This March 12, 2020 photo, shows empty Air France and Delta Airlines check-in desks at Paris-Charles-de-Gaulle airport after a US 30-day ban on travel from Europe due to the COVID-19 spread in Roissy-en-France. (BERTRAND GUAY / AFP)
The aviation industry faces losses of more than US$100 billion this year as a result of the disruption caused by the novel coronavirus, industry experts have warned.
International Air Transport Association forecast a 19% drop in worldwide passenger revenues once the coronavirus outbreak became global
“In little over two months the industry’s prospects in much of the world have taken a dramatic turn for the worse,” said Alexandre de Juniac, director general and chief executive of the International Air Transport Association, or IATA.
The rapid shift in the industry caused by COVID19 was “almost without precedent”, he said last week.
In its most recent analysis, the association forecast that the global airline passenger business would lose between US$63 billion and US$113 billion this year, depending on how widely the virus spreads. Less than three weeks ago the association had forecast losses of US$30 billion. That forecast had taken into account China related market impacts only.
Since then the outbreak has spread to more than 100 countries, and governments have been tightening travel policies as both businesses and individuals grow more cautious about flying.
The World Health Organization has repeatedly advised against “the application of travel and trade restrictions to countries experiencing COVID19 outbreaks” and said travel bans are “usually not effective in preventing the importation of cases”, but many countries have imposed restrictions at various levels on travel to and from other countries.
Besides governments, major global businesses are encouraging employees not to travel.
Drop in international travel
A survey by the Global Business Travel Association, or GBTA, published on Tuesday said more than 40 percent of its member companies had canceled or suspended all inter national travel, and 95 percent had canceled or suspended most or all business trips to China. The trend is similar in terms of domestic travel, the association said.
South by Southwest, the annual music, film and technology and conference that attracted more than 400,000 people from 106 countries to Austin, Texas, last year, was canceled last weekend for the first time in its 32year history.
GBTA’s survey indicated that 86 percent of its supplier companies expected the coronavirus to have a significant or moderate impact on their revenues, with airlines and hospitality providers taking the biggest hit. The association forecast that the outbreak would cost the industry US$821 billion this year, 54 percent of the year’s forecast business travel spending.
The coronavirus “is fundamentally affecting the way many companies are now doing business” and is significantly impacting the business travel industry’s bottom line,” said Scott Solombrino, GBTA’s chief operating officer and executive director.
“As the virus continues to spread across the world, business travel is slowing at an alarming rate. The impact to the business travel industry — and to the broader economy — cannot be underestimated.”
IATA forecast a 19 percent drop in worldwide passenger revenues once the outbreak became global. Some of the most affected markets, including East Asia, Western Europe and the Middle East, are los ing more than 20 percent of their passengers, while Canada and the US are facing a 10 percent decrease, the association said.
“Many airlines are cutting capacity and taking emergency measures to reduce costs,” de Juniac said.
United Airlines announced in a letter to employees that it will cut 10 percent of its US and Canadian flights and 20 percent of flights to and from other parts of the world in April and May.
Another US airline, Southwest Airlines, told investors its revenues will fall by between US$200 million and US$300 million this year. The British airline Flybe filed for bankruptcy last week, saying the impact of the virus was part of the reason.
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