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The COVID-19 Coronavirus Outbreak Could Cost Airlines at Least $5 Billion in the First Three Months of 2020 Alone

The COVID-19 Coronavirus Outbreak Could Cost Airlines at Least $5 Billion in the First Three Months of 2020 Alone

The global airline industry stands to lose between four to five billion U.S. dollars in the first three months of 2020 as a result of the COVID-19 Coronavirus outbreak according to the UN’s official aviation agency. Passenger capacity has slumped by as much as 41 per cent or 19.6 million passengers since the virus was first detected in late December.

The International Civil Aviation Organisation (ICAO) warned that the economic impact of the COVID-19 virus (the new official name of the novel Coronavirus given by the World Health Organisation) will be greater than that of the SARS outbreak in 2003.

Beijing Daxing International Airport. Photo Credit: British Airways

Around 70 airlines have now cancelled all international flights to and from mainland China according to the new ICAO report, while a further 50 airlines have severely curtailed their operations to the country. Connectivity with mainland China has been cut by as much as 80 per cent for foreign airlines, while Chinese airlines have cut connectivity by at least 40 per cent.

Before the outbreak, international and domestic airlines had been planning to increase capacity on mainland Chinese routes by as much as nine per cent in the first quarter of 2020 alone.

ICAO estimates that China’s international air traffic has doubled since the SARS outbreak and its domestic traffic has increased five-fold since 2003.

The figures estimated by ICAO are only for passenger traffic and the real impact for many international airlines could be a lot higher than currently forecast. ICAO did not include freight movements on cargo-only aircraft or domestic Chinese air traffic in its sums.

ICAO also didn’t include international air traffic to and from Hong Kong, Macau and Taiwan.

Hong Kong-based airline Cathay Pacific is cutting capacity across its global network by as much as 30 per cent as a result of a slump in demand caused by the COVID-19 outbreak. Some international airlines, including American Airlines and United, have cancelled all services to Hong Kong, while carriers including British Airways have almost halved capacity to the territory.

In the last week, many airlines that have suspended services to mainland China extended those cancellations through to the end of March at the earliest.

The effects of the outbreak are expected to be felt across the region, with ICAO estimating that Japan could lose $1.29 billion in tourism revenue in the first quarter of 2020 due to a drop in the number of Chinese travellers. Thailand is set to lose as much as $1.15 billion.

The World Travel and Tourism Council (WTTC) estimates that Chinese tourists now account of around 16 per cent of the world’s international travel spending. Some markets could take as long as 19 months for tourist numbers to fully recover once the outbreak has been contained.

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