Airlines to lose almost US$ 30 bn due to Coronavirus

The International Air Transport Association (IATA) has predicted that demand for air travel will fall for the first time in more than a decade. The worst affected airlines are likely to be from China & other parts of the Asia Pacific region. According to the forecast, in total, airlines in the Asia Pacific region are set to see a US$ 27.8bn revenue loss in 2020, while those outside Asia are expected to lose US$ 1.5bn in revenue. Further, according to the agency, carriers in China are set to lose revenue of $12.8bn in their home market alone.

“Airlines are making difficult decisions to cut capacity and in some cases routes,” stated IATA’s director-general Alexandre de Juniac. The agency clarified that these estimates are based on the slump in demand that was seen during the Sars (severe acute respiratory syndrome) outbreak in 2003. That 6 month period witnessed a steep fall in demand of about 5.1% followed by an equally quick recovery.

IATA also made clear the fact that the prediction was based on the assumption that the epidemic remains central to China; if the virus spreads, the effect on the aviation industry could be far worse.