KUALA LUMPUR, Feb 21 — 2020 will be a very tough year for the global airline industry as airlines are expected to lose US$29.3 billion (US$1= RM 4.187) in passenger revenues due to the Novel Coronavirus 2019 outbreak (COVID-19).

International Air Transport Association (IATA) director-general and chief executive officer Alexandre de Juniac said the association estimated that global traffic would be reduced by 4.7 per cent by the virus, which could more than offset the growth it previously forecast and cause the first overall decline in demand since the Global Financial Crisis of 2008-2009. 

“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,” he said in a statement on Thursday.

IATA said the virus could potentially result in a 13 per cent full-year loss of passenger demand for carriers in the Asia-Pacific region, which translates into a US$27.8 billion revenue loss in 2020 for carriers in the region.

Citing its initial assessment of the COVID-19 outbreak, it said considering that the region’s airlines were forecast to grow 4.8 per cent, the net impact would be an 8.2 per cent full-year contraction compared to 2019 demand levels. 

“In this scenario, that would translate into a US$27.8 billion revenue loss in 2020 for carriers in the Asia-Pacific region — the bulk of which would be borne by carriers registered in China, with US$12.8 billion lost in the China domestic market alone,” it said.

IATA said in the same scenario, carriers outside Asia-Pacific are forecast to bear a revenue loss of US$1.5 billion, assuming the loss of demand is limited to markets linked to China. 

“This would bring total global lost revenue to US$29.3 billion (five per cent lower passenger revenues compared to what IATA forecast in December) and represents a 4.7 per cent hit to global demand,” it said.

In December, IATA forecast global revenue passenger kilometres (RPK) growth of 4.1 per cent for 2020. 

The association explained that these estimates were based on a scenario where COVID-19 has a similar V-shaped impact on demand as was experienced during the severe acute respiratory syndrome (SARS) epidemic, when in 2003 SARS was responsible for the 5.1 per cent fall in the RPKs carried by Asia-Pacific airlines.



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