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Minimum years before pre 2019 levels of travel revenue – Air Canada

May 6, 2020 Headline News No Comments Email Email

New insights into a remodelled travel industry post coronavirus continue to emerge.  While some news is encouraging from China – airlines and the cruise industry are contemplating the possibility of a bleak two or three years. China Duty Free Group (CDFG) is preparing for a new wave of shopping through its Hainan Island business as the resort island helps lead the recovery from the COVID-19 crisis. No such luck however for US based Starboard Cruise Services with all of its shops closed and the industry seeking ways to rebuild trust with consumers once recovery begins. According to Lisa Bauer, President and CEO of the global cruise concessionaire, previously reducing fares was a key motivator to get people onboard.

Today, our research shows that it will be important that the government or CDC or WHO says cruising is safe, and that the possibility of a vaccine is available, and that people understand the steps that are being taken to assure their safety, she says. “The biggest impact I believe will be on the folks that have never cruised before. When you think about the North American base of 144 million consumers that had cruise in a consideration set, we believe we’re seeing about a -30% reduction in that. So the impact will be on those people who are new to cruise and who would not consider it in the near future.” That suggests a more experienced, loyal cruise travellers will lead the industry rebound. Meanwhile Carnival Cruise Line has advised guests and travel agents that it will extend its pause in operations in the Australian market through to August 31. All Carnival Splendor cruises departing from Australia from June 19 to August 31 will be cancelled along with Carnival Spirit’s trans-pacific from Hawaii departing on October 6.

The virus has also impacted heavily on Australia’s hard working travel agents – just how many survive is anyone’s guess. Law firm Slater and Gordon announced on Monday they would be pursuing a class action against major travel providers including airlines, travel agents and tour companies, to investigate whether they had breached legal obligations to customers. As of Monday afternoon, they had registered more than 400 expressions of interest. Practice group leader Andrew Paull said travel companies had pushed customers into taking “quite severely limited travel vouchers when in fact those people are entitled to full cash refunds for the amount they’ve paid”.

The cruise industry is under close Government scrutiny in Australia following the major coronavirus outbreak linked to the Ruby Princess – and in the US. Congress has opened a probe into Carnival Corporation over its handling of COVID-19 outbreaks, according to a report from Bloomberg.

Officials are now requesting Carnival turn over documents and communications about its coronavirus response and its plans for future improvement.  The investigation, led by the US House Committee on Transportation and Infrastructure, is specifically looking into how much Carnival executives were aware of the severity of the coronavirus outbreaks on its cruise ships and the lack of action it took during active cruises after being informed of the risks. More than 1,500 confirmed COVID-19 cases can be traced back to the company’s cruise ships, and dozens of Carnival customers and crew members have since died from the virus. According to the Miami Herald,  In a letter to CEO Arnold Donald, the chair of the committee Oregon Democratic Rep.

Peter DeFazio requested the cruise company turn over all internal documents and communications related to COVID-19 since Jan. 1. Citing repeated COVID-19 outbreaks on Carnival Corp. ships, and a history of norovirus outbreaks in the cruise industry, DeFazio said more robust health precautions must be required when the company begins operations again. “We understand your business and economic livelihood is focused in the entertainment and travel industry, but the realities of the coronavirus pandemic demand that the incentive to entertain is checkered by a responsibility to protect the health of passengers and crew,” the letter said.

A Miami Herald investigation has found that travellers on at least 19 Carnival Corp. ships have tested positive for COVID-19, and 58 people have died. Competitors have not been immune. Passengers or crew on at least 18 of Royal Caribbean Cruises Ltd.’s 51 ships have tested positive for the virus, and passengers on crew on at least six of Norwegian Cruise Line Holdings’ 27 ships have tested positive. Across the entire global cruise fleet, the Miami Herald has found at least 2,787 people have been infected across 57 ships and at least 74 have died.

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As Qantas secures a further $550 million in debt funding, Air Canada CEO Calin Rovinescu has said the airline is now “in a state of hibernation” and he expects it to be a “minimum” of three years before 2019 levels of revenue and service return. Talking to Routes online, he said that despite the dire near-term outlook, Air Canada will emerge from the COVID-19 crisis intact.

The return of Air Canada to normal operations is “really at this stage contingent on factors that are well out of control of an airline,” Rovinescu said. The recovery of air travel demand depends on how quickly governments open up countries from COVID-19 lockdowns and whether businesses such as restaurants are able to open again. Aviation Week says The COVID-19 pandemic is reshaping aerospace and, about two months into the sector’s worst crisis ever, its future shape is becoming clearer.

The industry is becoming much smaller than it was just a short while ago. “Unfortunately for the aerospace side of the business, the full effect of the declines is only beginning to filter through and will dominate industry activity for the foreseeable future, with analysts generally not expecting traffic to recover to pre-crisis levels before 2023.”

Edited by Ian McIntosh

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