Airlines lose $27.8b to Coronavirus outbreak

By Kelvin Osa Okunbor

Global carriers  have lost over $27.8 billion to the outbreak and spread of coronavirus, the International Air Transport Association (IATA) said at the weekend.

It said in a report endorsed by  its Director-General/Chief Executive Officer, Alexandre de Juniac, that initial assessment of the impact of the Novel Coronavirus 2019 outbreak (COVID-19) showed a potential 13 per cent full-year loss of passenger demand for carriers in the Asia-Pacific region.

The body said considering  growth for the region’s airlines, which was forecast to be 4.8 per cent,  the net impact will be an 8.2 per cent  full-year contraction compared to last year demand levels.

IATA said the scenario would translate into a $27.8 billion revenue loss this year for carriers in the Asia-Pacific region—the bulk of which would be borne by carriers registered in China.

It said $12.8 billion would be lost in the China domestic market alone.

In the same scenario, IATA said  carriers outside Asia-Pacific will bear a revenue loss of $1.5 billion, assuming the loss of demand is limited to markets linked to China.

IATA said: “This would bring total global lost revenue to $29.3 billion , five per cent  lower passenger revenues compared to what IATA forecast in December representing  a 4.7 per cent hit to global demand.

“In December, IATA forecast global revenue per kilometre  growth of 4.1 per cent , so this loss would more than eliminate expected growth this year, resulting in a zero point six per cent  global contraction in passenger demand for 2020.

“Governments will use fiscal and monetary policy to try to offset the adverse economic impacts. Some relief may be seen in lower fuel prices for some airlines, depending on how fuel costs have been hedged.

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“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—severe 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.’’

“And that scenario would translate into lost passenger revenues of $29.3 billion. Airlines are making difficult decisions to cut capacity and in some cases routes. Lower fuel costs will help offset some of the lost revenue. This will be a very tough year for airlines.”