Specialist
Former Head at Cathay Pacific Airways Ltd
Agenda
- Volume at risk and impact of flight cancellations
- Revenue and profitability compression
- Potential structural risk among APAC airlines
Questions
1.
What would you say is the number of flights cancelled per day in the APAC region on account of the coronavirus?
2.
Is there a way to relate that number of cancelled flights back to the number of seats lost daily or weekly?
3.
Which airlines are bearing the brunt of these cancellations?
4.
Do you think India will feel any hurt or volume loss during this crisis? You outlined some of the impact on Australia.
5.
Which network model – point-to-point or hub-and-spoke – do you think is more affected by the current volume cancellation?
6.
When these major travel hubs – Hong Kong, major Chinese cities, Macau – close down, is there a ripple effect throughout the entire region where a lot of network traffic also closes down?
7.
How do the actual capacity cuts deviate from the planned capacity cuts? Is there a significant discrepancy?
8.
Are there any operators who are particularly sensitive to the downside from the situation and to that trade-off between slots and keeping costs low? Do LCCs [low-cost carriers] with limited headway perhaps have less time where they have to start considering dropping slots vs running cash-burning flights?
9.
You gave the example of Singapore Airlines going from seven planned cuts down to four, but as you mentioned, on any day, it could go down to three. In that case, there is a deviation of about 25%. Would you say that 25% is a similar corridor of deviation for other operators who have multiple frequencies in a single day on routes?
10.
You mentioned the cargo flow that can support legacy carriers. Do you think there will be that extra cargo capacity to make up for those lost passenger volumes, or might a drop-down in economic activity perhaps reduce the cargo load available to compensate?
11.
You mentioned the legacy carriers’ inability to redeploy onto other routes to make up for lost volumes. When carriers do manage that, what are the typical costs of redeploying aircraft from their typical routes onto the other routes where there is less volume bleed?
12.
How does your estimate of daily cancelled seats due to the coronavirus translate into daily lost revenue for these airlines?
13.
Could you elaborate on the dynamic of direct revenue loss on cancelled routes vs network revenue lost through traffic at major hubs?
14.
Normally, without these mass cancellations, how much typical operating profit would this lost traffic represent? We established basically a 1% capacity cut equalling a 1% drop in revenue or more. What is the typical drop in operating profit?
15.
Could we examine the shift in consumer sentiment in APAC and its consequences for the passenger booking curve, especially considering last-minute passengers as a potentially higher-yielding sub-segment?
16.
You mentioned that under typical circumstances, optimising this booking curve can squeeze out 2-3% more revenue if done well. Now that the curve is inverted, are these optimisation strategies creating the opposite case, with a 2-3% drop in revenue on top of the volume-related revenue drop?
17.
What would you say is the breakeven target occupancy for a flight, and how does that differ for an LCC vs a legacy?
18.
How would you describe the sentiment of travellers outside of the APAC region? Is there also a significant slowdown in UK and US traffic?
19.
Perhaps considering the SARS [Severe Acute Respiratory Syndrome] outbreak of 2003 as a comparative period, how long does this drop in sentiment typically last for?
20.
Which major airlines in this region do you think are most at risk in this situation, especially structurally? If this situation continues beyond June, which airlines are most likely to need to go back to the market to raise money to keep afloat?
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