By Sam Bridge
International Air Transport Association updates its analysis of the financial impact of COVID-19, says global losses could be as much as $113bn
Airlines in the Gulf region could see passenger numbers slump by 23 percent and revenues by nearly 5 billion due to the global spread of the new coronavirus, it was revealed on Thursday.
The International Air Transport Association (IATA) updated its analysis of the financial impact of COVID-19 and said it now sees 2020 global revenue losses for the passenger business of up to $113 billion if it continues to spread at its current rate.
No estimates are yet available for the impact on cargo operations, IATA said.
For a region including Bahrain, Iraq, Iran, Kuwait, Lebanon, the UAE, IATA said passenger numbers could fall by 23 percent with revenue losses of $4.9 billion while for the rest of Middle East 9 percent of passengers could be lost at a cost of $2.3 billion.
IATA's previous analysis last month put lost revenues at $29.3 billion based on a scenario that would see the impact of COVID-19 largely confined to markets associated with China. Since that time, the virus has spread to over 80 countries and forward bookings have been severely impacted on routes beyond China.
As of Thursday, total coronavirus cases globally have exceeded 95,600 with 3,287 deaths.
Airline share prices have fallen nearly 25 percent since the outbreak began, IATA added.
It highlighted two possible scenarios. The first includes markets with more than 100 confirmed COVID-19 cases experiencing a sharp downturn followed by a V-shaped recovery profile resulting in a loss of $63 billion.
Scenario 2 applies a similar methodology but to all markets that currently have 10 or more confirmed COVID-19 cases which could result in a loss in worldwide passenger revenues of $113 billion.
Financially, that would be on a scale equivalent to what the industry experienced in the global financial crisis.
“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.
“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,” said Alexandre de Juniac, IATA’s director general and CEO.