IATA now forecasts airlines will lose $314 billion in passenger revenue this year amid the coronavirus outbreak, a deepening of $62 billion from its previous projection.
The new forecast equates to carriers’ 2020 passenger revenue being down 55% on 2019’s figure, and reflects worsening economic forecasts and predictions that the return to air travel is likely to be slower than previously expected.
The lower revenue in the new forecast is based on a projected 48% fall in traffic measured in RPKs for the full year, IATA states.
“We have never seen a downturn this deep before,” says IATA director general Alexandre de Juniac. ”In our latest scenario, full-year passenger revenues plummet 55% compared to 2019, while traffic falls 48%. In other words, half our business disappears. That’s catastrophic.”
IATA’s previous forecast – released on 24 March – predicted a $252 billion, or 44%, hit to passenger revenues and a 38% reduction in RPKs.
Most regions will see full-year RPKs down by around 50% year on year, IATA now predicts, with the North American sector being the outlier at around 36%.
The Asia-Pacific region accounts for $113 billion of the lost passenger revenue, followed by Europe with $89 billion and North America with $64 billion.
The airline body’s revision of its 2020 revenue projection was partly prompted by a steeper-than-expected reduction in worldwide flights leading into the second quarter, which IATA expects to be the height of the crisis. It had earlier forecast a fall in flights of around 65% year on year at that point, but by early April flights were down 80%, with the industry being “virtually grounded” aside from domestic markets in the USA and Asia.
Among its other revised considerations are a worsening economic outlook, including a projection that global GDP will fall by nearly 6% this year – twice as large as the contraction seen during the global financial crisis.
Amid that economic pressure, IATA expects the restart of travel in the second half of 2020 to be slower than previously forecast, driven in part by a slow return to international flights.
Domestic markets are forecast to return ahead of international markets, but will still be dampened by poorer-than-expected economic conditions.
IATA notes that while domestic markets accounted for 58% of passenger numbers in 2019, international flights accounted for 67% of traffic measured in RPKs – reflecting the latter’s importance to airlines.
The recession alone would push global RPKs down 8% in the third quarter, IATA notes, before travel restrictions and the confidence effects of the coronavirus outbreak are considered.
Even amid a recovery in traffic beginning in the third quarter, global RPKs are still predicted to be down 33% in the fourth quarter of this year.
IATA also notes that its revised assessment reflects a much deeper impact on markets in Africa and South America than previously expected.
Its forecast continues to be based on severe domestic travel restrictions lasting for the three months that make up 2020’s second quarter, with some curbs on international travel extending beyond that period.
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IATA deepens projected airline revenue loss to $314 billion