Coronavirus to cause $27.8bn revenue loss for Asian carriers: IATA

Cornelia Mascio
Febbraio 21, 2020

The International Air Transport Association (IATA) said Thursday airlines operating in the Asia-Pacific region might lose a combined revenue of $27.8 billion this year due to ongoing coronavirus crisis.

IATA had previously estimated Asia-Pacific airlines to register growth of 4.8 per cent this year, but they are now on course instead for a contraction of 8.2 per cent, it said.

IATA is now expecting a 0.6% global contraction in passenger demand, measured by revenue passenger kilometers (RPK), for 2020 from an earlier forecast growth of 4.1% in December 2019. "In this scenario, that would translate into a $27.8 billion revenue loss in 2020 for carriers in the Asia-Pacific region-the bulk of which would be borne by carriers registered in China, with $12.8 billion lost in the China domestic market alone", it said in a statement.

IATA said this would bring total global lost revenue to $US29.3 billion, 5 percent down on its December forecast, and represented a 4.7 percent hit to global demand.

The IATA said its estimate assumed that COVID-19 behaved like the SARS outbreak almost two decades ago, which was "characterised by a six-month period with a sharp decline followed by an equally quick recovery".

But there are some factors potentially softening the blow, the IATA said.

IATA said it is premature to estimate what the revenue loss will mean for global profitability.

Citing the Singapore government which is allocating S$112 million to provide financial relief to airlines as an example, he said: "Airlines and governments are in this together". "Airlines are making hard decisions to cut capacity and in some cases routes. Some relief may be seen in lower fuel prices for some airlines, depending on how fuel costs have been hedged", it added. "This will be a very tough year for airlines", said IATA director general and CEO Alexandre de Juniac.

New figures for Chinese airlines show traffic declines in January, when the coronavirus outbreak became a public health crisis. But South Korea in the past two days has confirmed 73 new coronavirus cases, making it the largest outbreak area outside of China, not counting a contaminated cruise ship in Japan, and raising concerns that the virus is breaking out beyond China.

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