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By Tracy Rucinski and Jamie Freed
CHICAGO/SYDNEY, March 4 (Reuters) - The rapid spread of
coronavirus cases worldwide is complicating a standard strategy
used by airlines when disease, disaster or conflict hit travel
destinations: lower fares and redirect flights to trouble-free
areas.
For now, some airlines have resorted to suspending change
fees for new ticket reservations in the hope of winning over
hesitant travelers until it becomes clearer where coronavirus
outbreaks are localized and which routes could benefit from
price drops.
While lower fares have proven effective in the past in
reviving demand, aviation consultant Samuel Engel said, "The
pocketbook only works so far against emotion."
The coronavirus, which emerged in the central Chinese city
of Wuhan late last year, has spread around the world, with more
new cases now appearing outside China than inside.
JetBlue Airways Corp, which does not fly to Asia,
was the first airline to launch free rebooking options last
week, as it became clear that cases were not isolated to China.
JetBlue pulled together and announced its plan in a matter of
hours, President Joanna Geraghty told Reuters.
"We tried to put ourselves in the shoes of our customers and
think about what we would want if we were, for example, booking
a spring-break trip right now," Geraghty said.
U.S. majors have since followed suit with varying waivers on
change fees for new reservations to many destinations, a switch
from a previous policy that covered only pre-booked flights to
areas hardest-hit by the coronavirus.
In Latin America, Peruvian low-cost carrier Viva Air was
holding a board meeting on Wednesday to discuss measures, Declan
Ryan, executive chairman of the board of directors, told
Reuters.
But with none of the offers so far guaranteeing money-back
refunds, travelers say the policies are not enough.
"I understand that there are a lot of question marks right
now for the industry on how this will unfold, but I don't feel
like there's a truly customer-friendly policy out here," said
Amanda Elman-Kolb of Chicago, who has put on hold plans for a
family trip to Europe in August.
Declining demand to fly abroad is not limited to U.S.
travelers. International travel to the United States will fall
6% over the next three months amid coronavirus concerns, the
largest decline since the 2007-2008 financial crisis, the U.S.
Travel Association forecast on Tuesday.
With extra widebody jets on hand after suspending flights to
China, South Korea, Japan and northern Italy, major U.S.
airlines are deploying them on domestic routes, a process known
as upgauging. American Airlines Group Inc, for example,
is flying passengers from Chicago to San Francisco on a 787
Dreamliner, rather than just the usual narrowbody like a 737 or
an A321.
DEFLATED BOOKINGS
Europe's biggest carriers warned on Tuesday that the
epidemic was upsetting growth, with Ryanair Chief
Executive Michael O'Leary forecasting a "very deflated booking
environment" for the next two to three weeks before recovering.
"After Easter if things have settled down, temperatures in
Europe are rising, I think there will be a significant decline
in the spread of the virus. Airlines will then respond with seat
promotions, seat sales that will get people back traveling very
quickly," he told Reuters.
In the Asia-Pacific region, offers are under way.
Malaysian budget airline AirAsia X, which was
struggling financially even before coronavirus, launched a 499
ringgit ($119.09) one-year pass for unlimited trips to
Australia, Japan, Korea, China and India, excluding taxes and
fees on each trip - a move that CEO Benyamin Ismail called
"unprecedented."
Fares are softening too on routes not directly affected by
travel bans, with Australia to Los Angeles 25% lower in the
three weeks ended Feb. 26 compared with the same period last
year, data provided to Reuters by Skyscanner showed.
In perhaps the most vivid example, Vietnam Airlines JSC
last week said it would offer $0 round-trip fares from
Ho Chi Minh City to Kuala Lumpur and Singapore, excluding taxes
and fees, to help stimulate tourism through the end of May.
"Airlines have historically shown little hesitance to reduce
prices to get volume," said Wolfe Research analyst Hunter Keay.
"One thing we know about leisure air travel demand, it can be
very easily stimulated."
($1 = 4.1900 ringgit)
(Reporting by Tracy Rucinski in Chicago and Jamie Freed in
Sydney
Additional reporting by Laurence Frost in Brussels, Alistair
Smout in London, Conor Humphries in Dublin, and Maria Cervantes
in Lima
Editing by Tim Hepher and Matthew Lewis)
