IATA: $ 63 billion in projected losses for global air transport in 2020
The International AirTransport Association (IATA) has revealed the update of its analyzes regarding the financial implications of the spread of the Corona virus and its impact as a health emergency on the international air transport sector. These analyzes indicate that during the year 2020 the international air transport sector will suffer losses in international passenger traffic of $ 63 billion, in the event that the spread of the virus is limited to the current markets that recorded 100 cases as of March 2, or $ 113 billion in the event of a virus spread Wider than that. To date, no estimates have been published regarding the impact of the virus on air freight operations. The Federation expected in previous analyzes published on February 20, 2020 to record revenue losses of $ 29.3 billion in the event that the spread of the virus is limited to the markets associated with the Chinese market. Since then, the virus has spread to 80 countries, severely affecting future flight bookings via air routes outside of China. The financial markets were affected significantly by the spread of the Corona virus, as flight prices have decreased by 25% since the outbreak of the virus, almost 21% more than the decrease recorded during the spread of the SARS virus in 2003, and sector revenue has also seen shocking losses that exceeded The forecasts are presented in the previous analysis report of the International Air Transport Association. Two possible scenarios IATA analyzes indicated that after considering the outbreak of the Corona virus, the International Air Transport Association estimated the potential impact on passenger revenue based on two possible scenarios: The first scenario: limiting the spread of the virus This scenario includes markets that recorded more than 100 confirmed cases of coronavirus until March 2, which witnessed a sharp deterioration, followed by a remarkable economic recovery according to the Model V. This scenario is also related to the decline in customer confidence in other markets such as North America, Asia Pacific and Europe. The markets included in this scenario are classified with the expected decrease in the number of travelers due to the outbreak of Corona virus according to the following: China (-23%), Japan (-12%), Singapore (-10%), South Korea (-14%), Italy (-24%), France (-10%), Germany (-10%), and Iran (-16%). Besides, demand levels are expected to decrease by 11% in Asian markets with the exception of China, Japan, Singapore and South Korea. Demand is likely to decrease by 7% in the Middle East and Europe regions, respectively, with the exception of Italy, France and Germany. The decline in demand is reflected by recording 11% losses in international passenger revenue, equivalent to $ 63 billion, knowing that China will incur $ 22 billion in total losses. Markets associated with Asia, including China, will face a total loss of $ 47 billion. The second scenario: Failure to contain the virus This scenario is based on a similar methodology that covers the markets that recorded 10 or more confirmed infections with the Corona virus as of March 2. These markets face a 19% loss in revenue for international travelers, equivalent to $ 113 billion, which is also the equivalent of losses incurred by the sector during the global financial crisis in 2008. Mitigate the effects Oil prices have dropped significantly by $ 13 per barrel of Brent crude since the beginning of this year. This could reduce costs by $ 28 billion on fuel requests for 2020, in addition to the savings that will be recorded as a result of declining operations, which may leave some scope for recovery, but without containing the catastrophic effects on demand due to the outbreak of the Coronavirus. It should also be noted that the application of protective measures will reduce this impact for many airlines.
