March 5, 2020 | 9:37am | Updated March 5, 2020 | 12:24pm
Airlines could lose nearly a fifth of their passenger revenues this year if the coronavirus epidemic continues to spread and dampen demand for air travel, an industry group warned Thursday.
Revenue losses for the global passenger air business could total $113 billion, or 19 percent, if the outbreak gets worse — a financial hit similar to the one caused by the financial crisis about a decade ago, the International Air Transport Association said.
The group, known as the IATA, estimated revenue losses of $63 billion even if the virus is contained in markets with more than 100 cases — more than double a previous projection of $29.3 billion.
“In little over two months, the industry’s prospects in much of the world have taken a dramatic turn for the worse,” Alexandre de Juniac, IATA’s director-general and CEO, said in a statement. “… Many airlines are cutting capacity and taking emergency measures to reduce costs. Governments must take note.”
The coronavirus outbreak has forced major airlines to cancel flights into mainland China, where the epidemic originated. It has also started to affect travel in the US, with United Airlines and JetBlue cutting capacity amid a drop in demand, according to Reuters.
The virus has also had a severe financial impact on the industry — airline share prices have plummeted almost 25 percent since the epidemic started, a drop 21 percentage points larger than the one seen during the 2003 SARS outbreak, according to IATA.
The association expects the air travel industry in China — where the outbreak started — to lose some $22 billion in revenue and see passenger numbers tumble 23 percent if the outbreak is contained, IATA said. Italy’s passenger numbers would drop 24 percent in that scenario, according to the group.
Revenue losses for China and nearby markets affected by the virus, including Japan and South Korea, would balloon to $49.7 billion if the outbreak becomes more widespread, according to IATA. Canada and the US would see passenger numbers fall 10 percent and lose more than $21 billion in passenger revenue if the epidemic worsens, the group said.
de Juniac called on governments to consider tax breaks and other relief for the air industry as they consider stimulus measures to blunt the outbreak’s economic impact.
“These are extraordinary times,” he said.