By bringing much of the global economy to a grinding halt, the COVID-19 crisis has sidelined countless vehicles – and not just the car in your neighbour’s driveway. Planes and ocean-going vessels have begun migrating from the world’s busiest airports and harbours to remote locations where the workhorses of the global economy go to rest, or die.
Having far fewer passengers and far less cargo to carry, airlines and shipowners are forced to decide where to store underutilized assets until the day they’re needed again.
That could be months, even years away. Or never.
Nowhere is the challenge more acute than in aviation. Reeling from travel bans, many airlines have grounded their entire fleets, while most others have cancelled the majority of flights. Collectively, they have dropped tens of millions of seats from their schedules every week, according to OAG, an aviation data firm.
Lately the pace has slowed. “Quite frankly, there isn’t much more international capacity that can be dropped around the globe,” senior analyst John Grant wrote in a recent commentary.
Since January airlines worldwide
have cancelled most scheduled flights
Scheduled seats, in millions
115
105
Base
global
capacity
95
85
75
65
55
Adjusted
capacity
by week
45
35
25
Jan. 20
Feb. 3
March 2
April 6
April 27
JOHN SOPINSKI/THE GLOBE AND MAIL
SOURCE: oag
Since January airlines worldwide
have cancelled most scheduled flights
Scheduled seats, in millions
115
105
Base
global
capacity
95
85
75
65
55
Adjusted
capacity
by week
45
35
25
Jan. 20
Feb. 3
March 2
April 6
April 27
JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: oag
Since January airlines worldwide
have cancelled most scheduled flights
Scheduled seats, in millions
115
105
Base global
capacity
95
85
75
65
55
Adjusted
capacity
by week
45
35
25
Jan. 20
Feb. 3
March 2
April 6
April 27
JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: oag
Major hubs such as international airports in Chicago and Frankfurt have converted unused runways into airliner parking lots, and some airports have waived parking fees. But that’s likely not a long-term solution, and OAG has predicted the volume of fliers might not recover until 2022 or 2023.
Other options include moving planes to regional airports, maintenance hubs and dedicated storage facilities, where owners are scrambling to make more space for an expected surge in new arrivals.
“They go wherever it’s cheapest to park them,” said John McKenna, president of the Air Transport Association of Canada.
Some airlines publicly announced their plans. Lufthansa said it will “temporarily decommission” its entire fleet of 17 Airbus A340-600s at Teruel Airport in eastern Spain; it expects them to remain out of service for at least one year. Qantas said it grounded 150 planes, including nearly all of its wide-body aircraft.
Many more airlines are making such decisions unannounced. Air Canada and WestJet did not respond to inquiries about storage of their own fleets.
Planes of German carrier Lufthansa are parked at the airport in Frankfurt, Germany, on March 15, 2020.KAI PFAFFENBACH/Reuters
To determine what Canada’s largest airlines are doing, The Globe and Mail turned to Flightradar24, a global flight-tracking service based in Sweden. While it’s not always crystal clear whether planes have truly left service, by Flightradar24’s reckoning more than 300 of Air Canada’s and WestJet’s planes are already parked. Another 200 or so planes either remain in service or their status could not be determined.
“The majority of both Air Canada’s and WestJet’s fleets are still in Canada, at the airports you would expect them to be at,” said Ian Petchenik, a spokesman for Flightradar24. There were two dozen De Havilland Dash-8 turboprops parked in Vancouver. About 30 of WestJet’s Boeing 737s are stored at the airline’s home base in Calgary. At small airports such as Montreal’s Mirabel, the increase in parked aircraft is obvious in satellite imagery.
May 4, 2019
April 7, 2020
Craig Bradbrook, vice-president of aviation services at the Greater Toronto Airports Authority, said Toronto Pearson International Airport instituted a new parking plan after airlines indicated they might park upward of 100 aircraft there. The plan was to use all available aprons – the area of an airport where planes are parked, loaded, unloaded or refuelled – first, then move to unused runways. (The latter measure proved unnecessary – lately there have been about 40 aircraft parked at Pearson.)
What’s involved in storing an aircraft – and the attendant costs – varies considerably depending on how long the plane is expected to remain out of service. The most expensive option is to keep it ready to fly at a moment’s notice.
Longer-term options must take into account that planes are designed to fly, not rest. Typical requirements include removing fluids and wrapping crucial components in protective casings, which can take several days to do and undo. Engines are covered, regular inspections conducted, cabins cleaned and doors checked to ensure they remain properly sealed.
Long-term storage facilities are like giant jigsaw puzzles; complexity increases as more aircraft arrive. “If you’ve got plenty of space, you can parallel park them,” said Jonathan McDonald, an aviation analyst at IBA. “When you’re running out of space, you can interlock park them – one facing in, one facing out." But that makes it challenging to disentangle planes when it’s time to re-enter service.
The longer an aircraft is parked, the more important it is to find a drier climate that won’t promote corrosion. Lufthansa recently selected Teruel Airport because it receives around 240 days of sunshine annually, and little rainfall – ideal conditions for preserving aircraft.
For similar reasons, in North America, arid southwestern U.S. states are home to long-term storage facilities as well as “boneyards” where retired aircraft go to die. Pinal Airpark, in Arizona, is such a facility. According to Flightradar24′s data, both Air Canada and WestJet have aircraft stored there. (Most are Boeing 737 Max, grounded as a result of the Lion Air and Ethiopian Airlines crashes involving that aircraft.) Such facilities are filling up as airlines take planes out of service.
April 21, 2019
April 21, 2020
The main reason such facilities are popular, Mr. Petchenik said, “is that there’s space, the parking is relatively inexpensive and you can park them all together in the dry desert air."
He said airlines usually prefer to store as many aircraft as possible in the same place. But at a time when thousands upon thousands of jets are parked around the world, “you’re running out of parking space in a lot of places,” he said. Parking location “is not determined by what you want, it’s determined by what you can do.
“The number of aircraft stored, and the uncertainty surrounding when they will be used again, is unprecedented.”
The shipping industry, meanwhile, faces a similar dilemma.
The 2008-09 financial crisis touched off several years of turmoil. Shipping lines were forced to lay up huge numbers of vessels as they ran out of cash. By late 2009, reports surfaced of what the media dubbed “ghost fleets”: legions of oil tankers, bulk carriers and other large commercial vessels anchored for long periods.
So far this year, 2.2 million TEUs (20-foot equivalent units, a measure of container capacity) – about 10 per cent of the global total – have been idled. That’s equivalent to all of 2009. “Everything is happening much faster” than it did during the financial crisis, said Peter Sand, chief shipping analyst for BIMCO, a large global shipping association.
COVID-19 is pushing many
container ships out of service
Percentage of global shipping fleet tonnage idled
10%
8
6
4
2
0
Nov.
Dec.
Jan.
Feb.
March
April
2019
2020
JOHN SOPINSKI/THE GLOBE AND MAIL
SOURCE: drewry
COVID-19 is pushing many
container ships out of service
Percentage of global shipping fleet tonnage idled
10%
8
6
4
2
0
Nov.
Dec.
Jan.
Feb.
March
April
2019
2020
JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: drewry
COVID-19 is pushing many container ships out of service
Percentage of global shipping fleet tonnage idled
10%
8
6
4
2
0
Nov.
Dec.
Jan.
Feb.
March
April
2019
2020
JOHN SOPINSKI/THE GLOBE AND MAIL, SOURCE: drewry
Hypothesizing that a recession prompted by COVID-19 might already be producing ghost fleets, The Globe turned to Cambridge, Ont.-based exactEarth Ltd., which collects data on global maritime vessel traffic from ship transponders using satellite-based automatic identification systems (AIS).
ExactEarth divided the world into 260,000 cells (which at the equator measured 25 kilometres by 25 kilometres); it then counted the number of vessels in each cell on April 14 and compared that number with the same day a year earlier.
The vast majority of cells had no statistically significant differences. However, exactEarth identified three clusters of cells in China with significantly larger concentrations of vessels this year. The most noteworthy hotspot was in the waterways around Guangzhou, a major port and transportation hub. On April 14, 2019, there were approximately 350 cargo vessels and tankers in the inland waterways around the city. A year later, there were well over 1,100.
April 14, 2019
April 14, 2020
Mr. Sand said that’s no ghost fleet. The additional ships reflect the fact that China’s economy has been effectively shut down for months because of the COVID-19 outbreak, slowing the flow of dry bulk cargo considerably. “These ships are simply waiting there to take the next cargo,” he said. “It’s a slowdown of business that shows up around the anchorages in the major exporting regions.”
But Mr. Sand said the industry ordered many more new vessels from shipyards than necessary during the last decade, such that capacity nearly doubled since the 2008-09 recession. With global demand plummeting now, owners have a strong incentive to begin laying up ships, which can save at least US$2,000 a day in operating costs per vessel. But to do that they must move away from major ports, where anchoring is pricey.
There are designated storage anchorages around the world, many of them in Asia. One of the most famous is Brunei Bay in the South China Sea, which is said to be safely out of the path of pirates and typhoons, and boasts favourable holding conditions and gentle currents. There are others in Scotland, Norway and Brazil.
“They empty the ship of many liquids in the engines, and they basically hibernate the ship, put on board a ghost crew or even only one watchman to patrol five or 10 ships, and seafarers go home,” Mr. Sand said. Dehumidifiers are installed to inhibit corrosion and underwater inspections can help monitor the hull’s condition.
Mr. Sand said he’ll watch the designated layup areas closely in the coming weeks. Some large bulk carriers have already anchored in Brunei Bay, although its waters are by no means packed. “We know from those who manage these areas that they have received increased interest in layup business,” he said. “The early indications are that owners are getting in touch with these layup sites to keep their options open.
“The shipping industry is a very optimistic one – people do things later rather than earlier, simply because they hope for a change,” he said. “But it is happening."
Our Morning Update and Evening Update newsletters are written by Globe editors, giving you a concise summary of the day’s most important headlines. Sign up today.