Home AviationAirlines Global Aviation Expected to Lose $29.3bn; Blame the Coronavirus!

Global Aviation Expected to Lose $29.3bn; Blame the Coronavirus!

by Ankur Deo

As we had reported earlier, the coronavirus has substantially affected businesses, especially the aviation industry. While Asian aviation industry is the one to suffer the most, global aviation, in general, has been on the decline. The International Air Transport Association (IATA) stated that carriers in the Asia Pacific are to incur a revenue loss of $27.8b, while global carriers will lose $29.3b in 2020 as an impact of the Novel Coronavirus outbreak.

Air Traffic is expected to hit the hardest due to covid-19. ©bbc

The growth rate for Asia Pacific aviation was forecast at a decent 4.8% before the outbreak. With the rapid spread of covid-19 cases, the net impact shall be an 8.2% full-year contraction compared to 2019 demand levels. That would translate into a $27.8b revenue loss in 2020 for carriers based in Asia-Pacific region—with $12.8b lost in the Chinese domestic market alone. Carriers outside Asia-Pacific are forecast to bear a revenue loss of $1.5b, assuming the loss of demand is limited to markets linked to China. This would bring total global revenue loss to $29.3b, thereby, representing a 4.7% hit to global demand.

IATA’s Director General and CEO, said in a statement:

‘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 Organization (WHO) and other public health authorities to keep passengers safe, the world connected, and the virus contained.’

However, the forecasted numbers are based on the assumption that the impact of covid-19 primarily stays focused in China, with global carriers exposed to the ripple-effects of it. However, according to latest reports, where cases of the illness are reported in Italy and other parts of the world, these numbers are bound to multiply. More airlines and micro-industries are expected to take a hit in case the epidemic further expands into a pandemic.

 

IATA has further cautioned it is too early to predict what this expected revenue loss would mean for airlines’ profitability this year. In 2003, SARS (Severe Acute Respiratory Syndrome)  was responsible for the 5.1% fall in demand for airlines in the Asia-Pacific region. If the covid-19 takes the form of a pandemic and spreads to other parts of the globe, effects could be far graver than SARS.

Australia’s Qantas Airways has already stated the outbreak would cost it up to $99m (USD) while European carrier Air-France KLM put the cost at up to $213m (USD) for the period between February and April. While Cathay Pacific and Hong Kong Airlines have already slashed jobs and delayed payments, exact figures of losses are not yet revealed by many airlines. How long do you think it will take for the industry to recover from this slack? And the elephant in the room: how many airlines will succumb to it? Let us know in the comments!

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