IATA warns of "very tough year for airlines"

By Andy Hoskins, published 21/02/20

The aviation industry could experience its first decline in passenger demand this year since the global financial crisis of 2008-9, IATA has stated this week as it warns of “a very tough year for airlines”.

Widespread flight cancellations and suspensions enforced by the spread of COVID-19 could see a 4.7% hit to global passenger demand and lost revenue of $29.3 billion in 2020, says IATA.

The International Air Transport Association (IATA) says its initial assessment of the impact of the latest coronavirus outbreak shows a potential 13% full-year loss of passenger demand for carriers in the Asia-Pacific region.

Growth of 4.8% had previously been forecast for 2020, meaning an estimated 8.2% full-year contraction in the region compared to 2019 demand levels.

That would translate into a $27.8 billion revenue loss in 2020 for carriers in the Asia-Pacific region, says IATA, the bulk of which would be felt by carriers registered in China.

Carriers outside of Asia-Pacific are expected to take a $1.5 billion hit, taking total lost revenue to $29.3 billion, representing a 4.7% reduction in demand.

In December, IATA forecast global growth of 4.1% for the industry in 2020, meaning an overall 0.6% global contraction in passenger demand is now forecast for 2020.

IATA says its estimates are based on a scenario where COVID-19 has a similar v-shaped impact on demand that was experienced during the SARS outbreak in 2003.

“These are challenging times for the global air transport industry,” says Alexandre de Juniac, IATA’s Director General and CEO.

“Stopping the spread of the virus is the top priority. Airlines are following the guidance of the World Health Organization and other public health authorities to keep passengers safe, the world connected, and the virus contained.”

De Juniac continues: “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.

“We estimate that global traffic will be reduced by 4.7% by the virus, which could more than offset the growth we previously forecast and cause the first overall decline in demand since the Global Financial Crisis of 2008-09.

“This will be a very tough year for airlines.”

iata.org