* Airlines report big drop in demand on Italian routes
* Demand seen stabilising if pattern from Asia followed
* Airlines call for relaxation of rules to help them cope
(Adds CEO comments)
By Laurence Frost and Sarah Young
BRUSSELS, March 3 (Reuters) - The worst is still to come for
the airline industry in terms of economic damage from the
coronavirus outbreak, European bosses warned on Tuesday, but
they predicted that travel demand could stabilise in the coming
weeks.
Coronavirus has hit demand, forcing airlines to cancel
flights and cut costs, and ask governments and regulators for
help as they battle to get to grips with what they hope will be
short-term, rather than long-term, disruption.
The heads of Europe's biggest carriers discussed the impact
of the epidemic at an annual industry conference. They included
Ryanair chief Michael O'Leary; Willie Walsh, boss of
British Airways-owner IAG; and easyJet's Johan Lundgren.
"We have seen a drop in demand when you look particularly in
the northern part of Italy, but that has also spilled over to
the other parts of the network," easyJet CEO Johan Lundgren
said.
Italy has suffered the biggest outbreak of the illness in
Europe.
IAG's Walsh also noted a "very significant fall-off in
demand" in Italian markets in the past week. But he predicted
demand would stabilise in coming weeks if bookings followed the
pattern seen in Asia.
"I think we will see air traffic recover in due course," he
said.
Ryanair's O'Leary agreed the next few weeks would be tough.
He said he expected a "very deflated booking environment" for
the next two to three weeks, but should the crisis stabilise,
bookings would recover.
"I think you will see a pretty rapid return to normal," he
said.
Yet the bosses acknowledged it could get a lot worse before
it gets better.
"If we're not successful in the containment of it then there
might be a more difficult outcome," Lundgren said.
O'Leary told Reuters in an interview that he would introduce
cheaper tickets to stimulate the market closer to the summer, if
necessary.
On future demand for the aircraft themselves, two sales
executives from planemakers Airbus and Boeing
said that it was too early to gauge the impact. Both O'Leary and
Walsh said there would always be demand for more aircraft if
they were cheap enough.
'TAKE BURDENS AWAY'
Airlines worldwide have been suspending flights or modifying
services in response to the coronavirus outbreak, which has now
claimed more than 3,000 lives and infected more than 90,000
people globally, after spreading from China to 77 other
countries and territories.
The crisis has led to a quarter of the short-haul fleet of
airlines like Lufthansa being grounded.
As part of the European airline lobby group A4E, the
airlines called for a relaxation of airport regulations which
cover slot usage, to help them cope with the impact of
coronavirus.
That was in line with a call from global industry body IATA
on Monday for a suspension of rules under which airlines can
lose lucrative landing and take-off slots if they cancel flights
for a prolonged period.
The airlines want a temporary waiver to be granted by all EU
member states on slots, something O'Leary called "critical", and
a common set of health requirements for travel to and from the
affected regions.
"Before we need help, there's a lot of burdens you can take
away - we never ask for help, we ask for less burdens,"
Lufthansa CEO Carsten Spohr told the conference.
IAG's Walsh said struggling airlines should not be given
state aid to enable them to survive the drop in demand. But
there was a feeling governments could take other actions to help
all airlines navigate this difficult period.
"I do think it is absolutely the right thing to do to ask
governments to consider what type of support they can give their
airlines in terms of maintaining connectivity," Lundgren said.
Air France-KLM CEO Ben Smith said that what set this crisis
apart from the SARS crisis in 2003 was the role played by social
media.
"What's definitely different with this crisis (is) the type
of media attention it's getting. Social media has had a
different impact on the trust and the understanding of people
who fly," he said.
Ryanair's O'Leary said social media wasn't helping but he
was confident its impact was short-lived.
"There's a lot of misinformation out there. Social media is
a scourge for idiots but common sense usually wins out in a
reasonably short period of time," he said.
(Reporting by Laurence Frost and Sarah Young; Editing by Tim
Hepher, Mark Potter and Pravin Char)