Flu threatens to bring down ailing airlines

By ANGELA GREGORY

Sars jitters are hurting airlines and keeping the St John Ambulance service busy.

Concern about the possible spread of the deadly virus to New Zealand prompted repeated ambulance callouts to Auckland Airport yesterday after some passengers showed flu-like symptoms. They were all checked and cleared, so did not need to be taken to hospital.

Some Air New Zealand cabin staff are refusing to fly to Hong Kong as a result of the outbreak.

Airline spokeswoman Rosie Paul said "half a dozen staff at most" had refused to fly to Hong Kong so far this week.

"Staff are being given daily updates [about the Sars situation] and we are also phoning the crew the night before a flight to check everything is all right," said Ms Paul.

"The great majority of staff have been reassured by this and are carrying out their duties."

Most airlines worldwide are now making further cuts to their flight schedules as demand for air travel slumps further in the wake of the infectious new virus that kills about 4 per cent of those who contract it.

The Centre for Asia Pacific Aviation in Sydney said traffic within Asia had been only relatively lightly affected by the Iraq conflict, but Sars was a real threat to traveller confidence in specific markets.

Service cancellations, staff cuts and other contingency plans were being implemented by carriers in response to demand falling by more than 25 per cent in some markets.

In some cases, the cutbacks embrace route rationalisations already in the pipeline as airlines responded to a new world situation.

"This exaggerates what's clearly now developing into a near-worst case-scenario for the airline industry," a centre spokesman said.

Recent service cutbacks were already more severe than occurred in the 1991 Gulf War on the back of an already distressed industry with little sign of short-term improvement.

Qantas, Japan Airlines System, US carriers and some European carriers have announced major schedule cutbacks in recent days.

Some North American and European airlines may have passed the point of no return. "The situation remains very fluid. More announcements of cutbacks are expected from carriers over coming days," the spokesman said.

An Auckland equities analyst, Bruce McKay, said airlines had had a disastrous run in the last few years with falling demands, terrorism fears, high oil prices and the Gulf war. "Bad news always follows bad news in the airline industry."

The industry had not been in a fantastic shape from 2001 and things had only got worse.

"Sars has come in and given the airline industry another belting around the head."

Mr McKay said that after September 11, 2001, there was an extremely rapid contraction in demand and then supply of air travel and the industry remained much more reactive than before.

But the worst threat was the poor state of the global economy.

"All major global airlines will suffer ... The outlook is murky," said Mr McKay.

He believed some airlines in the US and Europe would go to the wall. United was struggling to survive and Swiss Air had already gone.

According to the Air Transport Association, the US lobbying group for airlines, both transatlantic and transpacific traffic for US airlines fell sharply in the past week, down 19 per cent on both fronts.

"With all of the disasters that have befallen us - 9/11, Iraq, now Sars - it is a terrific problem for the industry," said Northwest Airlines chairman Gary Wilson.

Also suffering from the worst crisis in US aviation history are commercial jet manufacturers and suppliers. Boeing, the world's largest jet maker, on Wednesday said it delivered 71 commercial jets in the first quarter, down 35 per cent from the first quarter of 2002 as its airline customers struggle to survive.

Auckland-based Pacific Air Ambulance, the South Pacific's leading air ambulance provider, yesterday suspended its services to and from Hong Kong and Guangdong province.

"We cannot risk our staff being affected by the Sars virus, nor transmit it through the patients we carry," said a spokesman.