Published on : Friday, March 6, 2020
According to the International Air Transport Association or IATA, airlines industry all across the globe is under the threat of losing around $63 billion to $113 billion in revenue or sales. The grave situation arises in light of the deadly coronavirus spread. Airlines all around the world have noticed a reduced number of passengers ever since the outbreak of the virus especially this year.
Brian Pearce, Chief Economist, IATA said in a Singapore press brief that it was back during the global financial crisis in 2008 that the airline industry faced a loss of this extent. He also mentioned that the airline sector remains extremely fragile in the wake of the virus outbreak. Many airlines are already under a lot of debt and the profit margins have turned out to be relatively low in the past few months. He further warned if the situation continues to remain the same, the airline industry can fall into a very grave crisis. He also informed that the major loss comes from markets that have 10 or more confirmed cases. Unfortunately, these countries contribute around 80% of the airline revenues. The maximum loss happened in the Asia-Pacific region including China which includes the majority of virus hit areas.
IATA added that the airline industry can experience a loss of 19% in their business in case of failure in attempts to contain the virus. If the COVID-19 virus is successfully contained, there would be a $63 billion loss in airlines. However, if the virus spreads even further in forthcoming days, approximately $113 billion would be under threat. The organization further urged that the airline industry would require government support in certain areas including taxes and fees to reduce the pressure on struggling aircraft companies.
Last month, IATA estimated that the coronavirus outbreak would record around $29.3 billion loss in revenue generation if the disease was restricted to markets associated with China.
As the number of coronavirus cases soars higher, numerous airlines continue to take down flights due to travel restrictions and lack of customer demands. Earlier on Thursday, U.K based airline Flybe officially collapsed and cancelled all its future flights.