COVID-19 could cost airlines up to US$113 billion as virus goes global

The COVID-19 outbreak has certainly thrown a spanner in the works for many.

But the most terribly affected since the virus broke out in Wuhan, China, in December 2019 is the travel industry.

With numerous companies issuing travel advisories and even bans, airlines are set to be hit with a US$63 billion to US$133 billion drop in revenue because people are avoiding having to travel.

Drop in revenue.

Coronavirus outbreak empties out airports around the world.

The International Air Transport Association (IATA) had estimated in February 2020 that the revenues for global airlines could drop by US$29.3 billion.

However, with the outbreak going global to roughly 80 countries, the airline industry group scraped its previous estimations and has provided an update.

Among countries that would see its airlines badly affected are China, Italy, Singapore, Japan, South Korea, France, Iran, and Germany.

“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,” IATA CEO Alexandre de Juniac said, according to Forbes.

“It is unclear how the virus will develop, but whether we see the impact contained to a few markets and a US$63 billion revenue loss, or a broader impact leading to a US$113 billion loss of revenue, this is a crisis.”

Canceling flights.

 
Many are canceling their travel plans as the outbreak worsens.

In Southeast Asia, Singapore Airlines (SIA) is having it the worst after having to significantly cut flights to selected destinations globally between March and May.

Among the affected destinations include the likes of Los Angeles, San Francisco, Seattle, Paris, Frankfurt, Milan, London, Tokyo, and Seoul. The full list of affected flights can be read here.

Meanwhile its regional wing, SilkAir, will also be cutting flights to Hiroshima, Japan, citing lack of demand.

Spanner in the works.

AirAsia is launching a monthly flight pass for regional destinations
AirAsia has to cancel its IPO in the Philippines.

Meanwhile, Air Asia has postponed its planned stock market debut on the Philippines’ stock exchange in light of the outbreak.

The Malaysian budget carrier has shifted its initial public offering (IPO) to later this year or possibly early 2021.

The postponement comes after the Philippines government issued travel bans on China and South Korea, affecting 30 percent of the company’s revenue. Certainly not a good idea to get folks to invest in you in these times.

Elsewhere, Emirates has requested all of its staff to take up to a month of paid and unpaid leave. The airline has halted flights to Iran, Bahrain, and China.

“Considering the availability of additional resources and the fact that many employees want to utilise their leave, we have provided our employees the option to avail leave or apply for voluntary unpaid leave for up to one month at a time,” Emirates Chief Operating Officer Adel al-Redha said.

By the way, if you’re thinking of canceling your travel plans, you might want to read this first.

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Cover image sourced from Ledger Insights.