Airlines scramble to adjust to drop in travel as coronavirus spreads

International travelers wearing a mask arrive at Hartsfield-Jackson on Tuesday, March 3, 2020. (Hyosub Shin / Hyosub.Shin@ajc.com)
International travelers wearing a mask arrive at Hartsfield-Jackson on Tuesday, March 3, 2020. (Hyosub Shin / Hyosub.Shin@ajc.com)

The coronavirus outbreak is causing travelers to cancel trips, companies to cut business travel and meeting planners to cancel conventions — also driving down business for airlines.

Atlanta-based Delta Air Lines and other carriers are responding by slashing routeswaiving change fees and weighing whether to mothball planes early while also trying to reassure skittish passengers. Hartsfield-Jackson International Airport says it is cleaning public areas at an increased frequency and coordinating with public health officials.

» THE LATEST: Complete coverage of coronavirus in Georgia

Airline CEOs met Wednesday with President Donald Trump and Vice President Mike Pence as they try to prevent a nosedive in traffic. "Right now, the fear is almost worse than the virus," said Nicholas Calio, who heads the industry group Airlines for America, according to a transcript of the meeting.

Most of the downturn so far is being felt on international routes and traffic “has collapsed” on key Asian routes, according to the International Air Transport Association, after the virus spread outside China, Airlines are reporting 50% no-shows in some markets, with double-digit percentage declines in demand globally, the industry group said Wednesday.

CORONAVIRUS TIPS

CDC recommends preventive actions to help prevent the spread of respiratory diseases:

• Avoid close contact with people who are sick.

• Avoid touching your eyes, nose, and mouth.

• Stay home when you are sick.

• Cover your cough or sneeze with a tissue, then throw the tissue in the trash.

• Clean and disinfect frequently touched objects and surfaces using a regular household cleaning spray or wipe.

• CDC does not recommend that people who are well wear a facemask to protect themselves from respiratory diseases, including COVID-19. Facemasks should be used by people who show symptoms of COVID-19 to help prevent the spread of the disease to others. The use of facemasks is also crucial for health workers and people who are taking care of someone in close settings (at home or in a health care facility).

• Wash your hands often with soap and water for at least 20 seconds, especially after going to the bathroom; before eating; and after blowing your nose, coughing, or sneezing. If soap and water are not readily available, use an alcohol-based hand sanitizer with at least 60% alcohol. Always wash hands with soap and water if hands are visibly dirty.

• If you are concerned you might have the coronavirus, call your healthcare provider before going to a hospital or clinic. In mild cases, your doctor might give you advice on how to treat symptoms at home without seeing you in person, which would reduce the number of people you expose. But in more severe cases an urgent care center or hospital would benefit from advance warning because they can prepare for your arrival. For example, they may want you to enter a special entrance, so you don’t expose others.

Source: CDC

“Future bookings are softening and carriers are reacting with measures such as crew being given unpaid leave, freezing of pay increases, and plans for aircraft to be grounded,” IATA added.

The U.S. Travel Association forecast Tuesday that international travel to the U.S. will fall 6% over the next three months. Confirmed cases of the disease known as COVID-19 are much lower in the U.S. than Asia or Europe, but they are also rising.

Chicago-based United Airlines, which has a major presence in Asia, on Wednesday announced plans to cut international flights by 20% and domestic flights by 10%. United is also inviting employees to take voluntary unpaid leaves or a reduced schedule, freezing hiring, postponing raises for managers and allowing pilots to take a month off with reduced pay.

The coronavirus fallout represents a sudden reckoning for the American airline industry after years of economic growth spurred rising traffic and profits. It’s been about a decade since Delta lost money and the airline has since grown into the most profitable in the industry.

In a bid to allay consumer concerns, Delta on Wednesday said it is waiving change fees for all domestic and international flights booked in March, and all international flights booked by March 1 for travel in the month of March.

U.S. airlines have already suspended flights to China and reduced flights to Korea and Italy. On Wednesday, Delta announced it will also cut back on flights to Japan. Starting Saturday, Delta will operate its Atlanta-Tokyo flight only five days a week instead of daily and reduce flights on some routes from other cities to Japan.

Delta could retire MD-88 and MD-90 planes and possibly some older Boeing 757s or 767s earlier than planned to shrink its fleet, according to a research note from Raymond James, which hosted an investor conference where Delta Chief Financial Officer Paul Jacobson spoke on Monday.

In addition, the airline could delay contributions to pension plans and $1 billion in capital investments, according to a summary of Jacobson’s presentation by Raymond James analyst Savanthi Syth.

The Atlanta-based carrier also can reduce outlays thanks to its profit-sharing program, which allows it to pay less to employees when profits go down. And it brings in billions of dollars from its American Express credit card agreement, revenue that is not dependent on customers traveling. The decline in fuel costs driven by coronavirus should also cut losses.

For now, the downturn still appears manageable, with softness in domestic airline bookings appearing “notable, but not drastic,” according to Syth.

Yet to be seen is how long the decline in travel will last or if it will deepen if the coronavirus outbreak makes bigger inroads in the U.S., as many health experts expect.