by BERNAMA/ pic by BLOOMBERG
THE International Air Transport Association (IATA) has projected revenue losses of between US$63 billion and US$113 billion (RM470.08 billion) for passenger business globally due to the impact of Covid-19 on the global air transport industry.
It said the global revenue losses were estimated on two possible scenarios; firstly where Covid-19 is contained in current markets with over 100 cases as of March 2, and secondly in the event of a broader spreading of the outbreak.
IATA’s DG and CEO Alexandre de Juniac (picture) said many airlines were 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,” he said in a statement yesterday.
“The turn of events as a result of Covid-19 is almost without precedent as 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,” de Juniac said.
In the scenario of limited Covid-19 spread, markets including those with more than 100 cases confirmed as of March 2, have experienced a sharp downturn followed by a V-shaped recovery profile.
The analysis also estimates falls in consumer confidence in other markets in North America, Asia Pacific and Europe. Globally, the fall in demand translates to an 11% worldwide passenger revenue loss equal to US$63 billion, out of which China would account for some US$22 billion.
Markets associated with Asia, including China, would account for US$47 billion of this total.
If a similar methodology is applied to all markets that currently have 10 or more confirmed Covid-19 cases as of March 2, the outcome is a 19% loss in worldwide passenger revenues, which equates to US$113 billion.
Financially, that would be on a scale equivalent to what the aviation industry experienced in the global financial crisis.
The financial markets have reacted strongly to the spread of Covid-19 as airline share prices have fallen nearly 25% since the outbreak began, some 21 percentage points greater than the decline that occurred at a similar point during the SARS crisis of 2003.