Topline: Cancelled flights to mainland China and reduced demand for
travel because of the coronavirus could wipe $30 billion from the revenues of
global airlines, according to International Air Transport Association.
·
Overall, the impact of lower global demand for air
travel because of the coronavirus could cost airlines $29.3 billion this year—a
fall of 4.7%.
·
Airlines operating in
the Asia-Pacific region face the biggest hit with a $27.8 billion drop in
revenue, while international carriers could lose $1.5 billion in revenue.
·
This marks a major hit
for global air travel, which IATA said was expected to grow 4.1% this year, but
is now actually set to contract slightly thanks to local and international
carriers cutting back on flights because of lower demand.
·
This decline would
mark the first fall in demand since the global financial crisis in 2009, the
body said.
·
The impact of the
coronavirus on airlines has dwarfed the 2002–03 SARS outbreak that caused a $7
billion drop in revenues.
Crucial comment: “Airlines and governments are in this
together. We have a public health emergency, and we must try everything to keep
it from becoming an economic crisis,” said IATA CEO Alexandre de Juniac.
Key background: Dozens of major airlines have cancelled or
cut back flights to mainland China amid travel lockdowns and international
efforts to curb the spread of the pneumonia-like virus. Yesterday, Australian
flagship airline Qantas warned its profits could fall $99 million this year,
after it cut 16% of its flights between Australia and Asia until May.
Franco-Dutch carrier Air France-KLM warned its earnings could fall $215 million
between February and April, because of a drop in demand. The airline has cut
its routes to Shanghai and Beijing until mid-March. Meanwhile, China’s
government is reportedly drawing up a rescue plan for leisure and travel
conglomerate HNA Group, which had faced financial trouble that predates the
arrival of the coronavirus. The group’s flagship, Hainan Airlines, could be
sold off as part of the rescue deal.
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