Emirates & Etihad in serious trouble: Revival may take 5 years

Top GCC airlines - Emirates & Etihad - had to close regular flight operations in March and may not be able to resume till July. Emirates President Tim Clark and Etihad CEO Tony Douglas have warned that the situation is so bad that it would not normalise until 2023. How will the airlines & related tourism industry revive is now a big question for the governments world wide.

UAE airlines

Top executives of Emirates and Etihad, two of the Middle East’s biggest airlines, have painted a gloomy picture for the airline industry. They said passenger demand may not return to pre-coronavirus crisis levels until 2023.

About 85 percent of the world’s airlines could face financial distress by the end of the year without government aid, Emirates President Tim Clark and Etihad CEO Tony Douglas told a video conference hosted by the US-UAE Business Council last week.

Emirates operates out of its hub from Dubai and Etihad operates from its hub in Abu Dhabi. Though both Dubai and AbuDhabi are together in the state of UAE but maintain their independent financial, commerce and industrial institutions.

Clark and Douglas reiterated their beliefs that until an effective vaccine for the COVID-19 respiratory disease becomes widely available, how passengers fly will be different, a statement by the council said.

Lasting restrictions like 14-day quarantines, testing, and social distancing will impact demand and operations, they said. The airlines could not be reached for comment.

Read more: Question of economic survival?! Emirates resumes passenger flights

GCC Airlines hit hard by Pandemic

Emirates and Etihad, which operate fleets of over 370 aircraft, a majority of them wide-bodied, have grounded their operations in March (23 March) and are serving limited outbound flights to take repatriate foreigners from the United Arab Emirates. Both airlines are hit hard due to the nature of hubs these operate. They pick up most of their passengers from airports in India and Pakistan and then take them to destinations in Europe, North America and Australia.

UAE had stopped all inbound and outbound flights with effect from 23rd March. However Dubai’s Emirates said it had obtained approvals to carry passengers on certain flights in the first week of April.

“Effective Monday 6 April, initial flights will commence from Dubai to London Heathrow, Frankfurt, Paris, Brussels and Zurich, with 4 flights a week to London Heathrow, and 3 flights a week to the other cities,” said a statement published on Thursday (April) by the airlines.

Emirates had then said that it operated a flight to London and another to Frankfurt as part of its limited resumption. Etihad, on the other hand, said that from 5 April it would be operating “a number of outbound flights to help foreign citizens return home from Abu Dhabi”.

Repatriation flights started with Seoul Incheon, followed by destinations such as Melbourne, Singapore, Manila, Jakarta and Amsterdam,” according to a travel alert then posted on Etihad’s website in April.

To combat the spread of the virus, the UAE has imposed a sweeping crackdown, including the flight ban and closure of borders, shopping malls, entertainment centres, and markets.

However since then both airlines have not been able to resume regular operations. Dubai is expected to resume welcoming tourists by July, more than four months after halting the vital sector due to the coronavirus pandemic, an official said.

The return however will be gradual and could be delayed until September, Helal al-Marri, the director-general of Dubai’s Department of Tourism and Commerce Marketing, told Bloomberg TV last week.

Airlines hit hard world wide: expect financial bailouts 

A majority of global airlines have also stopped operations due to shutdowns imposed to counter the spread of the novel coronavirus – and expect governments to come up with bail out packages. In April the Trump administration came up with a $25 billion package for the US carriers. See the BBC News Report giving details. Here is a link:

US airlines to receive $25bn rescue package

The US, according to the news reports in April, has agreed a roughly $25bn (£19.8bn) rescue package for 10 of the country’s biggest airlines as travel plunges due to the coronavirus. American Airlines, United, Delta and Southwest are among the recipients. The money is to be used for payroll and will be provided through a combination of low-cost loans and direct grants.

Congress had planned for the aid as part of its roughly $2tn emergency relief bill last month, but airlines had been negotiating the deal.

The International Air Transport Association (IATA) has repeatedly called on all the governments to provide generous aid to airlines. IATA said on April 23 that air traffic in the Middle East and North Africa is set to plummet by more than half due to the virus crisis.

It also said that MENA airlines’ (Middle East and North Africa Region) revenues are forecast to slump by $24.5 billion this year compared to 2019. The International Civil Aviation Organization, a UN agency, said last month that the pandemic could mean 1.2 billion fewer air passengers worldwide by September. Closely aligned with the airlines business is hoteling and tourism across the world. Hoteling is hit hard across the GCC countries. Dubai business totally relied upon its tourist industry that was catering to both the official business visitors and holiday seekers.

Read more: Emirates and Eitihad Airways resume flight operations

IATA has urged governments to offer airlines direct financial support, loans and tax relief.

AFP with additional input by GVS News Desk