The airline industry, already hit hard by COVID-19, could lose up to US$113 billion in revenues if the spread of the virus continues around the world.
That’s according to new analysis released Thursday by the International Air Transport Association (IATA), an industry group representing 290 airlines around the world, including Air Canada and WestJet.
IATA forecast the financial impact of COVID-19 on the airline industry based on two scenarios: one where spread of the virus is limited and begins to sharply fall, and another where the virus continues to spread globally.
In the worst-case scenario, passenger demand in Canada and the United States is expected to fall by 10 per cent, resulting in a $21.1 billion loss in revenues. Globally, the continued spread of the virus could result in a 19 per cent decline in passenger demand, amounting to losses of $113 billion.
In the event that the virus is contained in the near-term, the impact is lessened, but still pronounced, according to IATA. Passenger demand around the world would fall by 11 per cent, resulting in losses of $63 billion. China would see the most significant impact, with demand falling 23 per cent, amounting to $22 billion.
IATA’s chief executive officer Alexandre de Juniac said in a statement that regardless of which scenario plays out, “this is a crisis.”
“The turn of events as a result of COVID-19 is almost without precedent. In little over two months, the industry’s prospects in much of the world have taken a dramatic turn for the worse,” de Juniac said.
Airlines around the world have began to cut capacity and take emergency measures in order to reduce costs as more travellers opt to stay home amid fears of the spread of the virus. According to IATA, passenger demand has fallen by double-digit figures and traffic on some routes “has collapsed.”
Both Air Canada and WestJet have waived change fees in light of concerns about the virus.
Air Canada said a one-time change is permitted within two weeks of travel for tickets purchases from the airline between March 4 and March 31 for travel within 12 months. WestJet also said it will allow a one-time change fee waiver within two weeks of travel to new bookings made between March 3 and March 17.
IATA has urged governments around the world to consider providing financial assistance to the airline industry through relief on taxes, charges and slot allocation.
“Aircraft are being parked and employees are being asked to take unpaid leave,” de Juniac said in a statement released this week.
“In this emergency, governments need to consider the maintenance of air transport links in their response.”
The Canadian government is mulling potential financial help to ease the burden of the coronavirus on businesses and individuals, deputy prime minister Chrystia Freeland said this week. A cabinet committee, lead by Freeland, has been formed to monitor the health impacts of the virus and the government’s response.
With files from the Canadian Press