INTERNATIONAL. The International Air Transport Association (IATA) has updated its analysis of the financial impact of the COVID-19 crisis, painting a stark picture of the outbreak’s impact on the global air transport industry and calling for urgent relief measures.
As reported, the association had initially predicted the global air transport industry would lose US$29.3 billion in 2020 revenue due to the coronavirus. This was based on COVID-19 being primarily confined to China and its associated markets.
“The turn of events as a result of COVID-19 is almost without precedent” – IATA Director General and CEO Alexandre de Juniac
Since then the virus has spread to over 80 countries and IATA is estimating global revenue losses will be more than double the previous estimate in a best-case scenario and almost quadruple in the event of broader spread.
The association said it now estimates 2020 revenue losses for the global aviation sector will be US$63 billion in a scenario where COVID-19 is contained to the current markets and US$113 billion if it spreads more broadly.
In the best-case scenario, where the outbreak is contained to countries that had more than 100 cases on 2 March, IATA said it is anticipating a double-digit fall in passenger numbers for those markets in 2020. Globally there would be a -11% fall in passenger revenues, resulting in a loss equal to US$63 billion.
IATA said that in the event of a broader spread in all countries that had more than ten cases on 2 March, the outcome would be a -19% loss in worldwide passenger revenues – the equivalent of US$113 billion.
The association said the recent drop in oil prices could cut fuel costs for airlines globally by up to US$28 billion in 2020, but that this would not significantly cushion the impact and further relief measures were essential.
“The turn of events as a result of COVID-19 is almost without precedent,” IATA Director General and CEO Alexandre de Juniac said.
“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 US$63 billion revenue loss, or a broader impact leading to a US$113 billion loss of revenue, this is a crisis.
“Many airlines are cutting capacity and taking emergency measures to reduce costs. 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.”
