Chapter 3 Pandemic Arrival and Evolution
On December 31, 2019, World Health Organization (WHO) was alerted by China about several cases of unusual pneumonia in the city of Wuhan, Hubei province of China. The virus was unknown but, several of those infected worked at the city’s Huanan Seafood Wholesale Market, which was shut down on January 1, 2020. Despite the closure and the disinfection of the installations, the virus was already spreading outside reaching the 44 case-patients by January 3.
It was necessary seven days to isolate the new virus. In January 7, the Chinese authorities announced they had identified a new virus, now named 2019-nCoV and classified into the coronavirus family. It was 2 days later when coronavirus claimed the first victim. On January 20, there were already 282 confirmed cases from four different countries including Thailand, Japan and the Republic of Korea and China, who reported the third death.
In the week of January 23 less than 15% of new cases reported having visited the Hunan market. There was more evidence that 2019-nCoV spread from human to human and with this raised the fears of a major outbrake as millions of people travelled for the Lunar New Year Holiday. From January 20 to January 23 the cases were more than duplicated in China and in the United states the first positive of 2019-nCoV was reported. Finally, in January 23 the cities of Wuhan, Xiantao and Chibi in Hubei province were placed under effective quarantine. First air transport measures arrived and departures from these cities were suspended. By the end of the week, more areas would be lockdown affecting a total of 56 million people.
Being a new virus, with no immunity or vaccines the only way to stop or reduce its spread was through physically isolating people. This is entirely in opposition to what aviation is, and the reason why aviation is probably the industry more impacted by COVID-19. To isolate people and to avoid the spreading, one of the first measures applied by governments was to ban travel.
As explained, in this stage of the pandemic, the transmission primarily occurred in China. The solution in this step was simple: ban the travel from China. This measure was rapidly taken by several countries like the United States of America or Afghanistan. Others like Canada or Thailand highly recommended to avoid travelling to China. In response to the drop in demand, several airlines cancelled their flights to China. Even though, the financial aftereffect of closing the borders was limited due to only a few foreign airlines were exposed to China. This was partly due to the strength of the Chinese airlines in China, which are mostly owned by the government of the country meaning they could take the hit. Several nearby airlines would be affected and would struggle but the lock-down of China was a bearable hit.
Figure 3.1: Some of the most affected foreign carriers by the China lockdown.
It was not until the January 30 when WHO declared the global emergency. By that day, deaths in China jumped to 170, there were more than 7.5 K cases confirmed in 18 different countries around the globe including Australia, France, Finland, Germany, Canada, among others. New travel ban were also applied to the most affected countries: Firstly South Korea and some days after Iran.
In the following days, more cases were confirmed in India, Russia, Spain, Sweden, and it was on February 2, the Philippines reported the first death outside China. It was 4 days later, on February 6, when Malaysian authorities reported the country’s first known human to human transmission, meanwhile, in Europe the number of infected people reached 30.
On February 9, the number of deaths in China surpassed that caused by 2002/2003 SARS epidemic, with 811 deaths and 37 K infections. Next days the virus continued spreading and several countries reported their first deaths. On February 11, WHO announced the disease caused by the new coronavirus would be called, COVID-19 meanwhile the virus itself would be named as SARS-CoV-2.
By February 27, the global infections passed 82 K, including more than 2.8 K deaths. This week marked the confirmation of first cases in countries around the world. In Europe, Italy was the country hardest hit and also the first to impose a quarantine. On March 8 the region of Lombardy and other 14 areas in the north of Italy were lockdown, affecting a total of 16 M people. Once again the airlines cancelled the flights to the Italian boot, but the virus could not be retained and spread around Europe. Europe would become the centre of the pandemic, the first fatal hit to the aviation industry by COVID-19 outbreak.
The virus was devastating the European continent, home by revenue of 3 of the 6 largest airline groups in the world: AirFrance KLM (Air France and KLM), Lufthansa Group (Lufthansa, Austrian Airlines, Swiss Airlines, Brussels Airlines and Eurowings) and IAG (Aer Lingus, British Airways, Iberia, LEVEL and Vueling. With governments now applying new measures, no-one wanted to travel to Europe, the demand dropped. It was the origin of an untenable situation for the industry.
Figure 3.2: Airlines forming the IAG, AirFrance KLM and Lufthansa Group
On March 11, the virus was a reality around the world and a truly concern. It was that day when WHO declared the coronavirus outbreak as a pandemic, This would be the beginning of the biggest strike in the history of the aviation industry. The era of isolation.
The virus spread fast and aggressively and at the other side of the Atlantic the measures did not take long to arrive. In March 11 President of the United States of America, Trump appeared laying out some of the measures the government will be applying in response to the virus. The most stunning of which, being a complete ban of all foreign travellers from Europe starting on March 13 and for 30 days. An unprecedented measure. The United States and Europe are two of the most economically linked regions of the world. More than 1.5 K flights cross the Atlantic sea per day, a travel ban between the two was an imaginable measure. This will represent the second fatal hit to the aviation industry. Banning traffic between the United States and Europe will affect an enormous number of people and considering the long-haul flights are for the airlines the most profitable, the reaction arrived soon. In the next days, Delta, United and American Airlines will join the big Europeans three (IAG, AirFrance KLM and Lufthansa Group) to have their demand slashed. The six biggest airlines of the world by revenue will be now into crisis mood.
Figure 3.3: The big three airlines in the United States
But not only the transatlantic long haul-flights decreased in demand, the domestic US and inter-Europe travel dropped like never before. Most every airline of Europe start experiencing what is called net negative bookings. In other words, airlines were refunding more bookings that they had coming in (Wendover Productions 2020b).
By the end of March, the number of cases increased to 750 K cases and the coronavirus related death surpassed 35 K. Although in Europe, the number of cases started to reduce. It was different for Americas, where the virus started to hit stronger. In fact, in March 31 the number of deaths in US surpassed those reported by China, in which thanks to the lock-down, the strict commitment of Chinese people and the strong measures applied for the government, since March 10 the daily new cases reduced to nearly zero. Finally, on April 8, 76 days later sealing off the city, Wuhan population was allowed to leave. It took around two months to stabilise the number of cases to 80 K and the deaths to 4.5 K.
On the other hand, in Europe, by April 8 Spain ranked as the most affected country of the region with around 140 K cases, followed by Italy (135 K), Germany (100 K), France (77 K), among others. The United States presented more than 300000 cases, being clear both continents had still a lot to do in order to flatten the curve (Aljazeera 2020).
As seen in Chapter 2, aviation industry has had to face several difficult circumstances. Almost 20 years ago, in 2001, the 9/11 affected the sector in many ways, being the most dramatic event for the industry. Three days after the terrorist attack, some of the major US airlines were laying off thousands of personnel, many people lost their jobs and several airlines went into bankruptcy protection. Air travel was down 1.5%. Seven years later, in 2008 with the great recession, the industry lost nearly 1%. Even though, aviation made it through and recovered. With coronavirus outbrake, air travel is expected to be down 48%2 in 2020.
Coronovirus pandemic has hit the travel industry and generating a drop in demand that was not seen even after the 9/11. This scenario is completely new for the sector with the biggest uncertainty of having no visibility when this is going to end (CNBC 2020).
As of April 14.↩