ICAO airline losses
Image Credit: ICAO

DUBAI: Airlines could face worse-than-expected losses this year due to the coronavirus crisis, latest industry data show, even as many parts of the world are seeing a "second wave" of the COVID-19 pandemic. The International Civil Aviation Organisation (ICAO), in a report out on Thursday (October 1,) has projected international and domestic aviation could take up to a $399 billion hit, in terms of gross passenger revenue for the first quarter alone.

That is much higher than the initial estimated losses of $314 billion the industry group International Air Transport Association projected in April 2010 for the global aviation industry, as IATA had projected a “3-month lockdown + recession” then.

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Aircrafts of IndiGo, Air India and Air Asia are seen parked at the apron of the Chhatrapati Shivaji Maharaj International Airport (CSMIA) after domestic flights resumed, in Mumbai on May 28, 2020. Domestic air travel resumed in India on May 25 after a two-month shutdown over the coronavirus pandemic, a top minister said Wednesday, in a further easing of the lockdown. The government halted all domestic traffic on March 25 days after suspending international flights as it imposed a strict nationwide shut down to halt the spread of the coronavirus. / AFP / INDRANIL MUKHERJEE Image Credit: AFP

For an indication of how civil aviation has been hit hard by the virus, Flight Radar reported tracking 11,000 flights on Sunday, October 5, 2020 on https://flightradar24.com. That's a huge drop from 230,000 flights cruising through the sky all around the globe on July 25, 2019 (aviation’s busiest day in history). And that's still a nine-fold reduction compared to the 102,465 average number of flights a day worldwide recorded in 2019.

This unprecedented nosedive to negative territory is nothing like the world had seen before — through all the crises since World War II, such as the Oil Crisis (1973), Iran-Iraq War (1980-88), the Gulf War (1990-1991), the Asian Financial Crisis (1997-98), the September 11 attacks (2001), Sub-Prime Crisis (2008) and SARS/MERS (2003/2012) pandemics.

Data published by the International Civil Aviation Organization on October 1, 2020.
Data published by the International Civil Aviation Organization on October 1, 2020. Image Credit: ICAO

With up to 674 million passengers unable to fly during to COVID restrictions, no other event in the world has dented passenger traffic number like the coronavirus did. The latest estimates indicate that the possible COVID-19 impact on world scheduled passenger traffic compared to baseline (business as usual, originally-planned) would be much worse than initially thought.

International passenger traffic had been hit harder than domestic, ICAO reported, with overall reduction ranging from 64% to 66% of seats offered by airlines, and an overall reduction of 1.413 billion to 1.459 billion passengers – approximately $255 to $263 billion potential loss of airlines’ gross operating revenue.  

The ICAO report gave the following estimates:

  • Full year 2020 (Jannuary – December) – overall reduction ranging from 50% to 52% of seats offered by airlines.
  • Overall reduction of 2,875 to 2,978 million passengers – approximately $386 to $399 billion potential loss of gross passenger operating revenues of airlines Q1 2021 (Jan – Mar)
  • Overall reduction ranging from 31% to 46% of seats offered by airlines
  • Overall reduction of 477 to 674 million passengers.
  • Approximately $68 to $95 billion potential loss of gross passenger operating revenues of airlines.

ICAO, a UN specialised agency established to look after international civil aviation, stated that the actual impacts on the industry will depend on duration and magnitude of the outbreak — as well and containment measures, the degree of consumer confidence for air travel, and economic conditions.

One bright spot for the aviation industry is China, whose aviation market is also a step ahead of Europe and the United States en route to recovery.

Since March, China has recorded fewer than 5,000 new COVID-19 cases, allowing a gradual restart of the aviation industry. The result: China's domestic flights have recovered to a level similar to the end of 2019

For its part, IATA has urged global carriers to work with regulators to introduce reliable coronavirus testing systems for passengers before they board in order to get people back on planes. This is in addition to face masks, regular hand washing and sanitizing of high-touch surfaces.

Grounded aircraft
Grounded aircraft Image Credit: Agency

IATA data show that 4.4 billion passengers flew in 2018 (up 6.9% from 2017).

FLYING FACTS
4.54 billion people - In 2019, the number of scheduled passengers boarded by the global airline industry reached over 4.54 billion people.

Data from the International Air Transport Association (Iata) show that 4.4 billion passengers flew in 2018, an increase of 6.9% from 2017. That represents an additional 284 million trips by air year-on-year.

Typically between 45% and 50% of air cargo is carried in the belly holds of passenger aircraft, but most passenger flights are suspended as a result of travel restrictions and lower demand due to the Covid-19 pandemic.

4.4 billion passengers flew in 2018 (up 6.9% from 2017), according to IATA data.