Asia-Pacific airlines could lose $27.8bn to coronavirus: IATA

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Empty seats, a huge cost for airlines. — AFP

PARIS — Airlines operating in the Asia-Pacific region stand to lose a combined $27.8 billion of revenue this year in the ongoing coronavirus crisis, the International Air Transport Association (IATA) said on Thursday.

The estimate is based on projections of a 13-percent full-year decline in passenger demand, mostly in China, the trade body said.

"This will be a very tough year for airlines," IATA CEO Alexandre de Juniac said in a statement. "Stopping the spread of the virus is the top priority."

IATA said its estimate assumed that COVID-19 behaved like the SARS outbreak nearly two decades ago, which was "characterized by a six-month period with a sharp decline followed by an equally quick recovery".

This will be the first time since the SARS crisis of 2003 that demand for air travel has declined, De Juniac said.

Airlines in China's domestic market alone are estimated to lose around $12.8 billion in revenues.

Carriers outside the Asia-Pacific region are seen suffering $1.5 billion in losses.

This brings worldwide airline revenue lost to the virus to a projected $29.3 billion, IATA said.

However, if the virus spreads more widely to Asia-Pacific markets then the impact on airlines from other regions would be larger, IATA warned.

IATA had previously estimated Asia-Pacific airlines to register growth of 4.8 percent this year, but they are now on course instead for a contraction of 8.2 percent, it said.

But there are some factors potentially softening the blow, IATA said.

"Governments will use fiscal and monetary policy to try to offset the adverse economic impacts. Some relief may be seen in lower fuel prices for some airlines, depending on how fuel costs have been hedged," it said.

It was therefore difficult to predict by how much exactly lost revenue would weigh on profits.

But airlines are already taking "difficult decisions" to cut capacity, or even routes, IATA said.

Meanwhile, China on Thursday touted a big drop in new virus infections as proof its epidemic control efforts are working, but the toll grew abroad with deaths in Japan and South Korea.

Fatalities in China hit 2,118 as 114 more people died, but health officials reported the lowest number of new cases in nearly a month, including in hardest-hit Hubei province.

More than 74,000 people have been infected by the new Coronavirus in China, and hundreds more in over 25 countries.

The number of deaths outside mainland China climbed to 11.

Japan's toll rose to three as a man and a woman in their 80s who had been aboard a quarantined cruise ship died, while fears there mounted about other passengers who disembarked the Diamond Princess after testing negative.

South Korea reported its first death, and the number of infections in the country nearly doubled Thursday to 104 — including 15 at a hospital in Cheongdo county.

Iran reported two deaths on Wednesday, the first in the Middle East. Deaths have previously been confirmed in France, the Philippines, Taiwan and Hong Kong.

Chinese officials say their drastic containment efforts, including quarantining tens of millions of people in Hubei and restricting movements in cities nationwide, have started to pay off.

"Results show that our control efforts are working," Foreign Minister Wang Yi said at a special meeting on the virus with Southeast Asian counterparts in Laos, citing the latest data.

Wang said the situation was "significantly improving" in Hubei and Wuhan, but an official in a central government team dealing with the epidemic said it was still "very severe". — AFP


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