IATA predicts coronavirus will drive 13% fall in Asia Pac passenger demand

The International Air Transport Association (IATA) announced that its initial assessment of the impact of the Novel Coronavirus 2019 outbreak (COVID-19) shows a potential 13% full-year loss of passenger demand for carriers in the Asia-Pacific region. 

“Considering that growth for the region’s airlines was forecast to be 4.8%, the net impact will be an 8.2% full-year contraction compared to 2019 demand levels,” IATA said in a statement. 

 “In this scenario, that would translate into a $27.8 billion revenue loss in 2020 for carriers in the Asia-Pacific region—the bulk of which would be borne by carriers registered in China, with $12.8 billion lost in the China domestic market alone.”

The association said that in this   scenario, carriers outside Asia-Pacific are forecast to bear a revenue loss of $1.5 billion, which assumes the loss of demand is limited to markets linked to China. This would bring total global lost revenue to $29.3 billion – or 5% lower passenger revenues than IATA had forecast in December 2019. This translates into  a 4.7% hit to global demand. 

In December, IATA forecast global RPK growth of 4.1%, so this loss would more than eliminate expected growth this year, resulting in a 0.6% global contraction in passenger demand for 2020.   

IATA’s estimates are based on a scenario where COVID-19 has a similar V-shaped impact on demand as was experienced during SARS. That was characterized by a six-month period with a sharp decline followed by an equally quick recovery. 

In 2003, SARS was responsible for the 5.1% fall in the RPKs carried by Asia-Pacific airlines.   The estimated impact of the COVID-19 outbreak also assumes that the centre of the public health emergency remains in China.

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

“It is premature to estimate what this revenue loss will mean for global profitability. We don’t yet know exactly how the outbreak will develop and whether it will follow the same profile as SARS or not,” IATA said in a statement.