Coronavirus: Airlines Estimated to Lose Billions

  • Air travel demand is set to decline for the first time since 2009, IATA warned.
  • The trade group said the coronavirus outbreak will cost airlines more than $29 billion in revenue this year.
  • Several airlines, such as British Airways, Delta, Lufthansa, Air France or Air Canada have canceled their return to mainland China due to the health crisis.

The Coronavirus epidemic could cause losses of nearly $27.8 billion for the airlines in the world, and almost half of this amount would be suffered by the Chinese market, the International Air Transport Association (IATA) estimated Thursday. For the first time since 2003, when the Severe Acute Respiratory Syndrome (SARS) crisis erupted, air transport suffered, according to IATA.

Coronavirus disease 2019 (COVID-19), also known as 2019-nCoV acute respiratory disease (2019-nCoV ARD), and novel coronavirus pneumonia (NCP) is a viral respiratory disease caused by the 2019 novel coronavirus (SARS-CoV-2). It was first detected during the 2019–20 Wuhan coronavirus outbreak.

Alexandre de Juniac, Director-General of the International Air Transport Association (IATA), said that the year 2020  “will be a very tough year for airlines.” In China alone, they estimate losses could reach $12.8 billion.

In its preliminary report on the economic effects of the coronavirus alert in the airline industry, the association predicts negative consequences in all regions, although Asia-Pacific will be the most affected, with $27.8 billion less revenue and an 8.2% drop in demand.

North America and Europe would be another market where there may be revenue reductions that amount to $700 million, although annual growth demand is expected to continue compared to 2019.

“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 Organization and other public health authorities to keep passengers safe, the world connected, and the virus contained,” de Juniac added.

Several airlines, such as British Airways, Delta, Lufthansa, Air France or Air Canada have canceled direct flights to mainland China due to the health crisis. Air France-KLM estimates the losses, between January and April, amounts to $150 to 200 million.

Severe acute respiratory syndrome (SARS) is a viral respiratory disease of zoonotic origin caused by the SARS coronavirus (SARS-CoV). No cases of SARS have been reported worldwide since 2004.

The Coronavirus epidemic has reversed growth forecasts published by IATA in December, in which it stressed that Asia-Pacific will remain the fastest-growing market, driven by the high demand for domestic flights in China “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,” IATA said.

Forecasts have been made taking into account the impact of the SARS epidemic on the airline industry, also from China, in 2003, the last year in which global demand for air transport declined.

Chinese authorities said on Thursday that the death toll from the epidemic was 2,112 in mainland China. Most of the deaths were recorded in Wuhan, the capital of Hubei, the province in central China where the epidemic began in December, according to the daily count of the Hubei Health Commission.

In total, 615 new infections were recorded in Wuhan and 13 in the rest of the province, a figure much lower than on Wednesday (1,693 new people infected in Hubei). The committee also downgraded the number of cases of infection registered in the previous days, without specifying the reason. In mainland China, the number of people infected with the virus exceeds 74,500.

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Benedict Kasigara

I have been working as a freelance editor/writer since 2006. My specialist subject is film and television having worked for over 10 years from 2005 during which time I was the editor of the BFI Film and Television.

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