Coronavirus: Airline industry faces a loss of $113 billion as passengers post photos of nearly empty airports
As the economy worldwide faces a downturn amid the current coronavirus (COVID-19) outbreak, the airline industry is forecast to take a massive hit of $113 billion if the outbreak is not limited in an analysis put forward by the International Air Transport Association (IATA).
The latest report is an update to IATA's February analysis where the lost revenues were put at $29.3 billion based on the scenario that the spread of COVID-19 was largely confined to markets associated with China.
However, the virus has since spread to over 80 countries as multiple airline carriers have grounded flights and imposed travel restrictions to and from countries that have been most affected by the outbreak, such as China and Italy.
IATA has noted that airline share prices have fallen nearly 25% since the onset of the outbreak — roughly 21% more than the decline that occurred at a similar point during the SARS crisis of 2003.
IATA's estimation of losses takes two scenarios into account. The first scenario includes markets with more than 100 confirmed COVID-19 cases as of March 2, experiencing a sharp downturn followed by a recovery profile. These markets include China, Japan, Singapore, South Korea, Italy, France, Germany, and Iran.
In this scenario, the fall in demand translated to an 11% loss in worldwide passenger revenue equal to $63 billion, of which China would account for roughly one-third of the loss, with Asia as a whole accounting for three-fourths of the total loss.
The second scenario included markets that have 10 or more confirmed cases of COVID-19 as of 2nd March. This scenario forecasts a 19% loss in worldwide passenger revenues, roughly equating to $113 billion.
It is important to note that the United Arab Emirates — home to one of the biggest international airline carriers, Emirates — has not been included in the analysis.
Across the world, passengers are sharing images of empty airports and dwindling traffic in one of the greatest crises to hit the airline industry. From the states of Virginia and Chicago in the United States to Ireland, Thailand, Switzerland, and Iran.
In a statement to MEA WorldWide (MEAWW), the Airports Council International has said they will release a statement on the impacts of COVID-19 virus on the aviation industry next week.
As it stands, with no vaccine for COVID-19 currently available and with testing efforts just being ramped up and the number of cases reported a worldwide increase, IATA may have to yet again revise their analysis.
In a statement, Alexandre de Juniac, IATA’s Director General and CEO said, "The turn of events as a result of COVID-19 is almost without precedent. In little over two months, the industry's prospects in much of the world have taken a dramatic turn for the worse."
"It is unclear how the virus will develop, but whether we see the impact contained to a few markets and a $63 billion revenue loss, or a broader impact leading to a $113 billion loss of revenue, this is a crisis."