Airlines operating in the Asia-Pacific region stand to lose a combined $27.8 billion of revenue this year in the ongoing coronavirus crisis, according to the International Air Transport Association.
"The estimate is based on projections of a 13% full-year decline in passenger demand, mostly in China,'' the trade body said on Thursday.
"This will be a very tough year for airlines," IATA chief executive Alexandre de Juniac said in a statement. "Stopping the spread of the virus is the top priority."
IATA said its estimate assumed that Covid-19 behaved like the Sars outbreak nearly two decades ago, which was "characterised by a six-month period with a sharp decline followed by an equally quick recovery".
"This will be the first time since the 2008-2009 financial crisis that demand for air travel has declined,'' De Juniac said.
"The bulk of the losses will be borne by Chinese carriers, including a $12.8 billion hit to the Chinese domestic market alone.
"Carriers outside Asia are expected to lose $1.5 billion of revenue due to the virus,'' IATA said, adding it "is too early to quantify the impact on earnings.''
"This brings worldwide airline revenue lost to the virus to a projected $29.3 billion,'' the trade body said.
"However, if the virus spreads more widely to Asia-Pacific markets then the impact on airlines from other regions would be larger,'' it warned.
IATA had previously estimated Asia-Pacific airlines to register growth of 4.8% this year, but said "they are now on course instead for a contraction of 8.2%.''
"But there are some factors potentially softening the blow,'' it said. "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."
"It is therefore difficult to predict by how much exactly lost revenue willl weigh on profits.
"But airlines are already taking 'difficult decisions' to cut capacity, or even routes,'' IATA said.
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February 22, 2020 at 03:31AM
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