The outbreak of coronavirus originating from Wuhan in China reminds global airlines of SARS pandemic in April 2003. SARS had a damaging impact on the financials of global airlines, who had reported heavy losses. As per the International Air Transport Association (IATA), at the peak of SARS outbreak, the passenger demand had plunged by 45%! The impact was so severe that global carriers like Cathay had to cut down their flight by 40% and had reported major financial losses. Other global airlines like Singapore Airlines, ANA Holdings Inc. and Japan Airlines had suffered a similar fate. Now Airlines are worried in wake of coronavirus, and are speculating damaging impacts, perhaps worse than what they had experienced during SARS outbreak!
How has the global aviation industry changed since SARS, 2003?
The global aviation industry has more than doubled from $322 billion in 2003 to $838 million reported in 2019. Roughly, the number of air passengers per annum also has doubled in 2019 as compared to that in 2003.
Further, China is emerging as the world’s largest outbound travel market and thus has a significant contribution to the international aviation industry. In figures, international fliers from China have increased ten-fold from 6.8 million in 2003 to 63.7 million in 2018, as per data from China’s aviation authority. Certainly, anything that impacts the Chinese travel market has a direct impact on global airlines also. In light of the surge in Chinese contribution to the global aviation industry as compared to 2003, coronavirus is likely to impact the industry in a big way.
Analysts are uncertain about the impact of coronavirus. As per, Brenden Sobie, an independent aviation analyst in Singapore “Whether only one secondary market, an entire country or the wider region is impacted is unpredictable and outside of the industry’s control”.
Which Airlines are mostly impacted by the coronavirus
Given the larger contribution of China in the global aviation market, it is almost certain that the industry will be impacted across the globe. Having said this, some of the airlines are feeling the heat more than others.
FlightRadar24, a flight-tracking website, reported that as of 0600 GMT on 23-01-2020, a total of 184 flights from Wuhan have been canceled, this accounts for 60% of the departures listed for the day.
Global carriers like Korean Airlines, Singapore Airlines’ budget carrier Scoot, Taiwan’s China Airlines Ltd and Japan’s ANA announced the cancellation of flights in and out of Wuhan after a lockdown announced by authorities.