Preliminary estimates by ICAO indicate that the ongoing Covid-19 outbreak could wipe out $4-5 billion in airline revenues for the current quarter. 

This is based on assumptions that overall passenger capacity will decline by 39-41%, equivalent to a reduction of 16.4 to 19.6 million passengers.

The estimated financial loss, however, does not take into reduction in Chinese domestic air traffic, or to and from Hong Kong, Macau and Taiwan. 

ICAO states that about 70 airlines — including American Airlines and the Lufthansa group — have cancelled all international flights to and from mainland China, the epicentre of the Covid-19 outbreak. Another 50 carriers, such as Singapore Airlines and Cathay Pacific, have reduced capacity. 

“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,” ICAO states. 

This contrasts sharply with a planned increase in capacity of 9% year-on-year for the first quarter of 2020.

It echoed sentiments that the Covid-19 outbreak will hit the airline industry harder than the Severe Acute Respiratory Syndrome (SARS) outbreak of 2003. This was due to the higher volume of flights to and from China, as well as the extent of flight cancellations seen so far. 

“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 adds. 

It has stressed that the figures were preliminary estimates, and that more comprehensive assessments were needed to fully determine the virus outbreak’s economic impact. 

The Covid-19 outbreak has hit more than 20 countries globally, with most of the confirmed cases and deaths occurring in China.