IATA release – COVID19

IATA Updates COVID-19 Financial Impacts

-Relief Measures Needed-

5 March 2020 (Singapore) The International Air Transport Association (IATA) updated its
analysis of the financial impact of the novel coronavirus (COVID-19) public health emergency on
the global air transport industry. IATA now sees 2020 global revenue losses for the passenger
business of between $63 billion (in a scenario where COVID-19 is contained in current markets
with over 100 cases as of 2 March) and $113 billion (in a scenario with a broader spreading of
COVID-19). No estimates are yet available for the impact on cargo operations.
IATA’s previous analysis (issued on 20 February 2020) put lost revenues at $29.3 billion based
on a scenario that would see the impact of COVID-19 largely confined to markets associated
with China. Since that time, the virus has spread to over 80 countries and forward bookings
have been severely impacted on routes beyond China.
Financial markets have reacted strongly. Airline share prices have fallen nearly 25% since the
outbreak began, some 21 percentage points greater than the decline that occurred at a similar
point during the SARS crisis of 2003. To a large extent, this fall already prices in a shock to
industry revenues much greater than our previous analysis.
To take into account the evolving situation with COVID-19, IATA estimated the potential impact
on passenger revenues based on two possible scenarios:
Scenario 1: Limited Spread
This scenario includes markets with more than 100 confirmed COVID-19 cases (as of 2 March)
experiencing a sharp downturn followed by a V-shaped recovery profile. It also estimates falls in
consumer confidence in other markets (North America, Asia Pacific and Europe).
The markets accounted for in this scenario and their anticipated fall in passenger numbers, due
to COVID-19, as are as follows: China (-23%), Japan (-12%), Singapore (-10%), South Korea (-
14%), Italy (-24%), France (-10%), Germany (-10%), and Iran (-16%). Additionally, Asia
(excluding China, Japan, Singapore and South Korea) would be expected to see an 11% fall in
demand. Europe (excluding Italy, France and Germany) would see a 7% fall in demand and
Middle East (excluding Iran) would see a 7% fall in demand.
Globally, this fall in demand translates to an 11% worldwide passenger revenue loss equal to
$63 billion. China would account for some $22 billion of this total. Markets associated with Asia
(including China) would account for $47 billion of this total.

Scenario 2: Extensive Spread
This scenario applies a similar methodology but to all markets that currently have 10 or more
confirmed COVID-19 cases (as of 2 March). The outcome is a 19% loss in worldwide passenger
revenues, which equates to $113 billion. Financially, that would be on a scale equivalent to what
the industry experienced in the Global Financial Crisis.

Note: Revenue loss figures are not additive due to overlaps of some markets, e.g., revenues for
China and Germany both contain the revenues for the China-Germany market. Revenues are
base fare revenues for all airlines flying to, from and within the country.

Africa and Latin America/Caribbean regions are not explicitly included in this market-based
analysis, because there are currently no countries in either region with at least 10 COVID-19
Oil prices have fallen significantly (-$13/barrel Brent) since the beginning of the year. This could
cut costs up to $28 billion on the 2020 fuel bill (on top of those savings which would be achieved
as a result of reduced operations) which would provide some relief but would not significantly
cushion the devastating impact that COVID-19 is having on demand. And it should be noted that
hedging practices will postpone this impact for many airlines.
“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.
It is unclear how the virus will develop, but whether we see the impact contained to a few

markets and a $63 billion revenue loss, or a broader impact leading to a $113 billion loss of
revenue, this is a crisis.
“Many airlines are cutting capacity and taking emergency measures to reduce costs.
Governments must take note. Airlines are doing their best to stay afloat as they perform the vital
task of linking the world’s economies. As governments look to stimulus measures, the airline
industry will need consideration for relief on taxes, charges and slot allocation. These are
extraordinary times,” said Alexandre de Juniac, IATA’s Director General and CEO.

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