IATA publishes updated analysis of coronavirus impact on aviation industry

Following original analysis published in February 2020, IATA has released updated figures suggesting an economic impact between $63 and $113 billion in revenue losses.

IATA publishes updated analysis of coronavirus impact on aviation industry

The International Air Transport Association (IATA) has published an updated analysis of the economic impact on the aviation industry following the outbreak of coronavirus (COVID-19).

During February 2020, IATA published an analysis that predicted a revenue loss of $29.3 billion, based on a scenario that would see the impact of coronavirus largely confined to markets associated with China. Since publication, the virus has impacted over 80 countries and forward bookings have been severely impacted on routes beyond China.

As a result of new analysis, it is now expected that there will be a 2020 global revenue loss for the passenger business of between $63 billion (in a scenario where the virus is contained in current markets with over 100 cases as of 2 March 2020) and $113 billion (in a scenario with a broader spreading of coronavirus). 

IATA’s Director General and CEO, Alexandre de Juniac, said: “The turn of events as a result of COVID-19 is almost without precedent. 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 $63 billion revenue loss, or a broader impact leading to a $113 billion loss of revenue, this is a crisis.”

De Juniac continued: “Many airlines are 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. These are extraordinary times.”

Based on two possible scenarios, IATA has take into account the evolving situation and estimated the potential impact on passenger revenues:

Scenario 1: Limited Spread

This scenario includes markets with over 100 confirmed cases of coronavirus (as of 2 March 2020) that have experienced a sharp downturn followed by a V-shaped recovery profile. It also estimates falls in consumer confidence in other markets (North America, Asia Pacific and Europe). 

Globally, the fall in demand translates to an 11 per cent worldwide passenger revenue loss equal to $63 billion. China would account for approximately $22 billion of this total, and markets associated with Asia (including China) would account for $47 billion of this total.

Scenario 2: Extensive Spread

This scenario applies a similar methodology as the first, but to all markets that currently have 10 or more confirmed coronavirus cases (as of 2 March 2020). The outcome is a 19 per cent loss in worldwide passenger revenues, which equates to $113 billion. Financially, that would be on a scale equivalent to what the industry experienced in the Global Financial Crisis.

There are currently no estimates yet available for the impact on cargo operations.

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