Asia Pacific airlines expect $27.8 billion losses from COVID-19

MANILA, Philippines — Carriers in the Asia-Pacific region are seen taking a major hit from the coronavirus 2019 (COVID-19) outbreak with a potential revenue loss of $27.8 billion due to low passenger demand, according to the International Air Transport Association (IATA).

IATA’s initial assessment of the impact of COVID-19 shows a potential 13 percent  full-year loss of passenger demand for carriers in the Asia-Pacific region.

“Considering that growth for the region’s airlines was forecast to be 4.8 percent, the net impact will be an 8.2 percent full-year contraction compared to 2019 demand levels,” IATA said.

Carriers outside Asia-Pacific are also forecast to incur a revenue loss of $1.5 billion, assuming the loss of demand is limited to markets linked to China. This would bring total global lost revenue to $29.3 billion, five percent lower than what IATA had forecast in December and represents a 4.7 percent  hit to global demand.

 In December, IATA forecast global RPK (revenue passenger kilometers) growth of 4.1 percent, so this loss would more than eliminate expected growth this year, resulting in a 0.6 percent  global contraction in passenger demand for 2020.

IATA said the bulk of the loss would be borne by carriers registered in China.

“These are challenging times for the global air transport industry.  The sharp downturn in demand as a result of COVID-19 will have a financial impact on airlines — severe for those particularly exposed to the China market,” IATA director general and chief executive officer Alexandre de Juniac said.

“Airlines are making difficult decisions to cut capacity and in some cases, routes. Lower fuel costs will help offset some of the lost revenue. This will be a very tough year for airlines,” De Juniac said.

After facing a difficult year in 2019, IATA said earlier the aviation industry was off to a “tragic and challenging 2020,” citing the shooting down of Ukraine International Airlines flight PS 752 in January, the PC2193 accident in Turkey early this month, and the COVID-19 outbreak as among the reasons for such.

Full-year traffic among Asia-Pacific airlines increased 4.5 percent last year, a decline compared to 8.5 percent growth in 2018.
 In the Philippines, the government has imposed a travel ban to control the spread of COVID-19, prompting flag carrier Philippine Airlines and low-cost carriers Cebu Pacific and AirAsia to cancel their flights to mainland China, Hong Kong, Macau and Taiwan.

The travel ban on Taiwan has already been lifted, enabling local carriers to resume flights, while the ban on Hong Kong and Macau has been partially lifted as the government now allows Filipino workers in the two special administrative regions of China to return to their jobs.