Alitalia Leads The Way...Lost Revenue in Western Europe

10 March 2020 / by John Grant

Are you ready for some big numbers? In a normal week there are some ninety-five scheduled airlines operating to destinations in Italy providing nearly 1.6 million seats a week to destinations across the globe. But this week is no ordinary week….

The rapid intervention by the Italian Government in attempting to control the spread of Coronavirus has captured a huge amount of media attention. Airlines have been managing their capacity to Italy for the last week and are making daily changes to the number of flights operated and the capacity provided.

For Alitalia and other locally based airlines the impact has been dramatic as the table below highlights.

In less than one week the airline has cut capacity by 22% or some 81,000 seats as demand appears to have collapsed for the airline as the virus continues to spread.

Milan, the epicentre for reported cases has seen 34% of capacity cut whilst Rome the single largest market in Italy has seen one in five seats dropped as the airline seeks to match capacity to expected demand.

Table 1- Alitalia Scheduled Capacity from Italy

alitalia-scheduled-capacity-from-italy

Source: OAG Schedules Analyser

The dramatic scale of the reductions replicates those seen in China in the first few weeks of the Coronavirus outbreak where carriers such as China Eastern dropped 31% of their capacity in one week and Air China 22% of capacity. Indeed, it seems that for many airlines the starting point for capacity reductions has been around the 22% mark. So, the key question becomes what does 22% mean in Europe?

In Western Europe alone some 20 million scheduled airline seats were planned to be operated in the week commencing the 2nd March. Should the 22% reduction in capacity be applied across the whole of Western Europe then that equates to a loss of some 4.4 million seats in a week or nearly 630,000 a week. Assuming for illustrative purposes an average yield per passenger of around US$175 then the potential revenue loss for airlines operating in Western Europe would be US$770 million a week!

Clearly some markets will be impacted more than others but the potential for widescale financial disruption for many airlines is a real possibility. Perhaps now is the time for Governments to provide some support……

Topics: Airlines, Italy

John Grant

Written by John Grant

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