General

How Aviation Industry Are Coping With The Coronavirus?

Nora Setiawan

May 28, 2020

The coronavirus has a significant impact on the aviation industry due to travel restrictions that are going around the world. Significant reductions on passenger numbers have resulted in planes flying empty seats.

According to Cirium.com, more than 570.000 flights have been cancelled too, from, and within China, which equals a cancellation rate of 47% compared to the original schedule. The international flights to and from China remain restricted with only 350 flights out of an original schedule that is nearly 3.000 services operating on 16 March 2020.

The miserable news is followed by Italy, as they lockdown the country from 9 March 2020. The US to Europe travel ban is an addition to the restriction on Italy lockdown.

Even before the lockdown, major airlines adjusted the schedules and cancelled flights to and from Italy, as the case number of pandemic rises and the passenger demand plunged. The rapid escalation had the authorities have closed completely the air travel to Italy.

This analysis shows around 21.000 total flights have been cancelled. The 4.800 domestic and 17.000 international flights, to, from and within the country. This equates to 44% of the scheduled flights.

This outbreak has absolutely impacted the aviation industry’s revenue. As for the revenue lost are such as, proportionate to traffic loss, and decline in unit revenues, especially in the airport area.

With the situation going on, it has affected on Indonesia’s Aviation Industries too. As the travel restriction has been made, and The Large Social Restriction policy has been applied in the country, it has affected the industry.


The Impaction on Indonesia Aviation Industries

The outbreak impact has expanded to a multi sector. A month ago, Saudi’ hajj and umrah ministry confirmed a temporary ban of the foreign tourists. The CEO of PT Angkasa Pura (AP) acknowledged, the airport operator has seven regular Umrah departures across the country, such as Surabaya in East Java, Makassar in South Sulawesi, and surely Jakarta.

The influence on Soekarno – Hatta International Airport is bad, because the 70% – 80% international flights are from there.

The airport estimated loss Rp409 billion every month due to the pandemic. Before the outbreak, there were 15 airports in Indonesia that had direct flights from Bali, Surabaya, and Manado to China. The total flights are 35 in a day, and the average number of passengers are 6.800 in a day.

Indonesian airlines have seen a drastic decline in passenger numbers since March, it is somehow prompting them to take efficiency measures and lay off their employees. All airlines had cut their flights and routes by 50% because of a drop in passengers.

However, Garuda Indonesia is the most vulnerable airline than the other local airlines,because they rely heavily on the Chinese market, and also the only one airline to Saudi Arabia.

Indonesia’s transport ministry has banned all flights to China, however it is also affecting five local airlines, national flag carrier Garuda Indonesia and its low-cost subsidiary, Citilink, Indonesia’s largest private carrier Lion Air and its medium service unit, Batik Air, and Sriwijaya Air.

Garuda Indonesia has reduced its flights between Indonesia and Singapore from nine a day to three to five, with similar cuts to flights to Seoul and Hong Kong.

However, Garuda Indonesia is still operating normally, they have not yet closed many routes or flight schedules or even lay-off employees. The company’s revenue was quite affected by the outbreak lately.

The latest OAG (Air Transport Data Consultancy) data revealed the extent to which cuts to airline capacity, as the capacity out of Indonesia fell by 92%.

Sharp falls in airline passenger numbers triggered by the rapid spread of the outbreak will likely last the long-term viability of Indonesian carriers.

Furthermore, in order to avoid more negative impact on the aviation industries, Angkasa Pura has intense communication with domestic and international airlines, just to boost domestic flights. The strategy from them is sweeping the slots that have been used for international, now can be used for the domestic flights, while they can give more incentives to the passengers.

What The Governments Do?

On February 25, 2020, Indonesia launched a US$725 million stimulus package to support the tourism, airline, and property industries to survive in the coronavirus outbreak. In addition, the government also provided extra funding for the affordable Food program to help 15 million low-income households buy staple foods.

According to Indonesia’s Coordinating Maritime Affairs and Investment Minister, Luhut Pandjaitan, Indonesia tourism sector has lost an estimated US$500 million due to the coronavirus outbreak.

The government also has provided 98.5 billion rupiah (US$6 million) of the incentives to airlines and travel agencies. There is an additional 433 billion rupiah (US$27 million) of discounts available for domestic tourists visiting one of the 10 tourist destinations promoted by the government. These destinations are Denpasar, Batam, Bintan, Manado, Yogyakarta, Labuan Bajo, Belitung, Lombok, and Malang.

This all equates to a 30% discount for flights from March to May 2020. State-run oil company PT Pertamina will also give discounts on jet fuel equal to 265 billion rupiah (US$18 million) at nine airports to support airlines that provide the 30% airfare discounts.

Additionally, the government will waiver taxes for hoteliers and restaurants located in those 10 destinations for the next six months. The solution will surely attract more local tourists to go to one of the destinations.

The golden age of air travel has gone and it will be a significant period of time to be back normal again. However, with the help from the governments, Indonesia’s airlines will survive.

In addition, the aviation’s economy has not yet recovered 100%, but Indonesia’s aviation industries have an ability to potentially recover. Even though it will be long and slow, but it should be placed on the belief to prosper again.

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