Air travel industry to lose £211 billion due to coronavirus, experts predict

The coronavirus pandemic is likely to lead to a $252bn (£211bn) drop in revenue for the air travel sector, the leading industry body has predicted .

The International Air Transport Association (Iata) updated its analysis of the impact of Covid-19 on 24 March, more than doubling its previous estimate of $113bn (£96bn) in revenue loss.

The new figure takes into account the severity of travel restrictions worldwide, which could be in place for three months, and the expected global recession that will follow the 12-week shut-down.

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Iata forecasts that passenger revenue could be down 44 per cent year-on-year from 2019.

“The airline industry faces its gravest crisis,” said Iata’s director general and CEO, Alexandre de Juniac. “Within a matter of a few weeks, our previous worst-case scenario is looking better than our latest estimates. 

“But without immediate government relief measures, there will not be an industry left standing. Airlines need $200bn in liquidity support simply to make it through. 

“Some governments have already stepped forward, but many more need to follow suit.”

Passenger demand for the whole of 2020 is expected to fall by 38 per cent compared to 2019; industry capacity could decline 65 per cent in the second quarter alone (1 April to 30 June).

The worst hit region is likely to be Asia Pacific, where passenger revenue will be down $88bn (£74bn), representing a drop of 37 per cent from last year, followed by Europe, which will lose out on $76bn (£64bn).

As it updated its findings, Iata called on governments around the world to step in and offer a package of measures to support the aviation industry, including direct financial support for airlines; loans, loan guarantees and support for the corporate bond market by the Government or Central Banks; and tax relief, such as rebates on payroll taxes paid in 2020 and temporary waivers of ticket taxes and other government-imposed levies.

“My message to governments that have taken up this cause is to say thank you for leading,” said Alexandre de Juniac, IATA’s director general and CEO. “And keep watching the situation as it develops because we may need you to do more.

“My message to governments that are considering doing something is to hurry-up. Every day matters.

“For all the others, the potential for a $252bn fall in revenues is an alarm bell. This is apocalypse now and you must act fast.”

It comes as the UK government confirmed there will be no industry-wide bailout for airlines and airports.

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IATA says coronavirus crisis warrants tax relief for airlines

Citing potential revenue losses of as much as $113 billion
due to the Covid-19 coronavirus outbreak, IATA called on governments to give
the aviation industry some relief on taxes, charges and slot allocation. 

“The turn of events as a result of Covid-19 is almost
without precedent,” IATA CEO Alexandre de Juniac said in a statement. “In
little over two months, the industry’s prospects in much of the world have
taken a dramatic turn for the worse. … This is a crisis.” 

IATA predicts 2020 global revenue losses for the passenger
aviation industry of between $63 billion and $113 billion, depending on how
long the outbreak lasts. The lower end assumes Covid-19 would be contained in
current markets with over 100 cases as of March 2, and the high end assumes a
broader spread of the virus. 

IATA’s previous analysis put lost revenues at $29.3 billion
based on Covid-19 being largely confined to markets associated with China. 

Financially, IATA said the higher end of its estimate would
be on a scale equivalent to what the industry experienced in the global financial
crisis in 2008. Citing airline capacity cuts and emergency measures to reduce
costs, de Juniac said, “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,” he said. 

Airline share prices have fallen nearly 25% since the
outbreak began, IATA added, some 21 percentage points greater than the decline
that occurred at a similar point during the SARS crisis of 2003. 

The $63 billion in revenue loss at the lower end of the
prediction assumes China would account for about $22 billion of the total and
that markets associated with Asia, including China, would account for $47
billion of this total. In what IATA calls the “extensive spread” scenario,
based on markets that had 10 or more confirmed Covid-19 cases as of March 2,
the outcome is a 19% loss in worldwide passenger revenues, which equates to
$113 billion. 

IATA said the drop in oil prices would mitigate some of the
damage by cutting costs up to $28 billion on the 2020 fuel bill. However, IATA
said those savings “would provide some relief but would not significantly
cushion the devastating impact that Covid-19 is having on demand.”

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Coronavirus could cost airline industry £87bn in 2020

Coronavirus could cost the airline industry as much as $113bn (£87.47bn) this year – more than double the previous estimates from International Air Transport Association (Iata).

The industry body had previously estimated that the deadly bug would cost the industry $29.3bn (£22.68bn) in terms of lost revenue.

The previous estimates, issued by Iata on 20 February 2020, was based on a scenario where the impact of coronavirus would be “largely confined to markets associated with China”.

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With the virus now in 80 countries around the world, its impact is already being felt elsewhere.

In an updated analysis released on 5 March 2020, Iata said that there are now two possible scenarios.



More follows…


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