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Airlines try ultra-cheap fares to get the world flying again

InternationalJan 10. 2021A member of the cabin crew wearing a protective face ask checks cabin seating ahead of the flight on-board a passenger aircraft operated by Wizz Air Holdings at Liszt Ferenc airport in Budapest, Hungary, on May 25, 2020. MUST CREDIT: Bloomberg photo by Akos Stiller.

By Syndication Washington Post, Bloomberg · Christopher Jasper, Charlotte Ryan, Justin Bachman, Will Davies

The nightmare year of 2020 brought the airline industry’s first decade of sustained profitability to a shuddering halt. The coronavirus pandemic tore through in a tumultuous, unprecedented way — leaving carriers in a deep hole, along with a constellation of aerospace manufacturers, airports and leasing firms.

2021 is shaping up to be a transition year for an enterprise that takes passengers on the equivalent of 208 million annual trips around the globe. At best, the path ahead will be bumpy, with progress toward a return to travel dependent on the pace of vaccine roll-outs, access to capital, government policies and the unpredictability of a virus that’s not yet fully understood. Still, there will be leaps, including the first commercial flights to near-space.

Travelers arrive at a Deutsche Lufthansa covid-19 testing center before boarding a flight at Munich Airport on Nov. 12, 2020. MUST CREDIT: Bloomberg photo by Michaela Handrek-Rehle.

Here are some developments to look for over the next 12 months.

– Fare wars: Airline traffic won’t see a major boost until vaccines saturate populations enough to stamp down infection rates. Even then, it may take effort to get some people back on planes. In Europe, that’ll mean fares as low as 9.99 euros ($12.33), according to Ryanair Chief Executive Officer Michael O’Leary. The Irish discounter on Thursday slashed its schedule through March, underscoring the uncertainties still clouding the industry outlook.

Other ideas being floated to entice travelers are free hotel stays, 2-for-1 deals and complimentary travel insurance. Travel-pass promotions from carriers such as China Eastern Airlines Corp., which is offering unlimited flights for a single price, have proved popular, while online agents show ultra-cheap trips in China for the Lunar New Year holiday next month. The key question is how long it’ll take to wean customers off those incentives.

An upturn in leisure and family travel should hit most regions by around midyear. More lucrative business traffic is likely to trail as companies resist sending people out on the road. John Grant, chief analyst at flight-bookings specialist OAG, says it won’t be a recovery until enticements are no longer needed and carriers can manage routes for profit.

– Cash quest; Airlines raised record amounts of money in 2020. More will be required in 2021. Stock sales and debt conversions will take on a greater importance as companies try to restore balance sheets to health. Governments, which ponied up $220 billion in state aid last year according to Moody’s, will continue to play a role. France and the Netherlands, the largest shareholders in Air France-KLM, are in negotiations to inject billions of euros more, while converting part of the 10.4 billion euros already loaned into hybrid debt.

Carriers like EasyJet are likely to raise more equity, while cash burn remains a concern, according to Daniel Roeska, an analyst at Sanford C. Bernstein. Some airlines are in more desperate straits. Norwegian Air Shuttle’s court-supervised restructuring plan relies on attracting new investment and would largely drop its well-known trans-Atlantic business to focus on regional services.

Creditors of bankrupt Thai Airways International are due to consider a rehabilitation plan in February. AirAsia X, the Malaysian long-distance carrier, and Thailand’s Nok Airlines are also due to present plans in coming months. U.S. airlines will receive $15 billion in federal aid to help pay workers through March 31, on top of $25 billion in similar help provided during 2020. The U.S. Treasury Department has made billions more available in the form of loans.

A member of flight crew sits next to social distancing signs at London’s Heathrow Airport on Dec. 19, 2020. MUST CREDIT: Bloomberg photo by Chris Ratcliffe.

– Airline shakeout: Dozens of airlines have disappeared or filed for bankruptcy since the pandemic began. More are on life support, in danger of getting swallowed by stronger players. In Germany, Deutsche Lufthansa is taking straight aim at holiday specialist Condor by adding routes to sunny spots like Zanzibar and Corfu. Condor, once a Lufthansa unit that in 2019 survived the failure of then-parent Thomas Cook, could make a tempting target.

However, natural consolidators like Lufthansa that accepted bailouts may be prevented from making purchases under terms of state aid packages. In India, Tata Sons bought out struggling partner AirAsia Group Bhd.’s stake in a local joint venture. State-owned Air India is another potential target, possibly through Vistara, Tata’s venture with Singapore Airlines. Air India’s buyer would “definitely need to make it a lot leaner,” Bloomberg Intelligence analyst James Teo says.

– Space trips: After years of work and premature predictions, the first “ordinary” space adventurers are poised to take flight in 2021 with billionaire Richard Branson inaugurating commercial suborbital rides at Virgin Galactic Holdings Inc. The company has told investors its spacecraft will carry Branson from New Mexico in the first quarter and then commence services with a group of about 600 early customers who have paid as much as $250,000 a ticket.

Branson’s venture could see competition from Jeff Bezos, who’s developing Blue Origin’s New Shepard reusable rocket for suborbital rides. In October, the company performed its seventh test flight from Van Horn, Texas. It plans “a couple” more before humans fly. A third outfit, Elon Musk’s Space Exploration Technologies Corp., is set to fly a four-person private crew for Axiom Space Inc. late in the year. The group will have a 10-day stint aboard the International Space Station as part of NASA’s efforts to spur commercial enterprise in low-earth orbit.

– Wide-body woes: While interest is starting to pick up for smaller jetliners, the market for twin-aisle aircraft from Airbus and Boeing is “beyond grim,” said aerospace consultant Richard Aboulafia. Sales were depressed before the outbreak, and a surplus of used models will crimp demand for years.

With long-distance travel on hold, Airbus and Boeing have seen higher retirement rates for their biggest planes within airline fleets and a dearth of new orders. And there’s not much sign of encouragement. Boeing is fighting to hold on to orders for the largest plane on the market, its 777-9, which is two years behind schedule. Analysts see more production-rate cuts ahead for the better-selling Boeing 787 — which is also beset by production snafus — and the Airbus A350.

Output of the less-popular A330 could go down to one a month, according to Agency Partners analyst Sash Tusa. The plane has struggled to attact orders despite a reengined version, with biggest customer AirAsia X’s financial troubles the latest blow. Still, analysts predict the program will limp on at lower rates rather than being scrapped.

– Weaker links: Major airlines packed into ever smaller destinations as the boom in air travel hit its zenith in 2019. Now, they’re dropping newly unprofitable routes to stem losses. Fewer flights, smaller planes and reduced big-city connections are eating into the economies of some tourism-dependent locations. A portion of the pullback could last indefinitely, according to OAG’s Grant.

Particularly vulnerable are longer routes that were still in their developmental phase. From late March, British Airways will permanently axe 13 long-haul destinations across North America, the Middle East, South Africa and Asia. Cathay Pacific will cease services to seven global locations as losses mount. Cities such as Manchester, England, are vulnerable to weaker links to key markets like China, while flights from Beijing to Lisbon, Barcelona and even Madrid could come under pressure as airlines re-evaluate. Large Middle Eastern carriers like Emirates and Qatar Airways, which thrive on whisking passengers across the world, aren’t likely to fill the gaps, according to Grant. He says they’re serving as many destinations as they can, given a dearth of connecting traffic. “It’s more about getting back to pre-Covid capacity and demand levels.”

– Startup hustle: While launching an airline into the teeth of the industry’s worst-ever downturn might seem reckless, there is some logic. Financing remains cheap, and the pandemic has created a huge fleet of grounded jetliners, many owned by leasing firms desperate to find new operators. Planemakers are also seeking buyers for brand-new aircraft following order cancellations — Boeing’s 737 Max in particular as the model returns from a 20-month grounding.

Incumbents have cut capacity and thousands of jobs, providing would-be rivals with a glut of experienced staff, while high debt levels limit their ability to fight back. Among projects underway, Cyrus Capital aims to revive Britain’s Flybe after buying the brand from administrators, while newly founded Emerald Airlines has won a contract to provide regional flights for Ireland’s Aer Lingus. Oslo-based Flyr, set to launch in coming months, wants to pick up traffic from Norwegian, and the founders of PT Lion Mentari Airlines are said to be planning a startup in Indonesia.

In North America, Canada’s Flair Airlines aims to expand from three jets to 50 under a new brand and management, while in Miami, Global Crossing Airlines, flying as GlobalX, plans to operate charter flights to Latin America. South African lessor Global Airways helped launch discounter Lift on Dec. 10 with its own surplus jets, indicating a possible new direction for finance firms stuck with idled planes.

– Brave new world: Just as long security lines, removing your shoes and limits on liquids have colored the post 9/11 experience of air travel, Covid is likely to herald continued use of masks, social distancing and apps for passenger records. “When we look back on this in five or 10 years, it’s going to be a catalyst for many changes,” says John Strickland of airline advisory firm JLS Consulting.

Customers are likely to demand airlines maintain their current high levels of hygiene, which could impact profitability. One major change that’s becoming part of the landscape is the introduction of pre-departure covid tests. Carriers had pushed for the step as a way to encourage travel, but had little success until the detection of a new strain of the virus in Britain forced governments into a rethink.

France and other European nations demanded screening for all U.K. passengers, while carriers including British Airways and Virgin Atlantic Airways Ltd. made checks mandatory for U.S.-bound flights – a policy the U.S. is itself considering for flights coming in from abroad. Separately, many airlines have eliminated change fees, and refunds could get easier after cash-strapped carriers held on to revenue for canceled flights, prompting an outcry. Improvements to processes for boarding and check-in are also likely to become permanent.

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U.K. experiment to combat covid variant

InternationalJan 10. 2021

By The Washington Post · William Booth

LONDON – Faced with soaring hospitalizations and deaths, Britain is launching a daring campaign to combat a ferociously infectious variant of the coronavirus by spacing the first and second doses of approved vaccines out over months instead of weeks.

The full vaccine deployment plan will be published by the government Monday, but the difficult decision to alter the recommended vaccination schedules will apply to the entire population, including the elderly and health-care workers.

Without enough doses immediately available, public health officials are betting that crucial second injections of two approved vaccines can be pushed back from their recommended waiting intervals – 21 days for Pfizer and 28 days for AstraZeneca – to 84 days for both.

The government’s science advisers say there is little choice, given the explosion in cases, even as they acknowledge that delaying the second dose involves risk. Clinical trials did not test the efficacy of the vaccines when administered on such an elongated schedule.

When Britain first proposed a three-month wait between doses, scientists in the United States, Europe and at the World Health Organization sounded dubious.

The Food and Drug Administration earlier this week said it would be “premature” and “not rooted solidly in the available evidence” to change the way the two authorized vaccines are administered.

On Friday, a spokesman for President-elect Joe Biden said the incoming administration will release nearly every available dose of vaccine in the United States after Biden takes office Jan. 20 to get supplies quickly out to the states. The move marks a switch from the current policy of holding back half to ensure second doses are available to those who have received a first dose.

The spokesman did not say the plan, to be spelled out in detail next week, will entail delays in people getting their second doses.

Limited data suggests a single shot of the Pfizer or AstraZeneca vaccines affords some protection against disease. For example, the first jab of the Pfizer vaccine was 52% effective in the three-week interval before people received the booster shot. Similar results were described for the Moderna vaccine, which British regulators approved for emergency use Friday.

But it is not known how long the protection lasts.

Britain’s health secretary, Matt Hancock, said earlier that a 12-week interval between doses will mean individuals might be less protected from the virus, but society overall will see more people vaccinated more quickly. That is the essential trade-off.

Hancock stressed that a single dose should protect most from the severe symptoms of covid-19 that send patients to overstretched hospitals and ICUs.

British scientists have largely supported the plan, acknowledging that the country faces a race between vaccines and the virus.

“It is safest and most cautious to use the vaccines in the exact conditions reflecting the trials,” said Stephen Evans, professor of pharmacoepidemiology at the London School of Hygiene and Tropical Medicine. “However, this will never be possible in the real world, and the question is how much moving outside the exact conditions is acceptable.”

On Friday, the WHO offered interim guidance that partially backed Britain’s approach, saying the period between the first and second doses of the Pfizer vaccine can be up to six weeks instead of the three weeks recommended.

WHO experts noted many countries are facing a crisis.

“Countries experiencing exceptional epidemiological circumstances may consider delaying for a short period the administration of the second dose as a pragmatic approach to maximizing the number of individuals benefiting from a first dose while vaccine supply continues to increase,” its guidance said.

Britain is being hammered by a third wave of covid-19, driven by a highly transmissible variant of the coronavirus. The country is under another national lockdown.

London Mayor Sadiq Khan on Friday said that the new variant is raging “out of control” and that hospitals are in danger of being overwhelmed.

More than 1 in 20 people in some parts of the capital city are infected, Khan said. In England overall, 1 in 50 are infected.

One respiratory physician wrote in the Guardian that London hospitals are rationing access to oxygen, with doctors having to decide who can be saved.

“This is a national challenge like nothing we’ve seen before,” said Prime Minister Boris Johnson at briefing Thursday, when he announced that the British military has been given the job of coordinating the delivery of millions of doses.

Britain has so far given 1.5 million people the Pfizer vaccine, alongside the first doses of the newly approved AstraZeneca-Oxford shot, in an early rollout Johnson hailed as the most advanced in Europe. The Moderna vaccine won’t be available in Britain until spring.

By mid-February, the government aims to have vaccinated the 15 million people in the top four priority groups, which include all those over 70 years old along with all residents of nursing homes, front-line medical and care workers, and those with extremely serious medical conditions. Health officials say 88 percent of covid deaths have occurred among the over-70 cohort.

Nilay Shah, head of the department of chemical engineering at Imperial College London, told The Washington Post, “The aim is just about achievable, but everything needs to go right every single day.”

Shah said the new campaign will require Britain to quickly ramp up to administering 300,000 doses a day, seven days a week, over 50 days.

Britons have watched in despair in past months as the government fell short of its promises: producing record numbers of emergency ventilators but after they were needed; struggling in the early months of the pandemic to get protective gear to front-line medical workers who were donning garbage bags instead; and repeatedly promising, but never delivering, a “world-beating” cellphone app to alert users when they have had close contact with an infected person.

The prime minister, too, has been accused of delaying decisions until events overtake him. On Sunday, he promised schools would reopen Monday. On Monday, he closed them again.

By the end of next week, Johnson said, the new campaign will be underway at 1,000 sites operated by general practitioners; at 223 hospitals and 200 pharmacies; and at seven mass vaccination centers located in sports stadiums and convention halls.

Simon Stevens, chief executive of the National Health Service, the country’s publicly funded health-care system, said 80,000 workers and volunteers – including doctors and nurses brought out of retirement – will be deployed.

Stevens said the NHS is also “unashamedly tapping into armed forces” to provide logistics.

Brig. Phil Prosser, who in the past was charged with getting troops and equipment onto the battlefield, said “a vaccine program of this size has not done before.”

He compared the logistical challenge to “setting up a major supermarket chain in a month.”

In Britain, much of the blame for the surge in cases has been ascribed to the new variant of the virus, which research suggests is at least 30% to 70% more infectious.

Jim Naismith, professor of structural biology at the University of Oxford, told science journalists, “It is not really possible to overstate how serious this new strain is.”

He warned, “If we fail to reduce the spread of the new strain, then we are likely to overwhelm the NHS.”

There is no evidence at this point that the mutated virus increases disease severity, nor is it anticipated that the new variant will soon affect vaccine effectiveness, though it is also true that viruses change over time and vaccines often need to be tweaked to keep up.

The Pfizer vaccine works against a key mutation found in fast-spreading coronavirus variants first discovered in the Britain and South Africa and are now spreading across the globe.

That finding bolsters many scientists’ expectations that the immune response triggered by vaccines will be broad enough to counter the highly contagious mutations. The research, led by scientists at the University of Texas Medical Branch, was published Thursday but is not yet peer-reviewed.

More experiments and direct tests of both variants in the next few weeks will bring greater clarity, scientists said. British scientists will also monitor the efficacy of the new dose regime.

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Missing Indonesia passenger plane feared to have crashed after take-off from Jakarta

InternationalJan 09. 2021

Wahyudi Soeriaatmadja Indonesia Correspondent The Straits Times

JAKARTA – A Sriwijaya Air flight carrying 56 passengers and six crew members is feared to have crashed as it lost contact on Saturday (Jan 9) afternoon after taking off from the Indonesian capital of Jakarta.

The SJ-182 flight’s last contact with the aviation tower was at around 2.40pm Jakarta time (3.40pm Singapore time) as the Boeing 737-500 flew en route to Pontianak, West Kalimantan.

Sriwijaya said in a statement that it is “keeping contact with various relevant parties to get more detailed info on  SJ-182 flight, Jakarta – Pontianak”.

“The management is having communications and investigating this and will immediately issue further statement when we get information,” the statement added.

“We heard a big boom around 2pm,” Jakarta-based Elshinta radio reported, citing a resident of Lancang island, part of the Thousand Islands district north of Jakarta.

“We all first thought it was thunder because rain was pouring,” the radio cited a resident identified as Mr Naki.

Mr Mustakin, another resident of the Thousand Islands district, told Elshinta radio he heard two explosions. 

Indonesia’s search and rescue agency Basarnas said at a press briefing on Saturday night that the focus of the search is between Laki island and Lancang island.

It added that it has not received a distress signal transmitted from the plane’s ELT (Emergency Locator Transmitter).

“Search operations will continue 24 hours a day, focusing on the area where debris probably belonging to the plane were found. We are trying to find the exact coordinate,” Basarnas deputy chief, Major General Bambang Suyo Aji, told reporters.

Broadcaster Kompas TV quoted local fishermen as saying they had found debris near the islands, but it could not be immediately confirmed as having belonged to the missing jet.

The plane is a Boeing 737-500 series which first flew in May 1994, according to Flightradar. It is not a 737 Max, the Boeing model involved in two major crashes in recent years. A Boeing 737 MAX operated by Indonesian airline Lion Air crashed off Jakarta in late 2018, killing all 189 passengers and crew.

The Sriwijaya aircraft had lost more than 3,000m in altitude in less than a minute, according to flight-tracking website Flightradar24.com.

Among the 56 passengers are seven children and three infants. There are two pilots and four cabin crew on board.

Sriwijaya Air was established in 2003. The private airline, which had more than half of its fleet grounded, had hopes to gradually resume full operations, after it secured maintenance services from national carrier Garuda.

On Oct 1, Sriwijaya Air and national carrier Garuda renewed their management cooperation agreement that will allow the former to send its aircraft for maintenance at Garuda’s subsidiary Garuda Maintenance Facility (GMF) AeroAsia.

Sriwijaya Air operates flights within Indonesia and to China, Malaysia and Timor Leste.

Missing Indonesia passenger plane feared to have crashed after take-off from Jakarta

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North Korea’s Kim calls U.S. ‘our biggest enemy,’ says its hostile policies never change

InternationalJan 09. 2021

North Korea leader Kim Jong Un

By The Washington Post, Simon Denyer

TOKYO – North Korea leader Kim Jong Un called the United States “our biggest enemy,” and said Washington’s hostile policy toward his country won’t change whoever is in the White House, state media reported on Saturday.

Kim, speaking at a rare ruling party congress, also called for North Korea to continue to expand its nuclear arsenal and long-range missile, although he said North Korea would not “misuse” its nuclear weapons unless its sovereignty was threatened, the Korea Central News Agency reported.

“Our foreign political activities ought to be focused and directed on subduing and defeating the United States, our biggest enemy, and the main obstacle to our revolutionary developments,” Kim said Friday. “No matter who is in power in the U.S., the true nature of the U.S. and its fundamental policies towards North Korea never change.”

President-elect Joe Biden called Kim a “thug” during the election campaign, and North Korean state media last year called him a “rabid dog” who needs to be put down.

In October, North Korea displayed a huge, new intercontinental ballistic missile (ICBM) at a military parade in Pyongyang, although the weapon has yet to be tested.

Some experts worry that Kim might greet the incoming U.S. leader with a long-range missile test, in order to get his attention, while others argue there could be a window of opportunity for the two sides to explore diplomacy.

But Friday’s speech is a reminder that North Korea is not about to give up its nuclear arsenal.

“There is no more foolish and dangerous act than not reinforcing our own forces while clearly seeing development of state-of-the-art weapons of our enemies,” Kim said.

“The reality is that we need to tirelessly strengthen our national defense capabilities in order to deter military threats from the U.S. and achieve peace and prosperity on the Korean Peninsula.”

Indeed, Kim called for expanding the country’s nuclear arsenal, including “preemptive” and “retaliatory” strike capabilities, so that its warheads can “accurately hit and extinguish arbitrary strategic targets” within 15,000 km (9,320 miles), a range that would comfortably include Washington.

Kim vowed to develop solid-fuel ICBMs that can be launched from land and sea. He called for more research and development into advanced military equipment, including spy satellites, hypersonic weapons and reconnaissance drones, and said research had nearly been completed on a nuclear submarine.

“We ought to augment our nuclear technology and further develop the nuclear weapons to be lighter and smaller … while continue producing tactical nuclear weapons and super-large nuclear warheads,” he said.

Kim said the key to better relations with the United States was for Washington to withdraw its hostile policy, while also stressing the need for North Korea to expand a coalition with “anti-imperialist and independent forces.”