Airlines in despair
Airlines are taking increasingly drastic and creative measures to monetize whatever assets they can.
United Airlines and Delta Air Lines are looking to sell loyalty miles in bulk at a discount to their credit card partners, according to the Wall Street Journal.
The airlines have been in discussions about selling miles in advance to their respective partners JPMorgan Chase and American Express. No agreements have yet been reached.
Co-branded card loyalty programs generate billions of dollars of revenue particularly in the corporate travel market, but it could be many months before business travel takes off again.
Banks and credit card companies regularly buy miles to reward high spending card holders.
“If airlines start seriously talking about mileage presales, we’ll know things are particularly dire,” said Joseph DeNardi, an airline analyst at investment bank Stifel.
According to DeNardi, American Express spent about $4 billion last year buying miles from Delta.
On the other side of the globe, the Association of Asia Pacific Airlines has again urged governments to act to ease the financial woes of the region’s major airlines. It wants restrictions eased such as exempting overseas crew from quarantine, and to relax slot restrictions and operating hours where appropriate.The new appeal by the AAPA comes as the trade group said the number of flights operated by Asia Pacific airlines declined by 93% in the first week of April.
“The current crisis is taking an enormous toll on Asian economies and people’s livelihoods across the region. Some 50 million people work in travel and tourism alone within the Asia Pacific region,” said new AAPA director general, Subhas Menon. Global demand for air cargo declined by 19% in March, AAPA said.
Meanwhile, the International Air Transport Association (IATA) released an updated data on how the coronavirus crisis is going to impact the air industry – airline passenger revenues are expected to drop by $314 billion in 2020, a 55% decline compared to 2019.
On 24 March IATA estimated $252 billion in lost revenues (-44% vs. 2019) in a scenario with severe travel restrictions lasting three months. The Association highlights the fact that governments must include aviation in stabilization packages. Airlines are at the core of a value chain that supports some 65.5 million jobs worldwide. Each of the 2.7 million airline jobs supports 24 more jobs in the economy.
MMP
foto: Tanathip Rattanatum / Pexels
