Pandemic struggles for aviation continue
February 03 2021 07:03 PM
By Alex Macheras
By Alex Macheras

By Alex Macheras

The reopening of Gulf airspace to Qatari registered aircraft will decrease costs by around $1.2bn, the group CEO of Qatar Airways, Akbar al-Baker has said.

“The reopening of airspace following the Gulf reconciliation will have a positive impact on the company’s financial performance,” al-Baker told the state television in an interview late Tuesday.

Last month, Qatar signed a reconciliation agreement with Saudi Arabia, the United Arab Emirates, Bahrain, and Egypt to heal their rift, which started in 2017. Following their reconciliation deal, the four countries agreed to reopen their airspace to Qatari jets.

Since the pandemic started in March 2020, Qatar Airways has paid out nearly $1.6bn of refunds to hundreds of thousands of travellers.

The airlines' Group Chief Executive Akbar al-Baker made this statement while speaking to Qatar Television. Al-Baker said that when the pandemic unfolded, last march, passengers started demanding refunds, Qatar Airways gave nearly $1.6bn. "While the other airlines actually froze the refunds, some demanding that they only be given back in vouchers, Qatar Airways held its responsibility and upheld our reputation – both as national carrier of Qatar and a reputable airline," said al-Baker.

Elsewhere, Asia has withdrawn high hopes of aviation sector recovery. Chinese seat capacity on domestic and international flights has fallen more than 20% from the end of September, when it almost got back to January 2020 levels, according to OAG Aviation, a flight data and analytics provider. People are being encouraged not to travel over the Lunar New Year period, which runs through early March, suggesting capacity may not rise until late this quarter.

The rapid rebound in Chinese aviation had a positive impact on jet fuel, which has taken the biggest hit among oil products from the pandemic. But the reduction in flights is more bad news for Asian refiners that are also struggling with weakening demand for other transport fuels.

China’s transport ministry has said the total number of trips – by air, road and rail – over the LNY period will be 40% lower than 2019. Seat capacity was 98% of January 2020 levels at the end of September, just before the Golden Week holiday, the OAG data show, before falling to 77% in late January.

Thailand and Malaysia – particularly dependent on tourism – are among the hardest-hit markets. Thai seat capacity is at 13% of pre-virus levels after getting back to 46% in late-December, according to OAG. Malaysia, which reached 31% of pre-pandemic seat capacity late last year, is at 11%.

Malaysia placed most of the country under some form of lockdown last month and officials will decide whether to extend it today. Like much of the world, there is no immediate sign of a recovery in flights in Thailand and Malaysia and there’s concern over the long-term viability of domestic airlines.

Bloomberg reported that Asian jet fuel margins are reflecting the drop in activity. They fell below $3 a barrel last week after peaking at $5.52 late last year, according to its Fair Value data. They had recovered to $4.80 on Wednesday.

Demand for jet fuel and kerosene will average 2.4mn barrels a day this quarter, with more heating fuel consumption offsetting less flights, said Kang Wu, head of global demand and Asia analytics at S&P Global Platts.

Eurocontrol data demonstrates that European flight activity looks worse than China, with air traffic set to hold at 72% below 2019 levels in February and March, according to the most optimistic estimate.

Elsewhere, Armenia became one of the first countries in the world to outline a vaccine policy for travellers. The Armenian Foreign Ministry reported that citizens of Armenia can only enter Georgia by air travel and must certify that they have received the full two doses of the Covid-19 vaccine.

“Please be informed that according to the new regulations set by the Georgian government, Armenia is not included in the list of countries whose citizens can enter Georgia if they receive a negative Covid-19 test result,” reads the ministry’s statement.

Meanwhile, Spain has detected its second known case of infection with the South African coronavirus variant in the northeastern region of Catalonia, officials said on Wednesday, a day after the government decided to restrict air travel with Brazil and South Africa.

Catalonia's public health secretary Josep Maria Argimon said this second detected case, along with the expansion of the British variant, were "not good news" amid efforts to tackle the pandemic.

Saudi Arabia announced the suspension of entry into Saudi Arabia from 20 countries, including the UK, effective from February 3, 2021.

Effective this week, all international travellers arriving at Toronto Pearson airport are required to take an additional Covid-19 test on arrival (in addition to the pre-departure testing mandate).

Elsewhere, Boeing Co has said it will dole out annual performance bonuses next month to most employees despite losing $12bn over the last year during the coronavirus pandemic.

Most of the US-based plane maker’s employees did not receive annual bonuses last year after it lost $636m in 2019 because of the grounding of its 737 MAX jet by the Federal Aviation Administration, The Seattle Times newspaper reported.

 

*The author is an aviation analyst

 



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