Coronavirus impacted passenger demand and revenues, finds IATA

Following an initial assessment of its impact, IATA has announced that the coronavirus (COVID-19) outbreak has caused a potential 13 per cent full-year loss of passenger demand for carriers in the Asia-Pacific region.

When taking into consideration that the predicted growth for the region’s airlines was to be 4.8 per cent, the net impact of the coronavirus outbreak will be an 8.2 per cent full-year contraction compared to 2019 demand levels.

In real-world terms, this represents a $27.8 billion revenue loss in 2020 for carriers in the Asia-Pacific region. The bulk of which would be borne by carriers registered in China, with $12.8 billion lost in the China domestic market alone. Similarly, carriers outside of the Asia-Pacific region are expected to experience a loss of $1.5 billion, assuming the loss of demand is limited to markets linked to China.

Globally, this would result in a total lost revenue of $29.3 billion and represent a 4.7 per cent hit to demand. In December 2019, IATA forecast global revenue passenger kilometres (RPK) growth of 4.1 per cent, so the loss as a result of the COVID-19 virus would more than eliminate any expected growth in 2020, resulting in a 0.6 per cent global contraction in passenger demand the year.

The estimated impact of the COVID-19 outbreak also assumes that the centre of the public health emergency remains in China. If it spreads more widely to Asia-Pacific markets, then impacts on airlines from other regions would be larger.

Director General and CEO of IATA, Alexandre de Juniac, said: “These are challenging times for the global air transport industry. Stopping the spread of the virus is the top priority. Airlines are following the guidance of the World Health Organization (WHO) and other public health authorities to keep passengers safe, the world connected and the virus contained. The sharp downturn in demand as a result of COVID-19 will have a financial impact on airlines – severe for those particularly exposed to the China market. We estimate that global traffic will be reduced by 4.7 per cent by the virus, which could more than offset the growth we previously forecast and cause the first overall decline in demand since the SARS crisis of 2003. That scenario would translate into lost passenger revenues of $29.3 billion. Airlines are making difficult decisions to cut capacity and, in some cases, routes. Lower fuel costs will help offset some of the lost revenue. This will be a very tough year for airlines.”