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A firefighter disinfects Wuhan’s international airport building. Last month, the volume of passengers in China slumped 71.7 per cent year while the volume of cargo declined 23.4 per cent. Photo: Xinhua

China’s aviation industry shrinks as pandemic triggers US$5.6 billion in first-quarter losses

  • Air passenger traffic fell 53.9 per cent in the first three months, and volume could linger at low level despite recovery signs: CAAC
  • Airlines globally could lose as much as US$314 billion this year, according to IATA
China’s aviation industry shrank in the first quarter, as quarantine and lockdown measures introduced across dozens of cities in the country to curb the spread of the coronavirus pandemic decimated travel and forced carriers to ground aircraft.

The industry suffered losses worth 39.82 billion yuan (US$5.6 billion) in the first three months of this year, the Civil Aviation Administration of China (CAAC) said on Wednesday. Air passenger traffic slumped 53.9 per cent to 74.08 million as the viral outbreak worsened.

While signs of recovery have emerged in recent weeks, activity could still be far from a return to normal levels, the CAAC said in a media briefing in Beijing. It did not specify whether the losses referred to revenue or profit. As a guidance, the domestic aviation industry generated 1.06 trillion yuan in revenue in 2019.

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“As resumption of work and production is advancing orderly nationwide, the number of flights has recovered to some extent,” the CAAC noted at the briefing. “But it could continue to linger at a low level in the future.”

In March, the volume of passengers slumped 71.7 per cent year to 15.13 million, while the volume of cargo declined 23.4 per cent to 484,000 tonnes, it added. As airlines cut flights, demand for freight space shifted to all cargo carriers, which experienced a 28.4 per cent jump to 253,000 tonnes last month.

The first-quarter losses came as airlines globally grounded as much as 90 per cent of their capacity, as many governments shut their national borders and stricter lockdown measures killed demand for travel. The pandemic has claimed more than 127,000 lives and infected almost two million people worldwide.

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The global aviation industry stands to lose US$314 billion in passenger revenue this year, the International Air Transportation Association (IATA) said this week. As of early April, the number of global flights had shrunk by 80 per cent, it added.

Apart for direct flight-related setbacks, losses at other related industries – from airport services to duty-free retailing – might take the total up to US$2 trillion, according to a private think tank.

April has brought some hope for carriers in mainland China and some East Asian countries, according to CAPA-Centre for Aviation. China’s recovery is most noticeable, after Beijing allowed offices and factories to reopen.

Shares of China’s three largest carriers have recouped some losses this month on local stock exchanges. Air China gained 3.4 per cent, China Southern Airlines added 1.2 per cent and China Eastern Airlines climbed 2.9 per cent.

This article appeared in the South China Morning Post print edition as: Aviation hit hard as virus shuts travel down