The cost of Covid-19 on the world’s airlines is massive and building, according to the International Air Transport Association (IATA).
In fact, if the outbreak continues at its current pace, airlines are facing a potential loss of nearly US$30 billion, Rich Thomaselli of Travel Pulse reported, citing IATA data.
The main lobby group for airlines says the bulk of that would be for carriers in, or flying in and out of, the Asia-Pacific Region. That includes such US airlines as United, American and Delta, the report said.
“Airlines are making difficult decisions to cut capacity and in some cases routes,” said Alexandre de Juniac, IATA’s Director General and CEO. “Lower fuel costs will help offset some of the lost revenue (but) this will be a very tough year for airlines.”
IATA said its initial assessment of the impact of the Covid-19 outbreak shows a potential 13% full-year loss of passenger demand for carriers in the Asia-Pacific region, the report said.
Prior to the outbreak, IATA had predicted a 4.8% growth for the Asia-Pacific region this year, meaning the net impact will be an 8.2% full-year contraction compared to 2019 demand levels, the report said.
In this scenario, that would translate into a US$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 — and airline carriers outside Asia-Pacific are forecast to bear a revenue loss of US$1.5 billion, the report said.
Combined, that’s a total global lost revenue of US$29.3 billion, the report said.
These estimates are based on a scenario similar to the SARS outbreak several years ago, in which a six-month period with a sharp decline was followed by an equally quick recovery, the report said.
Meanwhile, AirAsia X has begun laying plans to “aggressively” cut a number of routes and reduce its fleet size, including deferring the delivery of 78 Airbus A330neos as part of a larger effort to rein in costs to counter the effect of the new coronavirus, AINonline reported.
According to the carrier’s recently released 4Q19 and FY2019 financial statements, plans include delaying its A330-900 deliveries, selling two A330-300s, and the early return of a further five aircraft to lessors, the report said.
The aircraft sales could fetch a market price of up to US$100 million while the airline expects new lessor agreements to slash its lease rates by 30%, the report said.
The airline, which operates a fleet of 24 A330-300s, revised its deal with Airbus last August to take 78 A330-900s and 30 long-range A321XLR narrowbodies rather than 100 A330neos, the report said.