Coronavirus could cost airlines $63bn-$113bn in passenger revenue

Global airlines will lose $63 billion to $113 billion in passenger revenue this year due to the coronavirus, the International Air Transport Association warned, after revising an earlier estimate of a $29.3bn loss last month. The higher $113bn figure would result from a scenario where the deadly virus spreads more extensively around the world, Iata said in a statement on Thursday. That equates to a 19 per cent year-on-year decline in bookings, and the financial impact is on the scale of what the industry experienced during the 2009 global financial crisis. "Governments must take note: Airlines are doing their best to stay afloat as they perform the vital task of linking the world’s economies," Alexandre de Juniac, Iata's director-general and chief executive, said. "As governments look to stimulus measures, the airline industry will need consideration for relief on taxes, charges and slot allocation. These are extraordinary times." Iata in February estimated lost revenue of $29.3bn based on a scenario that Covid-19 would largely be confined to markets associated with China. Since then, the virus has spread to more than 80 countries and "forward bookings have been severely impacted on routes beyond China," the Geneva-based organisation said. The $63bn figure in passenger revenue is derived from a scenario where the coronavirus is contained in current markets with more than 100 cases as of March 2, Iata said. These markets would experience a sharp downturn followed by a V-shaped recovery profile. This fall in demand would translate to an 11 per cent passenger revenue loss globally. Regionally, carriers in Bahrain, Iraq, Iran, Kuwait, Lebanon and the UAE would collectively see a 23 per cent drop in passenger numbers that would lead to a $4.9bn revenue loss, Iata said. Iran is the epicentre of the coronavirus in the region. Airlines in the rest of the Middle East would suffer a 9 per cent decline in passengers, which would wipe out $2.3bn in revenue. Carriers in Asia-Pacific (including Australia, China, Japan, Malaysia, Singapore, South Korea, Thailand) would be the worst hit from the coronavirus crisis with an estimated loss of $57.3bn from a 23 per cent drop in passenger traffic, Iata said. European carriers could see a combined loss of $44bn, while for Canada and the US the figure could reach $21bn. A drop in oil prices since the start of the year could cut airlines' 2020 fuel bills by up to $28bn, on top of savings that would be achieved as a result of reduced operations, which would provide "some relief but would not significantly cushion the devastating impact that Covid-19 is having on demand", Iata said. It added that hedging practices will postpone this impact for many airlines.

Coronavirus could cost airlines $63bn-$113bn in passenger revenue

Carriers will need their governments to consider relief on taxes, charges and slot allocation, Iata says