Coronavirus outbreak could cost airlines $29.3 billion globally

Airlines worldwide stand to lose a combined $29.3 billion of revenue this year amidst the ongoing coronavirus crisis, the International Air Transport Association (IATA) said today.

In total, airlines in the Asia Pacific region are set to see a $27.8bn revenue loss in 2020, while those outside Asia are expected to lose $1.5bn in revenue, IATA has forecast. Airlines in China's domestic market alone are estimated to lose around $12.8 billion in revenues.

The estimate is based on projections of a 13% 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 the coronavirus—officially called COVID-19—behaved like the SARS outbreak nearly two decades ago, which was "characterised by a six-month period with a sharp decline followed by an equally quick recovery".

This will be the first time since the 2008-2009 financial crisis that demand for air travel has declined, De Juniac said.

However, if the virus spreads more 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.