ICAO warns of $4 billion dent to airline revenues in Q1 as capacity plummets 40%

ICAO estimates that coronavirus impact will be worse than SARS after capacity nosedives 40% and urges member states to better prepare themselves for future events
ICAO, Coronavirus, Global capacity, Dr Fang Liu

The coronavirus outbreak could cause airlines around the world to lose out on a combined estimate of between $4 billion and $5 billion of operating revenues in the first quarter of 2020.

That is the warning from the International Civil Aviation Organization (ICAO), which has forecast that a massive drop in capacity caused by the virus outbreak could have a serious economic impact on the international airline industry this year.

Some 70 airlines have cancelled all international flights to and from mainland China, which has resulted in an 80% reduction of foreign airline capacity for travellers directly to/from China, and a 40% capacity reduction by Chinese airlines.

Prior to the outbreak, airlines had planned to increase capacity by 9% on international routes to/from China for the first quarter of 2020 compared to 2019.

ICAO’s estimates that the first quarter of 2020 has instead seen an overall reduction of about 40% of passenger capacity, or a reduction of 16.4 to 19.6 million passengers compared to what airlines had projected.

The cost of the reduction in capacity has been put at between $4 and $5 billion in gross operating revenues for airlines worldwide.

ICAO’s preliminary estimates do not include potential impacts due to reductions in international air freight movements on cargo-only aircraft, airports, air navigation service providers or to Chinese domestic air traffic.

ICAO thinks that the fallout from coronavirus will have a worse impact than the 2003 SARS epidemic, in light of the higher volume and greater global extent of the flight cancellations being seen.

The agency urged its members to review civil aviation standards and be better prepared for similar future events.

ICAO secretary general Dr Fang Liu said: “We’re urging ICAO’s member states to collaborate and coordinate on their national and regional preparedness and responses, and also to consider providing financial or in-kind support to the CAPSCA programme.

“Increased financing is critical to the sustainability of this key global health and travel coordination mechanism relevant to contagious outbreaks.

“The COVID-19 outbreak and its impact on airports’ operations globally, underpin the important role of public health authorities at air borders, and the need for an effective national policy framework on air transport facilitation to establish clear roles and responsibilities of the various ministries, agencies and organisations involved with or responsible for air transport facilitation.”

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