Airlines operating in Asia-Pacific region may suffer a 13 percent full-year loss of passenger demand due to the coronavirus outbreak, according to the International Air Transport Association (IATA).
This 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, the trade body said in a statement.
IATA had earlier forecast Asia-Pacific region airlines to register a growth of 4.8 percent this year, but they are now on course instead for a contraction of 8.2 percent.
Carriers outside Asia-Pacific are forecast to bear a revenue loss of $1.5 billion.
This would bring total global lost revenue to $29.3 billion (5 percent lower passenger revenues compared to what IATA forecast in December) and represent a 4.7 percent hit to global demand, IATA added.
"This will be a very tough year for airlines. Stopping the spread of the virus is the top priority," IATA CEO Alexandre de Juniac said.
If it spreads more widely to Asia-Pacific markets then impacts on airlines from other regions would be larger, IATA warned.
IATA said its estimate assumed that COVID-19 behaved like the SARS outbreak nearly two decades ago. "That was characterized by a six-month period with a sharp decline followed by an equally quick recovery", it added.
This will be the first time since the SARS crisis of 2003 that demand for air travel has declined, De Juniac said.
But there are some factors potentially softening the blow, IATA 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 said.
It is premature to estimate what this revenue loss will mean for global profitability, according to IATA.
"Airlines are making difficult decisions to cut capacity and in some cases routes. Lower fuel costs will help offset some of the lost revenue. This will be a very tough year for airlines," De Juniac said.
First Published: Feb 21, 2020 6:25 AM IST
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