Business

Coronavirus Hits Airline Industry

According to IATA, carriers are forecast to bear a revenue loss of $29.3 billion if demand declines are limited to markets linked to China. For the China region alone, the lost revenues could total $12.8 billion.
06 Mar 2020 08:12
Coronavirus Hits Airline Industry

Airlines worldwide could lose close to $30 billion in revenues this year from the coronavirus outbreak, based mainly on the reduction in flights to and from China, according to the airline trade body IATA.

Data show a 2.8 per cent fall in global aircraft capacity so far this year, compared with the International Air Transport Association’s (IATA) expectations in December for growth of 4.7 per cent in 2020.

According to IATA, carriers are forecast to bear a revenue loss of $29.3 billion if demand declines are limited to markets linked to China. For the China region alone, the lost revenues could total $12.8 billion.

IATA based its estimates on a scenario where SARS-CoV-2 has a similar impact on demand as was experienced during the SARS outbreak in 2003. SARS was responsible for the 5.1 per cent fall in revenue per passenger kilometre — RPK is an industry measure — carried by Asia-Pacific airlines.

In a note to clients, HSBC aviation analyst Andrew Lobbenberg said that the European listed carriers could see earnings cuts ranging from 87 per cent at Air France-KLM to 23 per cent at Wizz Air for 2020

“We estimate that global traffic will be reduced by 4.7 per cent by the virus, the first overall decline in demand since the global financial crisis of 2008-2009,” said Alexandre de Juniac, IATA’s Director-General and CEO.

Screenshot 2020-03-06 at 8.06.27 AM

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