Coronavirus could cost airlines US$113 billion in lost revenue, International Air Transport Association warns
- World’s carriers stand to lose US$63 billion even if there is a sharp downturn in Covid-19 cases in affected jurisdictions, analysis predicts
- Governments need to intervene to save air travel industry in ‘extraordinary times’, IATA chief says
The International Air Transport Association (IATA) released an updated economic impact assessment of the coronavirus on Thursday that dwarfed its US$29.3 billion estimate on February 20, as the sector faced a growing black hole in its finances.
Governments around the world are grappling with a pandemic that has so far hit China, South Korea, Iran and Italy the hardest and threatens to accelerate the global economic slowdown.
The IATA analysis has found airlines across the world could lose between US$63 billion to US$113 billion in revenue depending on the severity of the health crisis.
The Asia-Pacific region stands to lose close to US$58 billion and its main aviation markets, including China, Australia, Singapore, Japan and South Korea, could see a 23 per cent fall in passenger numbers under the assessment’s worst case scenario, which foresees a wider spread of the virus. China alone would lose US$22 billion in that event.
The economic fallout if such a scenario played out would be on a similar scale to that experienced from the 2008/09 global financial crisis. The losses laid out are equivalent to 19 per cent of passenger revenues worldwide.
The more optimistic outlook for aviation markets where there had already been at least 100 confirmed cases foresaw a sharp downturn in cases, but the impact would still lead to lost revenue of US$63 billion.
Cathay parks half its fleet and slashes three-quarters of March flights
IATA’s estimate published last month, which was quickly out of date, forecast that the virus originating in the central Chinese city of Wuhan would be contained within the Asia-Pacific region.
Scores of airlines have implemented emergency cost-cutting measures and cut flights across the board.
Cathay Pacific, the worst-hit airline outside mainland China, led the charge by rolling out unpaid leave that was taken up by 75 per cent of its staff, freezing recruitment, stopping non-critical projects and putting the squeeze on suppliers.
Cathay has around 120 planes grounded at any given time and cut three-quarters of its weekly flights in March.
Lufthansa Group said on Wednesday it had parked the equivalent of 150 aircraft or a fifth of its fleet. On the same day, United Airlines said it would cut its international capacity by a fifth and domestic routes by 10 per cent in April.
British Airways has already cut 216 flights to Europe and the US from March 16-28.
Alexandre de Juniac, IATA’s director general and CEO, appealed on behalf of his 290 airline members for government help to steer the industry out of a major crisis.
China may have ‘no new coronavirus cases’ outside Hubei by mid-March
“Governments must take note. Airlines are doing their best to stay afloat as they perform the vital task of linking the world’s economies,” said de Juniac.
“As governments look to stimulus measures, the airline industry will need consideration for relief on taxes, charges and slot allocation. These are extraordinary times.”
Travel bans are currently in place covering a number of countries and those who have travelled there, especially anyone who has visited mainland China within 14 days.
The restrictions on travel are contrary to IATA and World Health Organisation advice, but the closing of borders to people continues to grow.
The virus has now spread to more than 80 countries across the world, with more than 96,300 cases and 3,300 deaths recorded as of Thursday night.
IATA noted the “severe impact” on advanced bookings as travellers clamoured for refunds or did not turn up for flights.
