A slowdown in flights due to the coronavirus outbreak could cost airlines as much as $113 billion, an industry group said Thursday.
The International Air Transport Association (IATA) updated its expected financial impact on the airline industry as the coronavirus has spread to more than 80 countries, it announced. The group estimated that carriers' 2020 revenue loss could range between $63 billion and $113 billion.
The IATA said the $63 billion estimate is for “a scenario where COVID-19 is contained in current markets with over 100 cases” as of March 2. The $113 billion loss could occur “in a scenario with a broader spreading” of the virus, according to the group.
The organization last month estimated a $29.3 billion loss for the industry if the virus was “largely confined to markets associated with China.”
The IATA recognized on Thursday's announcement that flights had been “severely impacted on routes beyond China,” adding that its estimates do not take into account cargo operations.
In the current worst-case scenario, global passenger revenues could drop 19 percent, the group said, which “would be on a scale equivalent” to what the industry went through in the global financial crisis.
IATA’s director general and CEO, Alexandre de Juniac, called “the turn of events” caused by the coronavirus “almost without precedent,” saying “governments must take note” of the airlines’ struggles.
“Airlines are doing their best to stay afloat as they perform the vital task of linking the world’s economies,” he said. “As governments look to stimulus measures, the airline industry will need consideration for relief on taxes, charges and slot allocation. These are extraordinary times.”
Since the beginning of the outbreak, airline share prices have dropped nearly 25 percent, which the IATA said is about 21 percentage points higher than the decrease during the SARS outbreak in 2003.
United Airlines said on Wednesday that it is cutting 10 percent of its U.S. flights and 20 percent of international flights in response to reduced demand amid the coronavirus outbreak.