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:

Scenario 1: Limited Spread

This scenario includes markets with more than 100 confirmed COVID-19 cases (as of 2 March) experiencing a sharp downturn followed by a V-shaped recovery profile. It also estimates falls in consumer confidence in other markets (North America, Asia Pacific and Europe).

The markets accounted for in this scenario and their anticipated fall in passenger numbers, due to COVID-19, as are as follows: China (-23%), Japan (-12%), Singapore (-10%), South Korea (-14%), Italy (-24%), France (-10%), Germany (-10%), and Iran (-16%). Additionally, Asia (excluding China, Japan, Singapore and South Korea) would be expected to see an 11% fall in demand. Europe (excluding Italy, France and Germany) would see a 7% fall in demand and Middle East (excluding Iran) would see a 7% fall in demand.

Globally, this fall in demand translates to an 11% worldwide passenger revenue loss equal to $63 billion. China would account for some $22 billion of this total. Markets associated with Asia (including China) would account for $47 billion of this total.

Scenario 2: Extensive Spread

This scenario applies a similar methodology but to all markets that currently have 10 or more confirmed COVID-19 cases (as of 2 March). The outcome is a 19% loss in worldwide passenger revenues, which equates to $113 billion. Financially, that would be on a scale equivalent to what the industry experienced in the Global Financial Crisis.