Coronavirus: IATA Projects $29.3bn Global Revenue Loss Due To Outbreak
The International Air Transport Association has projected a global revenue loss of $29.3bn due to the outbreak of coronavirus.
The IATA made the announcement after its initial assessment of the impact of the coronavirus 2019 outbreak on the global aviation industry.
The association said the impact would amount to five per cent lower passenger revenues compared to its forecast in December, adding that it would represent a 4.7 per cent hit to global demand.
In December, the IATA had projected global passenger growth of 4.1 per cent.
The association, however, said the projected loss would more than eliminate expected growth this year, resulting in a 0.6 per cent global contraction in passenger demand for 2020.
The association’s analysis also showed a potential 13 per cent full-year loss of passenger demand for carriers in the Asia-Pacific region.
The IATA said, “Considering that growth for the region’s airlines was forecast to be 4.8 per cent. The net impact will be an 8.2 per cent full-year contraction compared to 2019 demand levels.
“In this scenario, that would translate into a $27.8bn revenue loss in 2020 for carriers in the Asia-Pacific region, the bulk of which would be borne by carriers registered in China, with $12.8bn lost in the China domestic market alone.”
It added, “In the same scenario, carriers outside Asia-Pacific are forecast to bear a revenue loss of $1.5bn, assuming the loss of demand is limited to markets linked to China.
“This would bring total global lost revenue to $29.3bn (Five per cent lower passenger revenues compared to what IATA forecast in December) and represent a 4.7 per cent hit to global demand.”
According to the IATA, the estimates are based on a scenario where COVID-19 has a similar V-shaped impact on demand as was experienced during SARS, adding that it was characterised by a six-month period with a sharp decline followed by an equally quick recovery.
“In 2003, SARS was responsible for the 5.1 per cent fall in the RPKs carried by Asia-Pacific airlines,” the IATA added.
The association explained that the estimated impact of the COVID-19 outbreak assumed that the centre of the public health emergency remained in China, adding that if it spreads more widely to Asia-Pacific markets, then impacts on airlines from other regions would be larger.
The IATA said governments had an important role to play in the crisis by shoring up their economies.