NEW DELHI: The Novel Coronavirus outbreak (COVID-19) is likely to have an adverse impact on airlines operating in Asia Pacific region (APAC) with a potential 13 per cent full-year loss in passenger demand.
According to International Air Transport Association (IATA), the decline could translate into a $27.8 billion revenue loss in 2020 for carriers in the region, home to some of the fastest growing airlines in the world.
Most airlines across the globe have either suspended their operations to China or have drastically reduced their frequency as the pandemic so far has claimed over 2,200 lives and spread to many countries. Bulk of the fall would be borne by carriers registered in China with $12.8 billion loss in its domestic market alone, said IATA.
However, the Coronavirus scare could also hurt growth prospects of Indian airlines, especially IndiGo which sees China as a key focus market. IndiGo and Air India have extended suspension of all their flights to China, including Hong Kong for the next three months.
While IndiGo has suspended flights till June 14, Air India’s suspension extended till June 30. SpiceJet, which operates daily services to Hong Kong, had earlier suspended flights till February 29. IndiGo has daily flights on the Delhi-Chengdu, Bengaluru-Hong Kong and Kolkata-Guangzhou route, while Air India flies to Beijing and Hong Kong.
According to a recent CARE Ratings estimate, the temporary suspension of flights to China and Hong Kong can approximately lead to an Indian carrier missing out on earning gross revenue of Rs 55-72 lakh per flight. IATA in its note said that carriers outside Asia-Pacific are forecast to bear a revenue loss of $1.5 billion, assuming the loss of demand is limited to markets linked to China.
This would bring total global lost revenue to $29.3 billion (5 per cent lower passenger revenues compared to what IATA forecast in December).
“These are challenging times for the global air transport industry…The sharp downturn in demand as a result of COVID-19 will have a financial impact on airlines — severe for those particularly exposed to the Chinese market,” said Alexandre de Juniac, director general and CEO, IATA.