Can World Airlines survive coronavirus almost all flights have been grounded thousands of aircraft and multiple governments are now promising bailouts to keep the industry in the skies that will that be enough this is inside story. Hello and welcome to the program on peace adobe will leaders are being forced to take drastic emergency measures to confront the worsening Coronavirus Crisis that meant to keep people alive but they are killing the Global Economy with lockdowns in place around the world millions of people are being laid off Tourism Industries are already critical Consumer Spending has crashed so to stock markets and oil prices billions of dollars worth of perishable products have also been destroyed but few industries have been hit as hard as the aviation world the International Air transport association i oughta says the industry stands to lose more than 250000000000. 00 in revenue this year and thats assuming things recover in 3 months singapore emirates and Turkish Airlines are just a few of the big names to stop almost all the operations an estimated 8 and a half 1000 craft are sitting in storage around the world many experts say some carriers simply will not survive airlines typically have around 2 months of cash in reserve at any one time the us how. Its come to the aid of its operators with a near 60000000000. 00 bailout but the industry says that will only keep it up in the air for so long. Ok lets get going lets bring in our guests joining us from here in doha is alex machados hes the editor of aviation analysts dot co dot u. K. In london and head of aviation at the university of west london and from singapore brendan sobe fund of be aviation and former chief analyst at the center for aviation welcome to you all brendan in singapore are we talking about the survival of the fittest here. Well hi thats a bit extreme i would say i think all airlines are under extreme pressure right now and i mean firstly no airline can survive no International Passenger travel which is what were looking at pretty much now for the month of april and beyond so no were going to really survive that for better or more than a couple of months and so everybodys under pressure and really it comes down to what governments can can support their own airlines and their own aviation sectors such because every airline needs some kind of support. From about a dozen countries around the world and were going to need series a lot more countries in the coming weeks in order to write about bankruptcies and theres some confidence that in the industry that that will happen and that and that their lives will be there when this crisis is over to carry on as injuries to drive to a Global Economy once again annele in london regionally and around the world is this all of a piece or i mean traditionally regionally certain regions do subsidize their airlines and Certain Airlines you know their accounts their books are maybe open to question at some points during the year because they do run as a loss anyway. Yeah i mean this is this is a particularly difficult time for the Airline Industry this is the certainly the Northern Hemisphere summer rear looking at a time when demand for air travel will be beginning to go up were getting very close to the easter break. And you know traditionally and i was in europe particularly low Cost Carriers but also full Service Carriers made a loss in the period from around about the end of september up until the end of march and then. They make a significant amount of money in the summer period from march until september which recovers those losses and thats a bit of a profit and thats what they rely on and this easter period is really peak period for them to make revenue make profit and theyre going to be losing out on that certainly the ship and its mysterious here in doha what kind of carrier will survive make or break because the local government keeps them up in the skies well this is the largest crisis to ever face the Aviation Industry in the history of commercial flight so with that in mind it is true to say that the only way airlines will be able to power through what is the largest crisis they have ever faced that they cannot plan or that there arent enough cash reserves in the world or is with Government Intervention and thats where we get this survival of the fittest nature its not necessarily now down to the performance of the airline and whether or not they were in a fit and healthy nature financially before this pandemic started but actually its how supportive those governments will be and we are seem already around the world countries demonstrate that support for their respective Aviation Industries or airlines or take it there are a few examples in australia they have announced a package of over 430000000. 00 u. S. Dollars to support and prop up most of their Aviation Industry the same can be said for new zealand. Brazil are doing all they can to cancel and postpone all payments related to the Aviation Industry be it their payments to operate at the airport or to keep their planes on the ground and in singapore the government has said that they will pay 75 percent of salaries for Aviation Industry workers so its nice countries these type of examples that already i. R. Have been praising and are suggesting that the only way forward is if we see more of that ultimately for countries for example in europe that have a lot more airlines than some parts of the rest of the world that have no relationship with the government if they do not secure that intervention if they are not supported by their respective governments then its very likely they will not survive because at the moment we cannot see out of this pandemic we are still lets say 3 months in collectively for the world and and this hasnt even hit the us yet not in the hardaways that we are seeing now with europe taking over as the epicenter so its really is required its a requirement now that Airlines Need that Government Intervention just to be able to be alive and well for passengers to fly when we are out of the worst of this in london is there another knock on effect its this i are to believe so because i could find today from my answer saying this is heading towards costing the industry globally almost 20000000000. 00 us dollars the consequence of that is that the profit margin that has now disappeared cannot be spent on buying new aircraft or leasing craft or training new staff yes this is absolutely correct or think or another source that i read is the impact is about 250000000000. 00 us dollars across the industry youve got the manufacturers airbus and boeing which produce an aircraft obviously in recent years which are Game Changing incredibly fuel efficient but these aircraft mines will struggle to purchase these aircraft because of the financial situ. Ation because of the Current Crisis one area that i mean its not all gloom and doom i mean currently the air cargo industry is doing a fantastic job of transporting equipment around the world that is good predominantly medical supplies. And i think you know this is possibly an opportunity for airlines to recharge and think about their expansion Many Airlines have gone on a rapid Expansion Plan particularly low Cost Carriers in the developing world and is i think a Good Opportunity here for those airlines to reconsider how they expand how quickly they expand but. The challenge i think his fall d and lines that are currently laying off stuff on a temporary basis to get those guys back into the industry and also the next generation of aviation professionals coming through you know junior graduates that coming through might find initially a little bit challenging to get a job in the industry is the as the industry begins to contract a little and then hopefully grow brendan so be in singapore theres another variable here isnt there because we dont know the timeline of this nobody has a crystal ball here we dont know how long the coronavirus is going to carry on damaging the world of aviation so if youve got unpaid staff sitting at home there might come a point when youve got actually guys game over your jobs gone yet it is very hard to plan and thats thats why the those countries that have provided them support for the workers like here in singapore the package that alex was mentioning before was Just Announced a couple days ago exactly 5 percent of wages for him for 6 months so so that ensures that status is there ready to resume when the demand is there and indeed if it isnt then then there are going to night people. And it and it creates Economic Issues so singapores family met their kind of and. An economic advantage in their home has an advantage when the when there is recovery and back that could be a competitive advantage over other apps are other countries that do not do the same thing when this recovery yes when this recovery finally takes place whenever that happens to be and you know singapore has invested significantly in it for structure here at the airport you know a massive Expansion Plan is underway and they have a lot at stake so they dont want to lose on that they want they want to make sure that their. Continues to prosper and grow in the future and i think those countries you know around the world that have similar views and similar investments and make similar decisions to support the industry and to make sure the jobs are there any industry is ready to recover will be that will be the winners and those that dont could be could be the losers and the thing is nobody knows how long this will be like youre saying i mean the bottom is approaching that with birch a lot of International Travel beginning of april but nobody knows if its going to be 3 months 6 months 9 months or even a year but for him doing this is those countries those our lives that are ready for the recovery when it happens will will be in that in a better position than those that are that dont make those investments and and so that support during this interim period alex but when we get one middle east and kerry is c. E. O. Saying the survivors will be the companies who take a quote very prudent decisions what does that mean i mean you cant sell off the assets you cant sell off the planes to slash and burn and just basically hols the size of your fleet somehow. Well we are seeing this pattern not just here in the middle east but all over the world now and this is how airlines the handling it today because of course with no clear timeline as to how long this is going on for the gulf carriers specifically connecting both sides of the world all angles of the world by a that respective hubs here are feeling this just like any other adeline and they are typically immune to various challenges and struggles know to be the only price that affects the industry or in a normal circumstance on a normal day so airlines are responding by grounding the overwhelming majority of their fleet here in doha outside how much International Airport home to Qatar Airways they have grounded 75 percent of the fleet including the majority of a 380. 00 s. If we travel one hour to my right to the United Arab Emirates dubai and abu dhabi these super hubs to more gateways to the world closed as part of the u. A. E. Directive where they have grounded all u. A. E. Carriers actually had emirates at i. B. M. Fly to buy both at because of a fall in demand and do so because they need to do that part in limiting the spread of cub it 19 but what i think was really interesting specifically that came from the u. A. E. Was that they said that they would be there of course to respond to the actual demand when it picks up again but they did state that actually there is no demand now and thats why they are having to completely suspend all operations and aca is only ever able to make money for an airline when there are passengers on board when it is in the air and for the majority of allans worldwide right now those aircraft are not in the air and if there are some i can guarantee you the majority of them do not have very many passengers at all and so the airlines are having to respond for the now and then of course plan for the next 3 to 6 months how will this impact the airlines that have secured huge deals with abas and boeing for the introduction of your brand new jet yes when they join. One of single empty seat in addition now how will they factor that in in around 3 months thats that thats the challenge they base annele in london would it be fair to say that this is the worst crisis to hit the Airline World in as much as aviation you know when you get your bum on a seat thats relatively speaking a very very cheap way to move around the world anyway the Profit Margins are so tiny if youre flying an economy down the back of a full a 380. 00 you know say catteries be a whoever theyre not making a lot of money on the seat and on top of that youve got to convince people who now cannot afford to fly who dont want to fly to start flying again at some point in the future so all these carriers have got to plan on taking a massive hit that might be so big they have to face the prospect of going out of business. Yeah i think youre right i mean this is not the 1st major crisis that the industry has faced and actually the industry is very resilient you go back to 911. The industry had a significant hit there in terms of global profits and if you look at why after published they it took about 5 years after 911 for the industry to recover and become profitable again then you take the next big crisis which was the 2008 financial crisis and then the industry had a almost you know the 1st year a significant hit bigger than probably 911. 00 that but the Recovery Period was within about 2 years and this is a slightly different crisis and i think there is this 2 possibly 3 reasons why this is a slightly different crisis one is that we have a restriction globally from various governments about the movement of people so even if people want to supply that they caught the 2nd major reason is because a lot of people around the world in various sectors have been laid off theyre unemployed that is going to hit their personal finances and the amount of disposable income is reduced dramatically and i think the 3rd major impact demand is going to be once this crisis begins to recover what about some of the perceptions of passengers regarding Health Concerns you know is sitting in an aircraft cabin for several hours are you more likely to catch the virus and i think those 3 things have to improve dramatically for the industry for the demand to pick up again so its going to be interesting its not have a crisis that weve seen in the past you know and how quickly will the industry recover is this going to be quite a long recovery like we saw after 911 or is this going to be a recovery that is going to bounce back relatively quickly i think demand will bounce back fairly quickly particularly for business passengers. But its you know how how nervous is the. Regular passenger sitting in a call to me which makes up the vast majority of numbers and how quickly will they be able to feel confident that they can actually fly again thats that was that in the big question brendan so in singapore is there another bigger issue here and is this for the c. E. O. s who want to get the airlines back to profitability there isnt a multiple there isnt a one size fits all here because i mean as of 2 days ago demond in china domestic internal demand for an airline seat was done by 43 percent which is better than where it was 6 weeks ago because then it was done by 70 percent but china is the only country on the planet because of its size it has one big domestic carrier that in some ways is subsidized by the government you cannot apply that multiple to the european carriers to the big flag carriers around the world yet i mean theres there is theres all sorts of different models and we could see some resetting of these models this could provide an opportunity for that was our last press it was our last there were struggling for the prices to really look at their models and and focus on different areas in terms of network for example actually accelerate renewal of the fleet downsize maybe even some transformations but also it was that once the low Cost Airlines you know that there is an opportunity to make some changes like that could be for the better or you know where their long term outlook and or their long term positioning and make the industry healthier but were probably not going to see that much of that there is a domestic market you know that thats not really going to change those airlines in those countries that have large domestic markets you know like china you know theyll continue to benefit from those those domestic markets some some domestic markets are healthier than others theres a lot of domestic markets like australia and canada like that basically drop lease very profitable and now theres you know like malaysia where theres very intense competition and everybodys losing money so if it does vary a lot right now right the domestic market. It does give you an advantage in that china yes its starting to recover and so other domestic markets for example indonesia in japan theyre relatively. Steady i mean theyre you know theres theyre definitely down but theyre theyre relatively better than then a lot of the other countries and its certainly better than International Markets so airlines in those countries have a little bit more traffic than other airlines and then when the recovery does happen you know when in any country really knows the best markets that have been shut and i really like the abilities to prevent the spread of the virus the mess the only when the recovery happens those markets will recover 1st the domestic market thats ok coming back to an expansion as here in doha quite briefly do the c. E. O. s to the airlines and the airports have to throw out one core assumption because it occurs to me that since the 1980 s. The aviation world has had one assumption and is this Airline Travel will double every 16 years anil was making the point that people might not want to get back on a plane again they might want to do a staycation they might want to go someplace on a bullet train so tell me alex how do the big hub airports as well justify carry on expect carrying on with their Expansion Plans if nobodys going to get on that 747 all that a 380 im not to mistake i think that will be a queue of people waiting to get on that 7 plus 7 or 8 or 80 and we know history demonstrates this bounce back not just for the economic side of things but actually for the fact that the large majority of the world now are in home isolation and they will be waiting for the day that they have been given the all clear that they can travel to New Territories and see the world and and we will see that bounce back we know within the immediate aftermath of the sars outbreak in 2003 at trouble demand was right back up to presales level d after just 9 months of a crisis so that bounce back does occur well airlines have to do that bit to ensure that there is better travel confidence yes suddenly it all seems irrelevant as to who has. The best type of seat or the most direct line and actually airlines are doing all they can to convince you that their aircraft are the cleanest and that their airports are the most hygiene ik theres definitely been a shift here but i do believe that the bounce back will occur not just on an economic side of things but for the public to annul in london the i r so website today making the point there are between 770 and 800 what you and i would recognise as Civil Airlines around the world if we had this conversation again in 3 months time how many of them will have disappeared. Its difficult to say and i think the issue for Many Airlines is around liquidity so can they pay the supplies can they pay they stop and get going again no doubt there will be casualties from this because a lot of elizas that earlier rely on this call period in the summer to try and get that revenue and make that profit so its difficult to say i think its very very important to understand the International Air travel and the Aviation Industry globally puts a considerable amount of Economic Impact positive Economic Impact to 2 countries and for governments you know they they cannot in many parts of the world live without the Aviation Industry so it here in the u. K. For example the chancellor has ruled out any kind of help for airlines until it gets to a situation where its very dire and then they have to to to put some sort of bailout plan some sort of loan or grant to give these airlines its its it depends on how important the Aviation Industry is to each of the states and how much the government is willing to help those airlines i really that extent i think there will be a considerable bounce back as soon as the the crisis begins to drop away d. You know theres a lot of people that need to travel for leisure for business visiting friends and family around the world and that was that will happen i think the big airlines the ones that have got quite a significant about a cash built up will survive this and i also think Many Airlines because of the history of crises affecting the industry have strategically position themselves so that they can actually cope with these things even take the majority of the Worlds Airlines many of them have a fairly flexible fleet plan so that they can return aircraft better lisa. And in the many cases they have a mixture of aircraft that they own outright and also aircraft that they leased and so they can be very flexible about how much aircraft they are operating at any one time and thats the level of flexibility kind of risk the airlines of just want to boil that point down and put that to brendan serb in singapore when it comes to liquidity and government saying we will give you that liquidity could that potentially have a knock on a big knock on effect for some of the african carriers very briefly please brendan because the african countries are signaling look we dont have the money to do that so if its Kenya Airways if its Ethiopian Airlines you know you guys are on your own. Yeah africa is the Challenging Market and has been for some time it will be more challenging. Now because of this crisis is it doesnt affect everyone equally at an end and the africa a lot of the governments might not have to act tight or the money to bail out the airlines or to support the airlines in and thats very you know concerning for where africa its going to be very interesting to see what happens in africa so much potential there and there are lines there are so we can are generally after all enter this crisis and then already difficult position and and that might be airlines if they dont receive funds then they will run out of money very quickly and we might see some of the 1st casualties in africa and that would be unfortunate for the African Industry because its gentlemens really we have to leave our conversation there but thank you so much for taking us through so many variables so many unknowns in the weeks and months to come they were guests here on inside story on xmas charice and opata and bread in serbia and thank you too for watching you can see the program again any time on the website aljazeera dot com and for more discussion go to our Facebook Page thats facebook dot com forward slash a. J. Inside story can also follow the conversation on twitter a. J. Inside story or tweet me also about peter dalton one crummy piece at all b. And the team here in doha thanks for watching i will see you at the usual time tomorrow. Christian priest you are a friend of the palestinians is a tool for everyone and champion of the palestinian cause. An activist who is willing to sacrifice his freedom. For his beliefs. Aljazeera world tells the extraordinary story of the archbishop and the p. L. O. Every year 50000000 tons of electronic waste is thrown away the majority as anybody can be dumped in developing countries right now electronic waste is the most traded as of this with retracing the tax through the criminal organizations making big profits and asking why the west is turning a blind. Man made on the trail on aljazeera. Side of the center of moscow is on the love that we are while traveling the extra mile there are the media dont go we go there and we give them a chance to tell their story. Adrian so theyre going to hear the main news this hour on aljazeera that have now been more than 30000 coronavirus linked deaths worldwide more than hauffe of those in just 2 countries in europe aljazeera as paul brennan reports. Such as the scale of this crisis there is a risk that the numbers start to lose meaning and the deaths become mista to sticks to be noted but scarcely mourned but in italy there was no escaping scenes like these on saturday in St Josephs Church and said the coffins containing 45
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