"In little over two months, the industry's prospects in much of the world have taken a dramatic turn for the worse."
NEW DELHI: Airlines globally are set to lose in passenger revenues of up to $113 billion, if the Corona Virus spreads further, the International Air Transport Association (IATA) has said today.
This scenario applies a similar methodology but to all markets that currently have 10 or more confirmed COVID-19 cases (as of 2 March). The outcome is a 19% loss in worldwide passenger revenues, which equates to $113 billion. Financially, that would be on a scale equivalent to what the industry experienced in the global financial crisis, said the airline body.
The airline body also added that the losses in passenger revenues would be about $63 billion, if the corona virus does not spread further and is contained at current levels.
IATA’s previous analysis (issued on 20 February 2020) had put loss in revenues at $29.3 billion based on a scenario that would see the impact of COVID-19 largely confined to markets associated with China.
“Since that time, the virus has spread to over 80 countries and forward bookings have been severely impacted on routes beyond China. Financial markets have reacted strongly. Airline share prices have fallen nearly 25% since the outbreak began, some 21 percentage points greater than the decline that occurred at a similar point during the SARS crisis of 2003. To a large extent, this fall already prices in a shock to industry revenues much greater than our previous analysis,” the airline body said in a statement.
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“Many airlines are cutting capacity and taking emergency measures to reduce costs. Governments must take note. Airlines are doing their best to stay afloat as they perform the vital task of linking the world’s economies. As governments look to stimulus measures, the airline industry will need consideration for relief on taxes, charges and slot allocation. These are extraordinary times,” Alexandre de Juniac, IATA’s Director General and CEO, was quoted in the release.
The airline body said that no estimates are, however, available for the impact on cargo operations.
