News | Published February 22 2020

IATA warn airlines will lose £23 billion over coronavirus

According to the International Air Transport Association, airlines are set to lose £23.7 billion of revenue this year because of the coronavirus outbreak.

The industry body predicted that global air travel demand will fall for the first time in over a decade, with the resulting effect on airline incomes.

While carriers around the world have been forced to reduce their flights, airlines in China and other parts of East Asia are expected to be affected the most.

This directly translates to expected revenue losses, with airlines in the Asia Pacific region expected to lose $27.8 billion, with those outside Asia only projected to lose $1.5 billion.

These forecasts have been based on estimates made on the reduction in demand during the Sars outbreak in 2003. 

After the outbreak, six months of falling demand was followed by six months of quick recovery. Overall, the Sars outbreak led to a 5.1 per cent decrease in demand for airlines in East Asia.

These forecasts only focus on a loss of revenue and thus far the IATA have not made any predictions on profitability.

Revenue losses are expected to rise significantly if the virus spreads, with these forecasts assuming that the virus stays centred on China.

The location of the virus is particularly tied to a decreasing demand in global air travel demand as the Asia Pacific region was projected to be the biggest driver of demand between 2015 and 2035. Four of the five fastest-growing passenger markets are found in Asia.

Commenting on these predictions, Alexandre de Juniac, the director general of the IATA, said: “Airlines are making difficult decisions to cut capacity and, in some cases, routes. This will be a very tough year for airlines.”

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Authored by

George Salmon
Political Editor
February 22 2020

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