The airline industry will need consideration for relief on taxes, charges and slot allocation
The airline industry will need consideration for relief on taxes, charges and slot allocation

IATA updates Covid-19 financial impact, says relief measures needed

ANI | Updated: Mar 05, 2020 15:45 IST

Singapore, Mar 5 (ANI): The International Air Transport Association (IATA) on Thursday updated its analysis of the financial impact of novel coronavirus (COVID-19) public health emergency on the global air transport industry.
IATA now sees 2020 global revenue losses for the passenger business of between 63 billion dollars (in a scenario where Covid-19 is contained in current markets with over 100 cases as of March 2) and 113 billion dollars (in a scenario with a broader spreading of Covid-19).
No estimates are yet available for the impact on cargo operations.
IATA's previous analysis issued on February 20 put lost revenues at 29.3 billion dollars based on a scenario that would see the impact of Covid-19 largely confined to markets associated with China.
Since that time, the virus has spread to over 80 countries and forward bookings have been severely impacted on routes beyond China.
Financial markets have reacted strongly. Airline share prices have fallen nearly 25 per cent since the outbreak began, some 21 percentage points greater than the decline that occurred at a similar point during the SARS crisis of 2003.
To a large extent, this fall already prices in a shock to industry revenues much greater than IATA's previous analysis.
To take into account the evolving situation with Covid-19, IATA estimated the potential impact on passenger revenues based on two possible scenarios.
The first scenario includes markets with more than 100 confirmed Covid-19 cases (as of March 2) experiencing a sharp downturn followed by a V-shaped recovery profile. It also estimates falls in consumer confidence in other markets (North America, Asia Pacific and Europe).

The markets accounted for in this scenario and their anticipated fall in passenger numbers due to Covid-19 as are: China (minus 23 per cent), Japan (minus 12 per cent), Singapore (minus 10 per cent), South Korea (minus 14 per cent), Italy (minus 24 per cent), France (minus 10 per cent), Germany (minus 10 per cent) and Iran (minus 16 per cent).
Additionally, Asia (excluding China, Japan, Singapore and South Korea) will be expected to see an 11 per cent fall in demand.
Europe (excluding Italy, France and Germany) will see a 7 per cent fall in demand and Middle East (excluding Iran) will see a 7 per cent fall in demand.
Globally, this fall in demand translates to 11 per cent worldwide passenger revenue loss equal to 63 billion dollars. China will account for some 22 billion dollars of this total. Markets associated with Asia (including China) will account for 47 billion dollars of this total.
The second scenario applies a similar methodology but to all markets that currently have 10 or more confirmed Covid-19 cases (as of March 2).
The outcome is a 19 per cent loss in worldwide passenger revenues, which equates to 113 billion dollars. Financially, that will be on a scale equivalent to what the industry experienced in the 2008 global financial crisis.
IATA's Director General and CEO Alexandre de Juniac said the turn of events as a result of Covid-19 is almost without precedent. In little over two months, the industry's prospects in much of the world have taken a dramatic turn for the worse.
"It is unclear how the virus will develop. But whether we see the impact contained to a few markets and a 63 billion dollar revenue loss, or a broader impact leading to a 113 billion dollar loss of revenue, this is a crisis," he said in a statement.
Many airlines are cutting capacity and taking emergency measures to reduce costs. Governments must take note, said de Juniac. Airlines are doing their best to stay afloat as they perform the vital task of linking the world's economies.
"As governments look to stimulus measures, the airline industry will need consideration for relief on taxes, charges and slot allocation. These are extraordinary times," he said. (ANI)