By Samson Echenim
The International Air Transport Association (IATA) has predicted that airlines could lose a whopping $29.3 billion (£23.7 billion) of their revenue this year due to outbreak of the dreaded coronavirus.
The global airline industry body predicted that demand for air travel would fall in 2020 for the first time in more than a decade.
Airlines in China and other parts of the Asia Pacific region are expected to take the vast majority of the impact.
It comes as carriers around the world have been forced to reduce flights.
In total, airlines in the Asia Pacific region are set to see a $27.8 billion revenue loss in 2020, while those outside Asia are expected to lose $1.5 billion in revenue, IATA predicted.
Of that figure, IATA forecast that carriers in China are set to lose revenue of $12.8 billion in their home market alone.
“Airlines are making difficult decisions to cut capacity and in some cases routes… This will be a very tough year for airlines,” said Alexandre de Juniac, IATA’s director-general.
However it is too early to predict what this expected revenue loss will mean for airline’s profitability this year, IATA cautioned.
IATA said it had based its estimates on the slump in demand that was seen during the Sars (severe acute respiratory syndrome) outbreak in 2003. That was characterised by a six-month period that saw a sharp fall in demand followed by an equally quick recovery.
That year SARS was responsible for the 5.1 percent fall in demand for airlines in the Asia-Pacific region.
It also assumes that the virus remains centred on China, but warned the effect could be far worse if the infection spreads further in the region.
IATA has previously forecast that Asia Pacific would be the biggest driver of air travel demand between 2015 and 2035, with four of the five fastest-growing markets in terms of passengers being from Asia.
Last week, two major airline groups warned of a severe financial impact as the coronavirus outbreak dampens demand for travel in Asia.
Australia’s Qantas said the outbreak would result in a 100 million -150 million Australian dollar hit for the financial year, once it had accounted for cutting flights.
European carrier Air-France KLM estimated the coronavirus would cost it between €150 million and €200 million between February and April.