IATA: Coronavirus to Pound the Aviation Industry Hard

As the new coronavirus continues to spread rapidly, the International Air Transport Association (IATA) has updated its assessment on the financial impact of the COVID-19 crisis, painting a bleak picture of the outbreak’s impact on the global air transport industry.

IATA had previously estimated that the global air transport industry would lose revenues of $29.3 billion in 2020 due to the coronavirus, based on a scenario that would see the impact of COVID-19 largely confined to markets associated with China.

Since then, the virus has spread to over 80 countries and forward bookings have been severely impacted on routes beyond China.

Following the update, IATA now predicts 2020 revenue losses for the global aviation sector will be $63 billion in a scenario where COVID-19 is contained in current markets and $113 billion in a scenario with a broader spreading of COVID-19.

Financial markets have reacted strongly. Airline share prices have fallen nearly 25 per cent since the outbreak began, some 21 percentage points greater than the decline that occurred at a similar point during the SARS crisis of 2003. To a large extent, this fall already prices in a shock to industry revenues much greater than our previous analysis.

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

Africa and Latin America/Caribbean regions are not explicitly included in this market-based analysis, because there are currently no countries in either region with at least 10 COVID-19 cases.