IATA: demand for air travel set to fall for first time in a decade
Demand for air travel looks set to fall for the first time since the 2008 financial crash as a result of the novel coronavirus outbreak, which is threatening to wipe US$30bn from airline revenues.
Flight cancellations could result in a 13 per cent full-year loss of passenger demand for carriers in Asia Pacific alone, according to the International Air Transport Association (IATA).
When combined with the effect on airlines outside of the region, this translates to a potential US$29.3 billion sales loss for 2020 – five per cent lower than IATA forecast in December 2019.
The association said its estimate is based on the idea that the coronavirus scenario will have a similar impact on demand experienced during the SARS outbreak of the early 2000s. It said that situation saw a v-shaped trend with a sharp decline followed by an equally quick recovery.
IATA director general and CEO Alexandre de Juniac, said: “We estimate that global traffic will be reduced by 4.7 per cent by the virus, which could more than offset the growth we previously forecast and cause the first overall decline in demand since the Global Financial Crisis of 2008-09.”
Adding: “Airlines are making difficult decisions to cut capacity and in some case routes. Lower fuel costs will help offset some of the lost revenue. This will be a very tough year for airlines.”
IATA’s estimate comes after Qantas revealed it expects to take a AU$100-$150 million hit due to slowing demand to and from its Asian destinations. Cathay Pacific said it has cut capacity by 40 per cent in February and March, which it predicts will drive its results for the first half of 2020 ‘significantly down’ on the previous year. According to the latest figures from OAG, overall capacity in and from China has been reduced by almost 80 per cent since 20 January.
Published Date: 21/02/2020