What Happens to the World’s Airplanes After they are Grounded During the Pandemic?

Aviation history, Commerce & Business, Public health,, Travel

think most people, outside the industry, think the answer to this question would be “not a lot”. Unfortunately for the airlines, being grounded, being not able to utilise their assets to realise revenue, is only the start of the problems. In April it was estimate by the industry researcher Cirium that there were over 16,000 commercial passenger aircraft no longer flying – around 62% (the numbers would not have decreased since then) [‘Here’s What You Do With Two-Thirds of the World’s Jets When They Can’t Fly’, (Anurag Kotoky, David Stringer & Ragini Saxena), Bloomberg, 17-Apr-2020, www.bloomberg.com]. The severity of the blow to the airline industry internationally can hardly be understated, coming soon after IATA (International Air Transport Association) predicted (in December 2019) a US$29.3bn net profit for 2020 [http://airlines.iata.org].


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The norm under coronavirus: flights with a handful of passengers  (Photo: Jennifer Flowers / AFAR

Put simply, while the primary income from the airlines’ raison d’être, the loss of paying passengers, dries up, the fixed costs, the invariables, don’t go away for both the airports and the airlines. Let’s take the airports first, they make look deserted when you glimpse images of them on the internet or television, but they haven’t closed down altogether, they haven’t morphed into ghost towns. Airports still have infrastructure and most still run at least a limited service of domestic flights, and on the international scene, though closed for tourism, emergency flights still happen. So, with people and the coronavirus still around, the airports need upkeep. Surface cleaning with virus and bacteria killing disinfectants, hand-sanitising stations, etc. 

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A Californian “desert dormitory” for grounded jets (Photo: Mark Ralston / AFP via Getty Images)

The immediate problem for airlines in the Covid-19 crisis is where to put the multitude of grounded jets. The optimal place, leaving other considerations aside for a minute, is determined by climate. Aircrafts on the ground, exposed to the elements for any significant length of time, will do best in a dry climate with low humidity. This places the major airlines of Eastern Asia with their wetter, steamier climes at a disadvantage. Conversely, Australia’s great interior continental deserts are a favourable location. QANTAS and some other international airlines have accordingly parked their jets in Alice Springs (Central Australia)✫. In America [‘Parking in a pandemic: Grounded planes scramble for storage space’, (Paul Sillers), CNN, 22-Mar-2020, www.cnn.com]. Similarly, in America, US airlines have sought out long-term storage facilities in the hospitable desert environments of western USA [‘What It Takes for an Airline to Ground Its Fleet Amid Coronavirus’, (Jessica Puckett), Conte Nast Traveler, 31-Mar-2020, www.cntraveler.com].

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Delta jet, Pinal Airpark (reliever airport), Arizona (Photo: Rebecca Sasnett, Arizona Daily Star)

A lot of European airlines are not so lucky, forced to use the local airports in Europe where some of the runways have been decommissioned to make way for the grounded planes. Aircraft parking in some of the European hubs can also be exorbitantly expensive, charging up to US$285 an hour (although the cost varies greatly from location to location). Sometimes the remotely located (long-term) storage facilities are referred to as aircraft ‘boneyards’❈ [‘Aircraft Boneyards, MRO & Storage Facilities in Europe’, Airplane Boneyards, www.airplaneboneyards.com].

Thwarting the nesting birds (Photo: Reuters / Elijah Nouvelage)

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When happens with the planes taken out of service and parked? Although not in current use, they still have to be maintained so that they are ready when the airways open up again. Planes are subjected to regular, heavy mechanical maintenance checks, the hydraulics and the flight control system needs to be finely monitored. When the aircrafts are being stored long-term, the process followed has been described as a kind of ”aeronautical embalming” (Sillers) – fluids require to be drained (to prevent rusting of the landing gear), as the jets are housed al fresco everything needs to be covered and/or protected – the engine intakes and exhaust areas, external instruments, the tyres, the windows, the entire airframe (to prevent corrosion). Maintenance staff also have to check the planes for bird-nests and incursion from insects (grilles are sometimes affixed to keep birds outs). Every two weeks the wheels need to be rotated and the batteries reconnected (Sillers; Kotoky et al). Yes, it’s true to say that aircraft maintenance and storage firms are busy at the present time.

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To try to offset, at least partly, the crippling hit from of the coronavirus crisis, the loss of multi-billion dollars by the industry, some airline companies have switched their (unused) passenger jets to become freight-carriers (in addition to using their usual freighters). Scoot, for instance, in February commenced bi-weekly hauls from Singapore to Nanjing and Guangzhou transporting air cargo only. Cathay Pacific carries freight on passenger-less flights from Hong Kong to three Chinese cities∅ [‘Airplanes Without Passengers Start Coronavirus Recovery’, (Will Horton), Forbes, 10-Mar-2020, www.forbes.com]

 

EndNote: In March, even after extensive international flight restrictions had come into effect, a number of airlines were still undertaking their scheduled flights with zero passengers on board. One of the reasons for such a seemingly nonsensical practice was to abide with EU regulations which require the airlines to fulfil their allotments or risk losing the flight slots [‘Why Airlines Are Flying Empty Ghost Planes’, ((Caroline Delbert), Popular Mechanics 11-Mar-2020, www.popularmechanics.com].

 

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✫ north of five billion dollars’ worth of aircraft enjoy the arid air of Alice Springs Airport (from SilkAir 737s to Singapore 380s) [‘How expensive will air travel be after the Covid-19 crisis?’, (Cynthia Drescher), CNN, (14-May-2020), www.cnn.com]
❈ quite apt for housing a lot of the older, less-efficient planes, which will be retired and either be sold-off or used for parts and then scrapyarded
∅ there’s precious little upside for the airline industry at the moment, but one positive for the jets still in the air is the record low world oil prices at the present

Ewo and Taikoo: Two of the Legendary Free Market Hongs of British Hong Kong (The “Movers and Shakers”)

Commerce & Business, Economic history, Regional History

(Image: www.travelsfinder.com)

No organisation has left a larger footprint on Hong Kong‘s long colonial experience under the British (1841-1997) than the hongs (see Endnote). And one British hong that has been especially significant in shaping the course of British (and beyond) Hong Kong has been Jardine, Matheson. The company under the direction of Scots William Jardine and James Matheson arrived in Hong Kong on the ground floor, securing lot No. 1 on Hong Kong Island in the initial land sale by the British colonial administrators in 1841 [‘Jardine, Matheson – company history’, www.jardines.com].

Jardine’s original business premises on Causeway Bay

Jardine, Matheson Co Hong Kong replaced the firm’s previous base in Canton (Guangzhou). From Hong Kong (which soon become Jardine, Matheson’s headquarters) and from the startup of it’s Shànghâi operation a couple of years later, the company laid the foundations of it’s fortune initially from a highly profitable trade of smuggling opium (as well as tea, silk and cotton) into mainland China from South Asia. Jardine, Matheson quickly diversified into more ethical and legal enterprises, adding steamships to their portfolio from the 1850s (China Coast Steam Navigation Co, Indo-China Steam Navigation Co, Yangtśe Steam Navigation Co) which serviced the trade routes to Japan, Singapore, Calcutta, Manila and Vladivostok [‘Jardine, Matheson & Co. Steam Nav. Co / Indo-China Steam Nav. Co / Yangtse S.N. Co.’, www.theshipslist.com].

Taipan Wm Jardine

Jardine Matheson, a ubiquitous hong
Over the years Jardine, Matheson (JM Co) continued to diversify—cotton mills, property, breweries, insurance, financiers (of the first railway in China), sugar plantations, etc. All the while extending it’s trade links – Europe, Africa, Australia, America. Later JM Co got into hotels, motor vehicles, food and hygiene product wholesaling and so on. They functioned as Far East agents – for gunmakers amongst other manufacturers. JM Co even acted in a para-government capacity for consuls for foreign powers doing business in the region, as did other hongs [Jan Morris, Hong Kong: Epilogue to an Empire, (2000)].

Hong Kong Island

Butterfield and Swire
This particular British hong was something of a latecomer to Hong Kong compared to the pioneering Jardine, Matheson Co. The B&S trading house arrived on the Island in 1869. But Butterfield and Swire did not waste any time in developing into one of the most powerful players in the territory. The driving force behind the company was John Samuel Swire. Previously, Butterfield, Swire and his brother William, had started a shipping and trading business in Shanghai. The Swire hong’s road to riches was predicated, not on the illicit drug trade like JM Co, but on a combination of shipbuilding, sugar-refining, banking, insurance, mining, railroad building and other later entrepreneurial pursuits in the Far East, such as bottling Coca-Cola for Asia’s markets. Swire’s diverse subsidiaries have included the Taikoo Sugar Refinery, Taikoo Dockyard – which built mainly steamboats for the China Navigation Co, another Swire subsidiary. Since the 20th century another star in the business stable of the Swire Group is the leading Asian airline Cathay Pacific. Early on Swire’s was also an agent for the Blue Funnel cruise ship line [Morris; ‘Butterfield and Swire’, (School of Oriental and African Studies, London University), The National Archives, http://discovery.nationalarchives.gov.uk].

Taipan JS Swire, “the Senior”
(Photo: www.industrialhistoryhk.org)

JS Swire’s leadership and business style was unequivocally ruthless and uncompromising, he was very much of the “take-no-prisoners”, old school of business. Under “The Senior” Swire, the company played a telling part in driving some of the other Hong Kong frontier merchants into eventual business oblivion – as happened with two pioneering hongs, Dent and Co and Russell and Co (Morris).

Jardine, Matheson v Swire/Ewo v Taikoo
Swire‘s great and enduring rival in Hong Kong (and in the East) has been JM Co. For both hongs in the formative years the main game was about buying and selling in China for the European market. As both firms added more business pursuits to their respective China Sea empires, they came more into competition with each other. Swire’s Quarry Bay Taikoo Dockyard and sugar refinery for instance was in stiff competition with Jardine’s Kowloon Whampoa dockyard and refinery [‘Taikoo Sugar Refinery’, Wikipedia, http://en.m.wikipedia.org].

SS Shuntien, built at Taikoo Docks

Dynastic hongs with staying power
The Jardine presence in Honk Kong and at the helm of the company continues to this day through the Keswick family, ancestors of founder William Jardine’s sister. In a similar vein, the Swire name retains a connection with the present Swire Group (current conglomerate chairman Barnaby Swire is a descendent of John Samuel Swire and there are other ‘Swires’ in the management hierarchy).

(Photo: www.hkland.com/)

1984 and beyond
After several years of tortuous negotiations between the UK Thatcher government and China agreement was finally reached to hand over Hong Kong to Beijing in 1997. This left Swires and Jardines, two of the British hongs with most at stake, with the thorny issue of whether to stay in the erstwhile British colony or not under the hard-to-predict communists. Swires, who had earlier pulled its businesses out of China four year after the communist takeover (to later return), chose to keep its operational base in Hong Kong. Swires sought to work with the Chinese regime, entering into airline deals to give the PRC an interest in Cathay Pacific and secure a domestic foothold for itself. The Jardines conglomerate opted for a different strategy, choosing in 1984 to cut and run, switching its legal domicile from Hong Kong to Bermuda and delisting on the HK Stock Exchange in favour of London and Singapore. This move earned Jardines the ire of Beijing. Even after the ink was dry on the hand-over decision, JM Co continue to lobby the British government hard (with Simon Keswick particularly vocal) to keep the territory out of Beijing’s clutches [Felix Patrikeeff, Mouldering Pearl: Hong Kong at the Crossroads, (1989)].

By the turn of the 21st century JM Co had regained ground from a successful drive into Southeast Asia markets and had once again firmly secured a beachhead on mainland China [‘A tale of two hongs’, The Economist, 30-Jun-2007, www.theeconomist.com ; ‘Jardine Matheson Returns to China’, The Economist, 02-Jul-2015, www.theeconomist.com].

Postscript: Tension between government and the merchant class
Officially, Hong Kong was run during the British era by a succession of governors, appointed from Whitehall. However a fundamental difference in raison d’être existed between the governors and the taipans. The governors were about the Imperial interest of Britain, in practical terms they sought to raise sufficient revenue to fund the colony’s administration. The sole concern of the plutocrats, the merchants, was self-enrichment and their natural inclination was to resist all efforts of the governor to raise taxes…this made for a generally very rocky relationship between the Crown Colony’s two power blocks with antithetical interests (Morris).

Endnote: Hongs and taipans

The term hong’ (major foreign trading houses based in Hong Kong to trade with China) derives apparently from the Chinese word cohong, used to describe the guilds of Chinese merchants operating Canton’s trade with the West prior to 1842 (the “Thirteen Factories” or Canton System). In British Hong Kong each hong was headed up by a taipan (or series of taipans) who was the top boss man in the trading company. The hongs employed native (Chinese) personnel, called compradors, who acted as local “go-betweens” to facilitate business for the firms.

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“the Butterfield” in the partnership didn’t last long in Hong Kong with the autocratic Swire edging him into retirement within a short time
both trading houses adopted Chinese business names: Ewo (JM Co) means ” State of happy harmony”; Taikoo (Swire) means “Great and ancient”
China already held a long-lingering grudge against JM Co … company principal William Jardine was one of the main advocates for Britain to take action against the Chinese Empire in retaliation for it closing down the lucrative opium trafficking trade (leading to the First Opium War)