Sponsored Listings:
Citing potential revenue losses of as much as $113 billion due to the Covid-19 coronavirus outbreak, IATA called on governments to give the aviation industry some relief on taxes, charges and slot allocation.
“The turn of events as a result of Covid-19 is almost without precedent,” IATA CEO Alexandre de Juniac said in a statement. “In little over two months, the industry’s prospects in much of the world have taken a dramatic turn for the worse. … This is a crisis.”
IATA predicts 2020 global revenue losses for the passenger aviation industry of between $63 billion and $113 billion, depending on how long the outbreak lasts. The lower end assumes Covid-19 would be contained in current markets with over 100 cases as of March 2, and the high end assumes a broader spread of the virus.
IATA’s previous analysis put lost revenues at $29.3 billion based on Covid-19 being largely confined to markets associated with China.
Financially, IATA said the higher end of its estimate would be on a scale equivalent to what the industry experienced in the global financial crisis in 2008. Citing airline capacity cuts and emergency measures to reduce costs, de Juniac said, “Governments must take note.”
“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.
Airline share prices have fallen nearly 25% since the outbreak began, IATA added, some 21 percentage points greater than the decline that occurred at a similar point during the SARS crisis of 2003.
The $63 billion in revenue loss at the lower end of the prediction assumes China would account for about $22 billion of the total and that markets associated with Asia, including China, would account for $47 billion of this total. In what IATA calls the “extensive spread” scenario, based on markets that had 10 or more confirmed Covid-19 cases as of March 2, the outcome is a 19% loss in worldwide passenger revenues, which equates to $113 billion.
IATA said the drop in oil prices would mitigate some of the damage by cutting costs up to $28 billion on the 2020 fuel bill. However, IATA said those savings “would provide some relief but would not significantly cushion the devastating impact that Covid-19 is having on demand.”
Source: travelweekly.com
