The restriction applies to foreign nationals who, within the last 14 days, have been to one of the 26 countries in the Schengen Area, a European bloc with open border agreements. The United Kingdom and Ireland are not part of Schengen, and are so far excluded from the restrictions. There was initial confusion of the details due to conflicting information between President Trump, his aides and other government departments.
U.S. citizens, and others with exemptions, can continue travel but will be re-directed through certain U.S. airports, as has been done for passengers from Mainland China and Iran.
Aviation will be directly impacted from passengers unable to travel, and indirectly affected as the travel restriction sends negative connotations and sees consumers lose market confidence.
The situation is dynamic, in its early days, and difficult to precisely predict. Airlines were already taking different measures on trans-Atlantic flight capacity with changes being rolled out or evaluated in headquarters. The flow of passengers between the U.S. and Europe is not easily delineated. Europe’s strong international airlines and airport hubs mean that Ireland and the U.K., exempt from the ban, will be impacted as passengers use those countries to connect between the U.S. and other European destinations. The Netherlands, which is covered in the ban, has passengers transfer between the U.K. and U.S. Canada is also a hub.
The following is an overview of the U.S.-Europe market using a baseline of April 2019 flights and passengers, cited as one-way flight and passenger movements from the U.S. to Europe.
Countries most impacted: Germany, France and Netherlands. The U.K., which is exempt from the ban, is the single largest European market from the U.S., accounting for 31% of flights – 137 a day carrying 31,000 passengers in April 2019. This is almost as big as the next three largest countries combined: Germany (13%), France (11%), and the Netherlands (9%) for a total of 33% or 143 flights a day carrying 35,000 passengers.
One major European market not included on the initial list is Ireland, which had 5-6% of flights and passengers.
U.S. airlines: Delta. Delta Air Lines and United Airlines have a similar number of flights to Europe, but United has more flights to the U.K. and Ireland, reducing its exposure to the rest of Europe. Delta had the most number of non-U.K./Ireland flights at 51 a day (United had 37 and American 26). Delta relies on its long-time partners Air France and KLM, whose Paris and Amsterdam hubs have local markets in the travel ban. Delta has a newer partnership with Virgin Atlantic in the U.K., but Delta has the least number of U.K. flights amongst U.S. airlines.
U.S. Airlines’ Daily Flights to Europe: April 2019
Source: US Department of Transportation
American Airlines has half as many non-U.K./Ireland European flights as Delta. This partially reflects it having the most number of flights to the U.K. amongst U.S. airlines. However, much of American’s U.K. capacity connects at London Heathrow to European flights operated by partner British Airways. The ban will impact American’s large number of U.K. flights.
Foreign airlines impacted: Air France-KLM and Lufthansa Group. IAG, which includes British Airways, Iberia and Aer Lingus, is the largest airline group – North American or European – between the U.S. and Europe with 16% of flights (70 a day) and the same share of passengers. Of IAG’s 70 daily flights from the U.S., 62 are to the U.K. and Ireland, which are not part of the ban. But IAG’s Aer Lingus and British Airways carry substantial traffic beyond their home hubs to the rest of Europe. As with American Airlines’s large U.K. presence, Aer Lingus and British Airways will be heavily impacted from the ban.
The Lufthansa Group in the U.S.-Europe market had an 11% share (49 daily flights) while Air France-KLM had a 7% share (29 daily flights).
U.S. Flights From Europe’s Three Largest Airline Groups: April 2019
Source: US Department of Transportation
Pressure on small airlines dependent on Trans-Atlantic: Icelandair and La Compagnie. There will be especial pressure on smaller, less-capitalised, airlines that are dependent on Trans-Atlantic flights, like Icelandair and all-premium carrier La Compagnie. Other smaller airlines now dependent on the U.S. for their long-haul networks range from SAS to LOT. Portugal’s TAP was growing in the U.S., but it also has a large network to South America, in particular Brazil.
Restrictions add to Norwegian’s challenges: Low-cost airline Norwegian ambitiously expanded between Europe and the U.S. Its 30 daily flights last April made it a strong independent option – and disruptor – but Norwegian had been scaling back growth prior to the coronavirus outbreak. Of its 30 flights last April, 11 were from the U.K. and Ireland. Its recent cuts have mostly been to continental European services.
A London Gatwick airport hotel, worried about the airline’s finances, asked a Norwegian crew to pay upfront for their layover rooms, but then stopped the practice, the Guardian reported.
Virgin Atlantic heavily relies on the U.S., but from the U.K. Virgin Atlantic had 24 daily flights to the U.S. last April, more than any of Europe’s Big 3 airline members aside from British Airways and Lufthansa. The U.S. also comprises the bulk of Virgin’s total network. There is some insulation since Virgin does not transfer much traffic beyond London to other European cities, and the U.K. is excluded from the travel ban. Virgin historically has had weak finances, but it is 49% owned by the well-financed Delta.
U.S. airlines were already planning reductions to Europe. Prior to the ban’s announcement, U.S. airlines were planning reductions to Europe. They made updates at this week’s J.P. Morgan 2020 Industrials Conference.
American: 10% reduction in international peak summer capacity, with more changes if slot rules were waived (which they have now partially been).
Delta: 15-20% capacity reduction, including suspending Milan, reducing Rome, delaying seasonal flights and making ad hoc cancellations. Delta was also planning changes to Tel Aviv and Mumbai, which it groups in its Atlantic category. Delta was seeing the largest booking impact in Italy with growing softness in France. Trans-Atlantic comprised 15% of Delta’s 2019 revenue.
United: 20% international reduction in April with similar changes for May.
This data is from the US Department of Transportation. It includes Schengen as well as other countries that are large trans-Atlantic markets (Ireland, U.K. and Turkey).