The International Air Transport Association (IATA) has said that the coronavirus could cost the global industry up to $113bn this year, nearly four times larger than previous estimates.
The industry body’s best-case scenario sees a minimum hit of $63bn if the Covid-19 virus is contained within current markets, but said this figure could nearly double if the spread continues.
IATA said that 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.”
On 20 February IATA estimated a $30bn hit to the industry, with the majority of the cost confined to the Asia-Pacific region, but the subsequent collapses in global passenger demand has decimated the industry.
Since that time, the virus has spread to over 80 countries and forward bookings have been severely impacted on routes beyond China.
Flight suspensions, which were originally limited to China and neighbouring countries, have now been extended to many other destinations, with many UK-based airlines making wholesale cancellations of flights to Italy, Europe’s worst afflicted region.
UK regional airline Flybe collapsed this morning due to the impact of the disease, which saw the firm run out of cash before it could obtain a loan to keep it afloat.
Airline stocks have been among the worst hit by the outbreak, which has hammered financial markets around the world.
IATA said that stocks collectively had declined 25 per cent since the outbreak began, 21 per cent more than they did during 2003’s SARS outbreak.
In IATA’s worst-case scenario, the Asia Pacific remains the worst affected area, comprising $57.3bn of the total hit.
Europe is the next worst hit, at $43.9bn, followed by the US and Canada, for which a $21.1bn hit is predicted.
Alexandre de Juniac, IATA’s director general, said: “Many airlines are cutting capacity and taking emergency measures to reduce costs. Governments must take note.
“Airlines are doing their best to stay afloat as they perform the vital task of linking the world’s economies. As governments look to stimulus measures, the airline industry will need consideration for relief on taxes, charges and slot allocation. These are extraordinary times”.