The international travel industry faces a widespread shutdown over coronavirus fears after airlines announced new flight reductions and more countries introduced travel bans and isolation requirements.
Travel businesses were hit with multiple doses of bad news on Saturday and Sunday, with the US expanding its Europe travel ban to include the UK and Ireland, a number of South American countries bringing in flight restrictions and Australia joining New Zealand in requiring all people entering the country to self-isolate for 14 days.
The International Air Transport Association (IATA) updated its analysis of the financial impact of the novel coronavirus (COVID-19) public health emergency on the global air transport industry. IATA now sees 2020 global revenue losses for the passenger business of between $63 billion (in a scenario where COVID-19 is contained in current markets with over 100 cases as of 2 March) and $113 billion (in a scenario with a broader spreading of COVID-19). No estimates are yet available for the impact on cargo operations.
IATA’s previous analysis (issued on 20 February 2020) put lost revenues at $29.3 billion based on a scenario that would see the impact of COVID-19 largely confined to markets associated with China. Since that time, the virus has spread to over 80 countries and forward bookings have been severely impacted on routes beyond China.
Financial markets have reacted strongly. Airline share prices have fallen nearly 25% since the outbreak began, some 21 percentage points greater than the decline that occurred at a similar point during the SARS crisis of 2003. To a large extent, this fall already prices in a shock to industry revenues much greater than our previous analysis.
To take into account the evolving situation with COVID-19, IATA estimated the potential impact on passenger revenues based on two possible scenarios:
In Europe, the situation for the sector was increasingly dire.
Norwegian Air, which has built up large debts to establish itself as a low-cost transatlantic operator, said on Saturday that it had “weeks not months” to avert collapse.
KLM, the Dutch subsidiary of Air France-KLM, plans to slash up to 2,000 jobs, cut working hours by one-third for its entire staff and ask for government support.
German flagship carrier Lufthansa said on Friday it was considering a request for state aid.
In Bolivia, a ban on direct flights to and from Europe went into effect on Saturday. Travellers from China, South Korea, Italy and Spain are also banned from entry.
Panama banned flights from Asia, one day after blocking flights from Europe.
Eurocontrol reports that significant reductions by airlines across their networks:
AlItalia -77%
Lufthansa – 37%
Ryanair – 29%
EasyJet – 23%
Air France – 22%
British Airways -14%
After the introduction of travel restrictions to Europe by the US Administration, LOT Polish Airlines has decided to suspend its flights to Los Angeles, Miami and Newark. However, LOT will continue to fly from Warsaw to New York JFK and Chicago and from Krakow to Chicago.
Meanwhile American Airlines Group will implement a phased suspension of additional long-haul international flights from the U.S. starting on March 16 until May 6. This change is in response to decreased demand and changes to U.S. government travel restrictions due to coronavirus (COVID-19).
Delta Air Lines CEO, Ed Bastian, emailed a memo to all Delta employees worldwide, updating them on further action needed given the accelerating COVID-19 situation in the US. Currently, Delta has a fleet of 910 aircraft, while Delta Connection has 277.
Emirates said that there is no truth to the rumors circulating on social media that the airline will be suspending all flights on 17 March.
Eurocontrol / The Guardian / Aeronews / IATA
