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Trump's ban on European travellers hits reeling airlines anew

European and US carriers, already hit by fall in demand, will have to scrap flights; weaker airlines could go under

The US entry ban on most European travellers will hit 3,500 flights a week and hurt Lufthansa, Delta and United the most, said an aviation analyst.


PRESIDENT Donald Trump's 30-day ban on Europeans travelling to the US delivers a hammer blow to a global airline industry that is already at risk of losing as much as US$113 billion in passenger revenue this year because of the coronavirus.

Foreign nationals who have been in European nations (excluding the United Kingdom) in the previous two weeks will be barred from entering the US from midnight on Friday, Mr Trump said from the White House.

Minutes later, his administration told US citizens to reconsider all foreign travel.

Flight restrictions or bans are cascading across the world as the outbreak threatens to overrun more countries. Shares of Air France-KLM, one of the European airline groups most affected by the US action, fell the most since 2002 on Thursday, with industry losses in market value since the start of the year surpassing US$92 billion, based on the Bloomberg World Airline Index.

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The new controls will almost certainly mean more scrapped flights at European carriers; their US peers (including United Airlines Holdings Inc and Delta Air Lines Inc) have already seen demand crater as the virus spreads.

Struggling companies like trans-Atlantic discounter Norwegian Air Shuttle ASA, whose stock slumped 27 per cent , may be pushed closer to the brink.

"Things are moving so fast," said Sobie Aviation analyst and consultant Brendan Sobie. "The crisis that the industry is facing right now is likely to be the worst in over 40 years."

Restrictions on Europeans will hit some of the most popular routes to America. France, Germany and the Netherlands are home to three of the top 10 gateways to the US, said the US Department of Transportation.

The US is the world's largest air travel market, though China is catching up fast.

Airlines already faced an unprecedented crisis before Mr Trump's near-ban on Europeans entering the country. With the public increasingly avoiding travel for fear of contracting the virus, the International Air Transport Association (Iata) warned that passenger revenues might sink 19 per cent or US$113 billion this year. Even the trade group's most optimistic outlook baked in revenue losses of US$63 billion.

Global airline stocks are tumbling as the outlook darkens.

Air France-KLM plummeted 18 per cent after the US leader's statement; Deutsche Lufthansa dropped 11 per cent and the six-member Bloomberg EMEA Airlines Index, down 10 per cent on Thursday morning in Paris.

The declines followed slumps in Asia.

Qantas Airways Ltd dropped as much as 12 per cent in Sydney - the Australian carrier has lost more than 42 per cent in just three weeks; Singapore Airlines Ltd was headed to its lowest close since September 2001. Cathay Pacific Airways Ltd, which on Wednesday warned of a substantial first-half loss due to the virus, declined 5.3 per cent in Hong Kong.

Air France-KLM has lost about 60 per cent of its market value this year. The carrier, which typically operates four daily flights between Paris and New York, said it is assessing the restrictions.

Norwegian has seen its stock plummet 80 per cent this year, even though it operates most of US services from London Gatwick airport, reflecting underlying debt issues.

The ban affects about 3,500 flights per week and will hurt Lufthansa, Delta and United the most, said Daniel Roeska, an analyst with Sanford C. Bernstein.

Among European majors, British Airways owner IAG is least exposed, because the ban excludes the UK, he said. IAG fell 11 per cent on Thursday, less than its biggest rivals.


The scale of Mr Trump's crackdown caught many off-guard.

"This action will hit US airlines, their employees, travellers and the shipping public extremely hard," Airlines for America president and chief executive officer Nicholas Calio said in a statement. "However, we respect the need to take this unprecedented action."

The travel industry has braced itself for additional flight restrictions, but is expecting them to be limited to Germany and Italy, countries with heavy coronavirus outbreaks, said Scott Solombrino of the Global Business Travel Association.

The trade group had just finished calculating that falling demand for travel to Europe could set the travel industry back US$190 billion.

"We'll go back to the drawing board," he said. "At the end of the day, the numbers are staggering."

Mr Solombrino spent much of his week talking with his members about potential bailout packages spanning airlines to hotels. "Everybody is looking for financial assistance," he said. The next step the industry fears is a domestic flight ban, he said.

The slump in air-travel demand is so severe that it is now a matter of survival for some airlines, said Shukor Yusof, founder of aviation consultant Endau Analytics in Malaysia.

"Numbers become increasingly less important than helping airlines make it through. It's only a matter of time before financially weak carriers collapse," he said.

Mr Trump's controls on travellers from Europe do not apply to legal permanent residents and immediate family members of US citizens. Americans arriving from Europe will travel through specific airports where they can be screened for the virus.

The US Travel Association said 850,000 visitors flew into the country from Europe, excluding the UK, last March, accounting for 29 per cent of total overseas arrivals. The visitors spent about US$3.4 billion in the US,it said.

"Temporarily shutting off travel from Europe is going to exacerbate the already-heavy impact of coronavirus on the travel industry and the 15.7 million Americans whose jobs depend on travel," the association's President Roger Dow said in a statement. BLOOMBERG


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