Airlines around the world stand to lose a total of nearly US$30 billion in revenue in 2020 thanks to flight cancellations and slowing demand caused by the outbreak of the coronavirus.
According to the International Air Transport Association (IATA), the impact of the virus – now officially named Covid-19 – shows a potential 13 per cent full-year loss of passenger demand for carriers in the Asia Pacific region alone.
When combined with the effect on airlines outside of the region, this translates to a potential US$29.3 billion (£22.7 billion) revenue loss for 2020 – 5 per cent lower than IATA forecast in December 2019.
The association said its estimate is based on the idea that the coronavirus scenario will have a similar impact on demand experienced during the SARS outbreak of the early 2000s. It said that situation saw a v-shaped trend with a sharp decline followed by an equally quick recovery.
IATA director general and CEO Alexandre de Juniac commented: “These are challenging times for the global air transport industry. Stopping the spread of the virus is the top priority. Airlines are following the guidance of the World Health Organisation (WHO) and other public health authorities to keep passengers safe, the world connected and the virus contained.
“The sharp downturn in demand as a result of Covid-19 will have a financial impact on airlines – sever for those particularly exposed to the China market. We estimate that global traffic will be reduced by 4.7 per cent by the virus, which could more than offset the growth we previously forecast and cause the first overall decline in demand since the Global Financial Crisis of 2008-09…
“Airlines are making difficult decisions to cut capacity and in some case routes. Lower fuel costs will help offset some of the lost revenue. This will be a very tough year for airlines”.
IATA’s estimate comes after Qantas revealed it expects to take a AU$100-$150 million hit due to slowing demand to and from its Asian destinations. Cathay Pacific said it has cut capacity by 40 per cent in February and March, which it predicts will drive its results for the first half of 2020 “significantly down” on the previous year.
According to the latest figures from OAG, overall capacity in and from China has been reduced by nearly 80 per cent since 20 January.