The International Air Transport Association (IATA) has more than doubled its estimate of what the coronavirus will cost airlines. Its new range for lost revenue runs from $US63 billion to $US113 billion, against a previous estimate of about $US29 billion.
Which end of that range materializes depends on how far the virus travels. The lower number assumes it stays inside markets that already have more than 100 cases. The higher one, which IATA says would match the global financial crisis, assumes a wider spread.
“The turn of events as a result of COVID-19 is almost without precedent,” said IATA director general Alexandre de Juniac. “In little over two months, the industry’s prospects in much of the world have taken a dramatic turn for the worse.” He added: “It is unclear how the virus will develop, but whether we see the impact contained to a few markets and a $63 billion revenue loss, or a broader impact leading to a $113 billion loss of revenue, this is a crisis.”
Shares and capacity
Airline shares have lost 25 percent since the outbreak began, according to IATA. That is some 21 percentage points worse than the drop seen during the 2003 SARS crisis. The association noted, though, that the fall already prices in the shock to industry revenues.
De Juniac said many carriers are cutting capacity and taking emergency measures to lower costs. He also had a message for officials. “Governments must take note. Airlines are doing their best to stay afloat as they perform the vital task of linking the world’s economies,” he said. With governments looking at stimulus measures, he said, the industry will need relief on taxes, charges and slot allocation.
Where passengers drop away
Even the limited-spread scenario would hurt. IATA expects passenger numbers to fall 23 percent in China, 12 percent in Japan, 10 percent in Singapore and 14 percent in South Korea. Italy would lose 24 percent, France and Germany 10 percent each, and Iran 16 percent. Demand elsewhere in Asia would slip 11 percent, while the rest of Europe and the rest of the Middle East would each see 7 percent.
The worst case is broader. Australia, China, Japan, Malaysia, Singapore, South Korea, Thailand and Vietnam would together lose 23 percent of their passengers, and the rest of Asia-Pacific 9 percent. A group of European countries, from Austria and France to Spain, Sweden and the United Kingdom, would see a 24 percent fall, with the rest of Europe down 9 percent. Bahrain, Iraq, Iran, Kuwait, Lebanon and the United Arab Emirates would drop 23 percent, and the rest of the Middle East 9 percent.
Canada and the US come off lightest in that scenario, with a 10 percent decline in passenger numbers.
