The airline industry has put a price on the outbreak, and it is a number that will echo far beyond boardrooms. The International Air Transport Association says passenger carriers could lose up to $113 billion (£87 billion) in revenue this year, a forecast almost four times the estimate it gave only 13 days earlier.
For communities and the families who work the counters, gates and cabins, the pain is already visible. The collapse of British regional airline Flybe, IATA said, shows why “urgent action” is now needed to safeguard the industry. Airline shares have already lost nearly 25% of their value since the outbreak began, a slide about six times sharper than the one seen during the 2003 Sars outbreak.
Alexandre de Juniac, IATA’s director general, put the moment in plain terms. “The turn of events as a result of Covid-19 is almost without precedent,” he said, describing how the industry’s outlook across much of the world has sharply worsened in little over two months.
Two paths sit ahead. If the virus spreads only a little further, in markets already carrying more than 100 confirmed cases, losses could be limited to $63 billion, concentrated in the Asia-Pacific region. If similar patterns reach countries now holding just 10 or more cases, revenues would fall by 19% to the levels of the 2008 financial crisis.
The cuts are already concrete. United Airlines plans to trim its North American schedule by 10 percent in April, with a 20 percent cut to its international routes. Lufthansa has grounded 150 aircraft, while Cathay Pacific has slashed roughly 75 percent of its schedule.
Morningstar analyst Dan Wasiolek expects travel demand through 2020 to fall 5 percent in North America and 10 percent in Europe, with a steeper 25 percent drop in the rest of the world. Henry Harteveldt, president of Atmosphere Research Group, called it “perhaps the most extensive hit we have seen in the worldwide travel industry since 9/11.”
“January was just the tip of the iceberg in terms of the traffic impacts we are seeing,” de Juniac said, and even that was enough to produce the industry’s slowest traffic growth in nearly a decade.
Sources
- Airlines could lose up to $113bn on back of coronavirus, says Iata | Airline industry | The Guardian
- From empty sidewalks to deserted hotels, coronavirus is slamming the tourism industry
