Coronavirus Crisis May Cost Airline Industry Over $113B

coronavirus and airlines

The drop in travel due to coronavirus fears could end up costing the airline industry more than $113 billion in revenue this year, which is four times more than a prediction for losses two weeks ago, according to a report by the Financial Times

The International Air Transport Association (IATA) said Thursday (March 5) the airline industry was in crisis due to the rapid spread of the virus in regions like Europe and the United States. 

Southwest Airlines, which is the largest low-cost carrier in the world, said it predicted a hit of between $200 million and $300 million to its Q1 core sales.

Carriers in the U.S. have recently been the most healthy and profitable around the globe, but the impact of the coronavirus seems to be speeding up and forcing Delta and United Airlines to make cuts to domestic and international flights.

The drop in demand for flights has been sudden and difficult for airlines to deal with. Delta will cut Japan flights and United is seriously cutting flights to Asia and Europe, and all domestic flights by 10 percent.

IATA said it predicted carrier losses of between $63 billion and $113 billion this year, much more than a previous prediction of $30 billion.

“Since that time, the virus has spread to over 80 countries and forward bookings have been severely impacted on routes beyond China,” IATA said in a statement.

New scenarios depend on how the coronavirus outbreak continues, and whether it’s contained or continues to grow.

European airlines have also stepped up cancellations, and some are worried about losing airport landing and take-off slots due to less use. The rules say that if an airline doesn’t use its slots 80 percent of the time it will lose them, and airlines say they might be forced to run empty to keep them.

The trade organization is asking the government to suspend those rules so that airlines could keep their spots.

“Temporary suspension of slot use rules and a cut in passenger taxes are crucial steps governments can take to help,” said Rafael Schvartzman, regional vice president at IATA.



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