Easter Shapes Up as Air Travel’s Next Test of Virus Impact

(Bloomberg) -- Europe’s biggest airlines have already cut back on flights to cope with the coronavirus. Now they’re bracing for a bigger test: how business holds up during the coming Easter travel peak.

The holiday, which falls on April 12 this year, is bookended by extra days off in most countries. It typically marks the kick-off to the busy summer travel season in Europe, and what happens then will go a long way toward clarifying the hit from the virus, carriers including Ryanair Holdings Plc and IAG SA said Tuesday.

“The big mover for us will be the Easter holiday,” Ryanair Chief Executive Officer Michael O’Leary told Bloomberg TV at the Airlines for Europe summit in Brussels. “We don’t see any reduction in travel demand over that period of time. That could change as the situation evolves over the next couple of weeks.”

Ryanair has reduced capacity by 25% on some routes through early April, while IAG SA, the parent of British Airways, saw demand for flights to and from Milan more than halve after the virus swept northern Italy. CEO Willie Walsh also said business traffic has been damaged by companies curbing trips and the cancellation of major events. British Airways has scratched 12 London-New York flights over 10 days from March 17.

While there’s some “hysteria” surrounding the virus, O’Leary said the impact on airlines should be relatively short lived, based on past experience. It could extend into May but won’t interrupt the vital summer months “as long as events don’t get out of control in Europe, and I don’t think they will,” he said.

Knocking Elbows

Airline chiefs went ahead with their summit even as more consumer-focused events like the Geneva car show were called off. While they said they weren’t worried yet about a long term impact from the coronavirus, it was hard to forget the disease, which has surpassed 90,000 cases and 3,100 deaths worldwide.

Preventative measures were in place, with the host kicking off the gathering by warning attendees to avoid cheek kissing. Hand sanitizer was on stage next to the usual bottled water, and people knocked elbows instead of shaking hands.

Mandatory restrictions on travel aren’t justified by the comparatively small number of people infected and wouldn’t work anyway in Europe, O’Leary said. A U.K. decision to avoid banning sports events, keep the London subway open and put the emphasis on improving personal hygiene and self-quarantining represents a more sensible approach, he said.

Walsh told Bloomberg that the situation in Italy has started to slowly recover and that he sees the wider outlook stabilizing in the next few weeks, assuming events follow the pattern set after the diseases was detected in Asia, where demand has leveled out about 20% below normal, he said.

Fleet Shuffle

IAG has redeployed wide-body aircraft including Airbus A380 superjumbos away from the weakest Asian destinations to markets where demand remains buoyant, he said. Deutsche Lufthansa AG CEO Carsten Spohr said at the event that the German company has cut 25% of narrow-body routes and grounded the equivalent of 23 wide-body planes out of 200.

O’Leary, Walsh and Air France-KLM CEO Ben Smith all said that the coronavirus is likely to hasten the demise of weaker carriers around the globe.

Walsh said a drop in the price of oil as the virus threatens economic growth may provide a brief stay of execution for some unhedged operators, adding that state intervention to save uncompetitive airlines wouldn’t be justified.

He said that consolidation may come via the elimination of carriers rather than takeovers, with IAG not targeting any purchases at the moment beyond completing the takeover of Air Europa in Spain.

©2020 Bloomberg L.P.

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