The global airline industry is facing huge financial losses as a growing number of carriers cancel flights to China because of the coronavirus outbreak. The hit will very likely be worse than the damage wrought by the 2003 SARS epidemic.
The outbreak of the disease has already killed 492 people worldwide, mostly in China, and infected more than 24,500 people across 25 countries.
In response, more than a dozen major airlines have canceled flights to and from mainland China. Several countries have also banned entry to foreigners who have traveled to China, while others have told their citizens not to travel there, or to leave if they can.
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The last time the aviation industry faced this kind of crisis was back in 2003, when the SARS outbreak cost Asia Pacific carriers $6 billion in revenue, according to the International Air Transport Authority (IATA). North American airlines lost $1 billion, while European carriers largely escaped unscathed, analysts say. It took nine months before international passenger traffic returned to normal, IATA said.
The coronavirus will “definitely” surpass that $7 billion SARS hit, said Ivan Su, an analyst with financial services firm Morningstar.
The global aviation industry, which generated $838 billion in revenue last year, will lose more money this time around for several reasons: The number of Chinese air travelers has ballooned since 2003. Chinese carriers, and the industry as a whole, are bigger now than before. And flight suspensions and travel advisories could last longer than they did during SARS, which would weigh on international airlines.
Around 660 million Chinese passengers traveled by air in 2019 — more than seven times as many as in 2003, according to state news agency Xinhua and Fitch Ratings. The vast majority of those trips are for domestic travel. The boom in China far outpaced the global increase in passenger numbers, which grew from 1.7 billion in 2003 to 4.2 billion in 2018, according to the World Bank.
When SARS hit, global passenger traffic fell by 18.5% in April 2003 compared to a year earlier, with a drop of almost 45% in Asia-Pacific, Fitch ratings agency said in a report last week