Home » Aviation, Breaking News » ICAO: airlines could lose up to $5B in gross revenues from COVID-19

The International Civil Aviation Organization (ICAO) in its preliminary estimates said the COVID-19 travel bans on international air connectivity could equate to a potential reduction of US$4 billion to $5 billion in gross operating revenues in the first quarter of 2020 for airlines worldwide.

This as the economic impacts of COVID-19 are expected to be greater than those caused by the 2003 SARS epidemic.

In a media release February 13, ICAO said that 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.

But the organization’s preliminary estimates now indicate that the first quarter of 2020 has instead seen “an overall reduction ranging from 39% to 41% of passenger capacity, or a reduction of 16.4 to 19.6 million passengers compared to what airlines had projected.” This equates to a potential reduction of US$4 billion to $5 billion in gross operating revenues for airlines worldwide.

ICAO currently reports that some 70 airlines have cancelled all international flights to/from mainland China, and that a further 50 airlines have curtailed related air operations. This has resulted in an 80% reduction of foreign airline capacity for travellers directly to/from China, and a 40% capacity reduction by Chinese airlines.

“The above estimates do not include potential impacts due to reductions in international air freight movements on cargo-only aircraft, airports, air navigation service providers, to Chinese domestic air traffic, or to international traffic with respect to the Hong Kong and Macau Special Administrative Regions of China, or its Taiwan Province,” said the statement.

On major tourism-related impacts in the first quarter of 2020 due to reductions in Chinese air travellers, ICAO estimates that Japan could lose $1.29 billion in tourism revenue, followed by Thailand at $1.15 billion.

The agency also noted that COVID-19 impacts are expected to be greater than those caused by the 2003 SARS epidemic, in light of the higher volume and greater global extent of the flight cancellations being seen.

“Seasonal passenger load factors are another extenuating factor, as is the fact that China’s international air traffic has doubled, and its domestic traffic increased five-fold, since the 2003 period,” ICAO added.

ICAO stressed that these are preliminary figures and forecasts, and that they do not yet take into account the more comprehensive assessments of direct and indirect COVID-19 economic impacts which will eventually be determined.

A specialized agency of the United Nations, ICAO sets standards and regulations necessary for aviation safety, security, efficiency, capacity and environmental protection, amongst many other priorities, for its 193 member states.

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