Pandemic will cut airline revenue by US$314 billion this year: IATA
MONTREAL The picture for airlines keeps getting bleaker.
Passenger revenue at International Air Transport Association member carriers is expected to drop by a combined US$314 billion from 2019 because of the coronavirus pandemic, the group said Tuesday. The forecast, which amounts to a 55-per-cent drop, replaces an earlier estimate that called for a full-year hit of US$252 billion.
Flight activity globally is down around 80 per cent, a spike from the 65-per-cent drop recorded three weeks ago, said IATA, which has offices in Montreal and Geneva. Outside of domestic markets in the U.S. and Asia, the industry is now “virtually grounded,” it said.
Economists have become much more pessimistic about the effects of the health crisis in recent weeks, IATA chief economist Brian Pearce said on a conference call. Global GDP growth is now expected to fall six per cent in the second quarter, which affects the speed at which air travel will rebound, he said.
The crisis for airlines “is deepening,” IATA head Alexandre de Juniac said Tuesday. “The scale of the crisis makes a sharp V-shaped recovery unlikely. Realistically, it will be a U-shaped recovery with domestic travel coming back faster than the international market.”
Restrictions on international travel will probably extend well into the third quarter, delaying an improvement in the financial health of airlines, Pearce said. International flights typically generate about two-thirds of all airline revenue.
While flights have resumed in China, a spate of imported COVID-19 cases — reportedly from Russia — has raised concerns about the speed at which global airlines may ramp up operations.
“The Chinese experience shows that the problem of imported cases means that opening international travel restrictions is more problematic until we see a solution to the health issues,” Pearce said.
Airlines, aviation authorities, airports and other stakeholders are set to start discussing restart plans — via video conference — in the coming days, de Juniac said. The pace of the restart will likely differ from region to region.
Topics of discussion will include new airplane disinfecting methods, passenger health controls and the implementation of physical distancing measures, such as updated boarding procedures or “neutralizing some seats,” he said.
Airlines will comply with any request from authorities to test passengers for COVID-19 symptoms at departure or upon arrival, de Juniac added.
Still, “if we need to test everyone, we will need hundreds of millions of tests,” he said. “We will follow what the health specialists, the doctors, the professors and the health authorities will request.”