Global air transport industry is reeling under a massive impact led by the global outbreak of Coronavirus. As per the International Air Transport Association, the impact could amount to as much as USD 29 billion in revenue. If so, this would be the first time in over a decade that the global airlines would record a loss in revenue.
IATA, a trade association of the world's airlines founded in 1945, cites two main reasons for this loss. It notes that the global Coronavirus scare has led to an overall decline in air travel demands. In addition, the shutdown of industries due to the scare has resulted in a long pause in corporate air travel.
IATA further warns that this loss can far exceed this prediction if the virus spreads to more parts of the world. Majority of this impact would be experienced in the Asia-Pacific region, with IATA predicting a USD 12.8 billion loss in revenue for the Chinese airlines alone. A similar impact was seen during the outbreak of the SARS virus back in 2003.
Airlines have already cancelled more than 2 lakh flights in the wake of the Coronavirus scare. This was reflected in the NYSE Arca Airline Index, which tracks 16 carriers in North America and Latin America as well as European budget carrier Ryanair. The Index was down by 20% in the last week of February and was headed to a record percentage drop since 2008, as per a CNBC report.
Singular impacts highlighted a 7.7% drop in shares of American Airlines, 2.4% drop for United Airlines and a 2.8% decline in Delta shares.
The decline is likely to continue as further advisories are being issued to prevent non-essential travels by nations across the globe. Moreover, some countries are even banning the entry of foreigners to their land citing the scare. Saudi Arabia, for instance, recently announced a temporary suspension on the entry of foreigners for pilgrimage and tourism purposes.
Being aware of the possible worsening of the situation, airlines have made huge cuts in their travel routes and capacities. A report by CNBC records that all the three major U.S. airlines have suspended flights to mainland China and Hong Kong.
As for the flights still under operation, airlines are adhering to the guidelines by WHO in more than one ways. American Airlines, for instance, has started stocking hand sanitizer for crew, sanitizing wipes for the fliers and even face masks on some flights.
Though not a single flight has been affected by a lack of crew, there are reports of even the pilots being fearful of flying to specific locations.?
Keeping the scare of the virus spread in mind, airlines are turning to their domestic markets for the upkeep of air travel demand. US Airlines, for instance, have always had domestic travel as a strong revenue stream. Amidst the fear of air travel due to Coronavirus, these airlines are now looking to double down on this domestic travel by waiving off cancellation and change fees.
Similar deductions are also being made for travels to the countries affected with the Coronavirus, as demands for travels to these destinations diminish. These countries include China, South Korea and some European nations.
Airlines globally are expected to come up with such discounts for the fliers till the Coronavirus scare haunts the world. A persistent air travel through these discounts combined with the falling prices of fuel is the biggest hope for airlines at the moment to cruise through these tough times.
As IATA¡¯s CEO, Alexandre de Juniac, explains in a release, ¡°These are challenging times for the global air transport industry. Stopping the spread of the virus is the top priority. Airlines are following the guidance of the World Health Organization and other public health authorities to keep passengers safe, the world connected, and the virus contained.¡±
So for those looking to travel this spring and the following summer, the low air-fares might just prove to be their best chance to visit their dream destinations across the world, provided the Coronavirus scare is taken into consideration throughout the trip