America’s Travel Ban Could Cost The Industry $2 Billion

The 30 day travel ban between the United States and Europe could cost US$2 billion. Midway between a ban running from mid-March to mid-April, revenue from about 5.5 million seats will be lost. It will be a devastating blow to an industry being brought to its knees by both the closure of borders and cessation of travel demand.

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Cirium expects the 30-day travel ban between the US and Europe to cost at least US$2 billion. Photo: Getty.

24,500 transatlantic flights will not run this month

Analysts at Cirium have crunched travel data to come up with this number. They say 24,500 transatlantic flights were timetabled to fly between 14 March and 12 April. As Cirium points out, while US$2 billion may not seem like a lot of money, this is just for the transatlantic market over  a 30-day period. Cirium’s Director of Market Development, Alistair Rivers, said;

While US$2bn may seem like a small figure in comparison to what the major US carriers generate alone for Atlantic flights, this represents a significant loss considering the ban only applies to Schengen countries and the UK over a 30-day period.

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As airlines around the world react to government restrictions placed on travel, their clear objectives for now are to help contain the spread of the virus–protecting people–and at the same time try to survive this unprecedented crisis.”

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The situation is deteriorating on a daily basis

With the situation deteriorating daily, previously grim forecasts of financial headwinds are becoming worse. Just three weeks ago, IATA predicted a worst-case scenario of US$113 billion worldwide for the airline industry. That has now more than doubled to US$252 billion.

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The 30-day travel ban is placing immense financial pressure on airlines. Photo: Adrian Pingstone via Wikimedia Commons.

And IATA expects Europe to endure the worst of this. With borders closed and routes suspended, including the all-important transatlantic market, Europe’s airlines face a financial abyss.  As the inevitable global recession kicks into gear, forward passenger demand will remain subdued even when borders re-open. IATA expects a 46% drop in revenue-per-passenger-kilometer this year.

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No winners, lots of losers

According to Cirium, the two airlines that held the biggest slices of the transatlantic pie were Delta Air Lines and United Airlines. Delta had over 830,000 passenger seats available over the 30-day travel ban period. United Airlines had over 770,000 passengers seats timetabled onto the transatlantic routes.

British Airways was the biggest European carrier on the transatlantic routes. It is losing over 750,000 seats.  Rounding out the top five transatlantic airlines are American Airlines and Lufthansa. American Airlines had 690,000 timetables seats across the transatlantic over the 30-day travel ban period. German carrier, Lufthansa, had over 600,000 seats available.

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Both British Airways and London Heathrow are paying a large penalty as a result of the 30-day travel ban. Photo: Adambro via Wikimedia Commons.

Approaching the problem from an alternative perspective – airports – it is London Heathrow that is most impacted. The European hub is losing 820,000 transatlantic seats over the 30-day period. Paris Charles de Gaulle will bid farewell to the revenue from  370,000 passenger seats. Frankfurt will lose over 340,000 seats, Amsterdam will lose over 290,000 passenger seats and Dublin will lose over 160,000 passenger seats.

These numbers are set to deteriorate further as countries tighten lockdown requirements and show no sign of easing cross border restrictions. It is a diabolical situation that will see airlines going out of business. These Cirrum and IATA forecasts are just beginning to scratch the surface regarding the long-term financial impact on airlines.

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Christian

And that’s assuming restrictions get lifted in April, which is unlikely at this point. A more likely scenario is a gradual resumption of transatlantic flights starting in early May at reduced capacity with some flights/routes not resuming until summer 2021. I also predict traffic will take 3-4 years to reach… Read more »

JFP

U.S. taxpayer aid should be apportioned according to capital investment in the past five calendar years, based on the percentage that was spent in the U.S. With that formula, Southwest would likely get much more than Delta. However, Delta should thus be in line to get more aid from the… Read more »