The International Air Transport Association (IATA) has announced their initial assessment of the impact of the Novel Coronavirus 2019 outbreak (COVID-19). The statement shows a potential 13% full-year loss of passenger demand, for carriers in the Asia-Pacific region; the statement also shows a 4.7% hit to global demand, caused by COVID-19.
This decline would translate into a $27.8 billion revenue loss in 2020, for carriers in the Asia-Pacific region. The largest hit would be directly to carriers registered in China. The Chinese domestic market alone will suffer an estimated $12.8 billion loss.
Carriers outside the Asia-Pacific are forecast to suffer a revenue loss of $1.5 billion, assuming the loss of demand is limited to markets linked to China.
This would bring total global lost revenue to $29.3 billion (5% lower passenger revenues compared to what the IATA forecast in December). That represents a 4.7% hit to global demand.
In December, the IATA forecast global RPK growth of 4.1%. This loss would more than eliminate any expected growth this year. The result would equate to a 0.6% global contraction in passenger demand for 2020.
Compare to the Past
These estimates are based on a scenario where COVID-19 has a similar V-shaped impact on demand, as was experienced during the SARS epidemic. That shape characterises a six-month period, with a sharp decline followed by an equally quick recovery.
In 2003, SARS was responsible for the 5.1% fall in the RPKs carried by Asia-Pacific airlines.
These are challenging times for the global air transport industry. We estimate that global traffic will be reduced by 4.7% by the virus, which could more than offset the growth we previously forecast and cause the first overall decline in demand since the Global Financial Crisis of 2008-09. And that scenario would translate into lost passenger revenues of $29.3 billion. This will be a very tough year for airlines.
Alexandre de Juniac, IATA’s Director General and CEO
Role of Governments
Governments have an important role to play in this crisis.
It is important for governments to take leadership in shoring up their economies. The Singapore government, for example, is allocating SGD $112 million; this is to provide financial relief to airlines and the aviation sector, which is struggling to economically maintain connectivity.
Only a day ago, we reported that the fourth-largest airline in mainland China, Hainan Airlines, is near takeover according to various media.