The outbreak of the coronavirus has plunged the airline industry into a mini crisis. The virus, which has killed over 305 people as of February 2, is spreading like a bushfire. At least 14,564 other cases have been confirmed in 26 countries.
This could possibly turn into the worst epidemic since the outbreak of the SARS virus. At its peak, in 2013, SARS sent shivers right across the globe, causing a 45% dip in air travel demand.
The Severity of the Virus and China’s Position in Global Aviation Complicate Things
First, the coronavirus spreads very easily. According to the CDC, the virus (also known as the Novel Coronavirus or 2019-nCov virus) is transmitted from person-to-person among close contacts (about six feet). Transmission mainly occurs via respiratory droplets when an infected person coughs or sneezes.
The CDC also fears that it might be possible to contract the coronavirus by touching an object or surface that has the virus on it and then touching your eyes, mouth, or nose with it. This mode of transmission makes air travel a significant risk factor.
Secondly, China has become a global aviation hub. In the past decade, China has been the world’s biggest outbound international travel market and the second-largest domestic aviation market. In 2018, for instance, 8.5 million people flew from the US to China. Also, the country accounts for about 25% of global sales for Airbus and Boeing.
Therefore, a significant number of airlines are caught between a rock and a hard place. They must protect passengers and staff from a deadly, easy-spreading virus. But, at the same time, they must also keep in mind the potential revenue losses.
Strategic Response Allowing Players to Maximize Safety while Protecting Revenue
As IATA has clearly put it, airlines are going to ensure public safety, without causing unnecessary disruption to global traffic. The message is: let’s keep everyone safe – without creating undue panic.
So, what are airlines doing?
First, the Chinese government has put Wuhan – the epicenter of the epidemic – on lockdown. No commercial flights are allowed into the city. Additionally, China’s domestic carriers, including China Airlines, have canceled flights into and out of Wuhan until the end of February.
At the borders, most airlines are following suit, albeit with a bit more caution. In Hong Kong, for example, flag carrier Cathay Pacific has suspended flights to Wuhan but will continue to fly all other Chinese routes. The airline recently said that staff could wear protective masks to China if they wish to.
In Taiwan, Mandarin Airlines has also suspended flights to Wuhan until the end of February and promised to assist passengers with rebooking. Mandarin Airlines and TigerAir Taiwan are both providing protective masks to crew and passengers.
In South Korea, the Korean Airlines is providing hazardous-material suits for crew. Singapore, India, Macau, and Vietnam-based airlines are also taking precautions, including screening passengers, providing protective masks, and canceling flights to Wuhan.
The drill remains the same in the rest of the world, with screening now intensified at most international airports. In the US, United Airlines, Delta Airlines, and American Airlines are the most affected. China accounts for 2-6% of the estimated revenue for these three airlines. United Airlines, for instance, is suspending 24 flights to and from China, starting early February.