Flybe falls prey to coronavirus and ‘stronger’ airlines are likely to follow

Only five days ago, the boss of British Airways’ owner IAG warned that the coronavirus would push weaker airlines “over the edge”. Little surprise, then, that Flybe should be an early victim: a perennial struggler to turn a profit, flying routes that few others deemed commercially viable around the UK. But, even at such a geographical remove from the current outbreak, it is unlikely to be the last.

For now, the effects of Covid-19 on airlines echo the pattern among the human population: standstill in China, tolerated by the stronger carriers abroad, but potentially fatal to those less robust. And Flybe’s pre-existing conditions included an unusually onerous tax burden of air passenger duty affecting domestic flights, dampened demand alongside Brexit, and increased fuel and leasing costs from a falling pound. Its investors – a consortium led by Virgin Atlantic swooped in last year – had sensed a final opportunity after its share price had tanked; but by January they were begging the government, in vain, for assistance to stay alive.

But other airlines – including Virgin itself – are more directly exposed than Flybe to the crisis, first cancelling major Chinese routes and then seeing the drop in demand “rippling through” the global networks, as the International Air Transport Association (Iata) warned this week. On Wednesday, Virgin announced emergency measures, including cutting executive pay, and urging other staff to take unpaid leave, after bookings halved in recent days. Ryanair and EasyJet have cancelled hundreds of flights to Italy, and other destinations, while IAG and BA have even cut transatlantic services.

No airline, it appears, is immune – underlined by the sight of US airline executives meeting Donald Trump this week to discuss the impact in a country where domestic aviation is far bigger than international travel.

Iata is in the process of quickly revising up its estimates, barely a fortnight old, of a $30bn (£23bn) hit to revenues. No one knows, analysts and executives now say, quite how much this crisis is going to cost airlines. But many warn that it already looks worse for the industry’s bottom line than the aftermath of 9/11.

Firms are restricting business travel, and international conferences are being axed by the day, pulling the most valuable customers from the traditional carriers. Passengers may still take a punt on a cheap flight – but leisure airlines in the northern hemisphere traditionally expect low demand and losses in winter months. The ebullient Ryanair boss, Michael O’Leary, claims that holidaymakers will not be deterred come Easter, and that may prove true; but if further public health measures are needed and demand tumbles throughout the peak period, more airline casualties can be expected.