Massive Hit To Aviation Industry by Coronavirus

Introduction

The world is suffering from huge hypertension in the name of coronavirus. Oh! It is more of a crisis, as many innocent people have been isolated in order to prevent the spread of the deadly disease. 

Current state

The deadly coronavirus was discovered in China and has spread over 25 countries across the globe. It is a “no-brainer” that many countries have restricted their flights and subsequently the airlines are suffering from their worst financial loss since 2003. As many as 25,00 flights were canceled during the first week of February, this data is provided by a travel intelligence firm OAG. According to many sources, thirty airlines have suspended services to China and this is accumulated to around 8,000 seats per week, as per OAG. The deadly virus, which was discovered in the central city of Wuhan last December, has affected more than 40,000 people and killed approximately 900 victims as of February 10th. 

The big names in the airline’s circuit will fell the hiccups as this case reminds them of the deadly Severe Acute Respiratory Syndrome (SARS) that was discovered in China in the year 2003. Many of the aviation experts say that today’s suspensions are already bad as the SARS peak time from March through June 2003. They have stated the main reason for coronavirus’s fatality has affected the travel agencies all around the globe. This move was taken as a “learning step” from the SARS epidemic. 

“The high numbers of cancelations have already exceeded any other epidemic across in the history”, says Mayur Patel, head of Asia at OAG. He also has cited the pile-up of cancelations as a “swift action from the regulators and the airlines.”

The SARS epidemic had affected around 8% of annual revenue per kilometer for the Asian Pacific Airlines and had influenced a loss of 6 billion USD in revenues due to lost business. The SARS epidemic had affected the functioning of livelihood in major places like Hong Kong, Taiwan, and Singapore. 

Losses

The losses expected from the deadly coronavirus-linked cancelations are considered to be of the “SARS” level. Most of the mainland Chinese airlines have felt the negative impact this year, as they are the most common places the Chinese prefer to visit. Among the most affected airlines, Air China and China Southern Airlines are the big names. Privately owned airlines like Hainan Airlines have to cut short their services in order to prevent any further damage caused by the epidemic. 

Taiwan based and Hong Kong-based airlines will be affected too, because of their dependency on China flights. In order to protect their customers, United Airlines and British Airways have reduced China flights. According to a spokesperson for Taiwan-based EVA Airways, the carrier has planned to scale back China flights through April and it has been monitoring the development and spread of the disease. As there is no case of the epidemic to stop, Taiwanese peer China Airlines had set up a Q and A website for its passengers on 4th February and has confirmed that it would refund fares booked directly throughout the company.

The losses accounted this year may add up if the virus affects more people across the globe. According to Moody’s Investors Service, carriers with weaker business models or liquidity profiles are likely to be affected heavily and may take a longer time to recover. 

Hope amongst disaster

The civil aviation will bounce back as soon as the virus recedes, many analysts believe. This is mainly because the main airport in Beijing, the epicenter of the SARS outbreak, witnessed peak passenger flow as soon as the disaster was controlled. The analyst expects a “V-shaped” recovery from the coronavirus slump by the airlines. This is mainly because passengers who spiked travel during the outbreak of the disease will jump back into it with extra demand.