Airline Carriers Could Lose $30 Billion Over Coronavirus

If the impact of the coronavirus outbreak continues at its current pace, airlines are facing a potential loss of nearly $30 billion according to the International Air Transport Association (IATA).

The main lobby group for airlines says the bulk of that would be for carriers in, or flying in and out of, the Asia-Pacific Region. That includes such U.S. airlines as United, American and Delta.

“Airlines are making difficult decisions to cut capacity and in some cases routes,” said Alexandre de Juniac, IATA’s Director General and CEO. “Lower fuel costs will help offset some of the lost revenue (but) this will be a very tough year for airlines.”

IATA said its initial assessment of the impact of the Novel coronavirus-outbreak” target=”_self” rel=”nofollow noopener noreferrer”>Coronavirus 2019 outbreak (COVID-19) shows a potential 13 percent full-year loss of passenger demand for carriers in the Asia-Pacific region.

Prior to the outbreak, IATA had predicted a 4.8 percent growth for the Asia-Pacific region this year, meaning the net impact will be an 8.2 percent full-year contraction compared to 2019 demand levels.

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—and airline carriers outside Asia-Pacific are forecast to bear a revenue loss of $1.5 billion.

Combined, that’s a total global lost revenue of $29.3 billion.

These estimates are based on a scenario similar to the SARS outbreak several years ago, in which a six-month period with a sharp decline was followed by an equally quick recovery. It’s also based on the assumption that the center of the public health emergency remains in China.

If it spreads more widely, the impact on airlines from other regions would be larger.

“Stopping the spread of the virus is the top priority. Airlines are following the guidance of the coronavirus-risk-very-high-globally.html” target=”_self” rel=”nofollow noopener noreferrer”>World Health Organization (WHO) and other public health authorities to keep passengers safe, the world connected, and the virus contained,” de Juniac said.