-based salary increases for management and administrative employees will be postponed until July 1.
"We sincerely hope that these latest measures are enough, but the dynamic nature of this
outbreak requires us to be nimble and flexible moving forward in how we respond," Munoz wrote. "All of our schedule reductions are, importantly, being implemented in a way that minimizes the impact on our employees and our operation. For example, we're reducing the number of frequencies per week, finding routes with alternative travel options via other United hubs, and delaying start dates for seasonal travel to certain destinations – without closing any domestic stations."
U.S. airline CEOs met at the White House Wednesday with President Donald Trump and Vice President Mike Pence to discuss containment strategies for the coronavirus, including sharing data about passengers.
The Senate Commerce Committee is also holding a hearing this afternoon on how the global aviation industry can help contain the spread of the respiratory illness, which has claimed more than 3,200 lives so far. The number of daily travelers from China to the U.S. has fallen from 15,000 before the virus outbreak to fewer than 1,000 today and they are being funneled through one of 11 airports equipped to do health screenings, Joel Szabat, assistant secretary of transportation for aviation and international affairs, testified.
The Department of Transportation coordinated with other agencies to implement health protocols for pilots and crews flying from China to the U.S. "These protocols differ for China-based and U.S.-based crews and allow for continued all-cargo operations," he said.
Meanwhile, a request by the International Air Transport Association to suspend slot rules for crowded airports because of necessary schedule adjustments has fallen on deaf ears with aviation regulators, who say such a move is premature, according to Aviation Week.