Advertisement

Updated February 21st, 2020 at 14:33 IST

IATA: Virus may slash $29 billion from airlines' revenue

The outbreak of the new virus threatens to erase $29 billion of this year's revenue for global airlines, mostly for Chinese carriers, as travel crashes worldwide, according to the International Air Transport Association.

IATA: Virus may slash $29 billion from airlines' revenue
| Image:self
Advertisement

The outbreak of the new virus threatens to erase $29 billion of this year's revenue for global airlines, mostly for Chinese carriers, as travel crashes worldwide, according to the International Air Transport Association.

The trade group for global airlines said Thursday that the virus causing COVID-19 has the potential for causing a 13% decline in demand for Asian carriers this year.

The contraction comes at a time when Asian airlines' sales had been growing, the group said.

Global air traffic will be reduced by 4.7% for the year, marking the first overall decline in such demand since the financial crisis of 2008 and 2009, IATA said in a statement. How profits will be affected was still unclear, it said.

The estimates foresee a scenario where COVID-19 has a “V-shaped impact,” similar to what happened during the SARS virus outbreak in 2003, with a sharp dive followed by a quick recovery, according to IATA.

The virus, which began in China late last year, has sickened more than 75,000 people in China, Some 2,000 people have died in China. More than 1,000 cases have been found outside mainland China.

International airlines including British Airways, Germany’s Lufthansa, Australia’s Qantas and the three largest U.S. airlines have suspended flights to China, in some cases until late April or May.

Cathay Pacific asked employees to take three weeks of unpaid leave to help it weather the crisis.

Travel restrictions inside China and fear of the illness have devastated demand for domestic flights in the fast-growing China market.

Many nations are warning people not to travel to China, or barring travelers from China, especially from the Wuhan area, at the center of the outbreak.

People around the world are also voluntarily scaling back travel, while some governments and health experts are encouraging people to stay indoors not only in China but also South Korea and Japan to avoid getting infected.

“These are challenging times for the global air transport industry. Stopping the spread of the virus is the top priority," said Alexandre de Juniac, IATA’s Director General and CEO. “This will be a very tough year for airlines.”

Analysts at Cowen, a U.S. investment bank and financial services company, noted IATA might be underestimating the impact on Asia travel outside of China, noting the recent reports of dozens of cases in South Korea.

“While still relatively small, and too early to tell if it will spread further, we see this as a material negative data point on the global containment of the virus,” the Cowen report said.

___

Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

Advertisement

Published February 21st, 2020 at 14:33 IST

Your Voice. Now Direct.

Send us your views, we’ll publish them. This section is moderated.

Advertisement
Advertisement

Trending Quicks

Jailed Gangster Mukhtar Ansari Passes Away
a few seconds ago
Marginalised Communities Reaching Top Govt Positions Due To 'Affirmative Action': Justice B R Gavai
a minute ago
Retired Police constable gets five-year jail term for molesting minor girl
6 minutes ago
Life Insurance Corporation
7 minutes ago
Elon Musk announces successful Neuralink brain chip implant in human recipient amidst controversy
11 minutes ago
Congress Press Conference
16 minutes ago
Allu Arjun
16 minutes ago
Kia Motors
18 minutes ago
Mastering NDA Preparation: The Importance of Effective Revision Strategies and Organized Study Materials
29 minutes ago
Advertisement
Advertisement
Advertisement
Whatsapp logo