US travel ban set to batter global airlines
Los Angeles/Washington/Brussels — The new US ban on foreign citizens entering the country if they have been in Europe in recent weeks will heap more pressure on airlines already reeling from the coronavirus pandemic, analysts say, hitting European carriers the hardest.
The 30-day curb from Friday, which excludes Britain, Ireland and other countries outside the European Schengen passport-free travel area, are similar to those that went into effect targeting China on February 1. They come after the outbreak’s rapid spread across Europe and the US.
Combined with a fresh US State Department advisory asking citizens to reconsider the need to travel globally, the move could create chaos at dozens of airports across Europe as passengers attempt a last-minute rush to fly to the US before the ban takes effect.
As well as slashing arrivals, the move is set to decimate spending by European tourists in the US. There were 5.8-million arrivals from the biggest markets of Germany, France, Italy and Spain in 2018, according to US data, which said they spent nearly $22bn combined.
European Council president Charles Michel said on Thursday in a tweet that the EU will assess the travel ban, adding: “Economic disruption must be avoided.”
“Following the travel ban President Trump announced, we will assess the situation today,” Michel said. “Europe is taking all necessary measures to contain the spread of the Covid-19 virus, limit the number of affected people and support research,” he said.
The news of the ban sent shares in Asian carriers sliding during the region’s trading day, with analysts warning of a significant effect to come when European markets opened.
Flights from Europe can still operate to a limited number of US airports with enhanced screening under measures announced on Wednesday evening. But only US citizens, permanent residents and immediate family members will be allowed in, severely denting the passenger base and hurting the US tourism industry.
US President Donald Trump said the ban was needed because the country was entering a “critical time” in the fight against the virus, which has spread across the US and killed at least 30 people and infected 1,281.
“We made a life-saving move with early action on China. Now we must take the same action with Europe,” Trump said in an address to the nation. “We will not delay.”
The ban stops movement of people, not goods, he later clarified on Twitter.
US airlines had already slashed flight schedules to Italy, which has the largest European outbreak, and will take another hit from lower demand for flights from major destinations such as France and Germany.
Nicholas E Callio, president of airline trade group Airlines for America, said the ban would hit US airlines, their employees and travellers “extremely hard”.
He said his group respected the need to take the unprecedented action, but Association of Flight Attendants-CWA president Sarah Nelson called the ban “irresponsible”.
“There is no explanation for how this will help fight the spread of the virus,” she said. “It makes little sense when the virus is already in the United States.”
Foreign carriers ‘zapped’
The new restrictions will particularly batter foreign carriers such as Germany’s Lufthansa and Air France KLM that dominate the market for flights between mainland Europe and the US and had already grounded dozens of planes, analysts said.
“The ban on flights on Europe will really zap foreign carriers,” said independent aviation analyst Mike Boyd of Boyd Group International.
He said the US embargo makes sense, because EU countries and carriers did not sufficiently restrict China access, which allowed the virus to spread.
“We have to close the door,” Boyd said.
“This is not a drill — the epidemic is real — and unprecedented. It is the type of hard decisions the US needs to make ... the EU has not moved aggressively to limit the spread,” he said.
Lufthansa said it was assessing the effect of the changes on its US operations, while Air France KLM did not respond immediately to a request for comment. Delta Air Lines said it would waive change fees for customers travelling to, from or through Europe and Britain through May 31.
Shares in Asian carriers slumped after the news.
Australia’s Qantas Airways fell 11%. Singapore Airlines was down 4%, as was Hong Kong’s Cathay Pacific Airways. Japan’s ANA Holdings and Japan Airlines were both down more than 5%.
“The travel ban from Europe has definitely taken everyone by surprise, hence the market impact,” said Khoon Goh, head of Asia research at ANZ in Singapore.
“Already we know the economic impact is significant, and with this additional measure on top it’s just going to multiply the impact across businesses. This is something that markets had not factored in ... it’s a huge near-term economic cost.”
Reuters and AFP