Airlines to bear Rs4,289 bn loss due to coronavirus

MONTREAL: The International Air Transport Association (Iata) on Friday announced that its initial assessment of the impact of the Novel Coronavirus 2019 outbreak (Covid-19) shows a potential 13 per cent full-year loss of passenger demand for carriers in the Asia-Pacific region, foreign media reported on Friday.

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 $27.8 billion (Rs4,289 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.

In the same scenario, carriers outside the Asia-Pacific are forecast to bear a revenue loss of $1.5 billion, assuming the loss of demand is limited to markets linked to China. This would bring total global lost revenue to $29.3 billion - 5 per cent lower passenger revenues compared to what the Iata forecast in December - and represent a 4.7 per cent hit to global demand.

In December, the Iata forecast global RPK growth of 4.1 per cent, so this loss would more than eliminate expected growth this year, resulting in a 0.6 per cent global contraction in passenger demand for 2020.

These estimates are based on a scenario where Covid-19 has a similar V-shaped impact on demand as was experienced during the Severe Acute Respiratory Syndrome (Sars). That was characterised by a six-month period with a sharp decline followed by an equally quick recovery.