Coronavirus effect on air transport is ‘likely to be temporary,’ says IATA, with airlines expected to ‘weather the storm in the long term’

The International Air Transport Association (IATA) has said history indicates that the coronavirus is unlikely to have a long-term effect on air travel demand. In an article posted on the website of its official magazine, Airlines., it notes analysis of previous epidemics such as SARS which shows the industry to be resilient to shocks.

Right now that may not seem the case. Latest media reports highlight that the death toll has risen beyond 130 people with confirmed cases now exceeding 6,500, across at least 19 countries globally, including the first human-to-human transition outside of China.

Air and ground transportation has been blocked in Wuhan, the origin of the virus, airlines have scaled-back capacity into other parts of China, rescheduling other flights to minimise the exposure to its own staff.

In the past day, British Airways has suspended its flights from London to Beijing and Shanghai until Mar-2020 following updated travel advice from the UK’s Foreign and Commonwealth Office. Lufthansa Group has followed its European rival and its Lufthansa, SWISS and Austrian Airlines operating arms have ended China flights, initially until 09-Feb-2020.

Meanwhile, Finnair has suspended three times weekly Helsinki-Beijing Daxing between 05-Feb-2020 and 29-Mar-2020, and twice weekly Helsinki-Nanjing between 08-Feb-2020 and 29-Mar-2020, but will continue to operate to Beijing Capital, Shanghai and Guangzhou in mainland China.

Finnair’s COO Jaakko Schildt stated the cancellations were needed to “manage the impacts of the recent suspension of group travel by Chinese authorities, which have a pronounced impact on the load factors” of those particular routes.

The US Government has suggested it could update guidance that could temporarily also end non-stop flights in and out of China from and to the US. For now, American Airlines has said it will suspend services between Los Angeles and Beijing and Shanghai from 09-Feb-2020 through 27-Mar-2020, but will retain other Chinese connections. Fellow major, United Airlines, has cut around a third of its flights for the first week of Feb-2020, citing a “significant decline in demand”.

OPINION: The Blue Swan Daily
“China has changed a lot since the SARS outbreak and just as the coronavirus appears to be spreading more quickly than SARS, a exponentially larger air transport system makes us believe that the industry will take a much more notable hit than it did then.”

While the World Health Organization (WHO) has declined to define the virus at this stage as an epidemic, nor pandemic, it advises that measures to limit the risk of exportation or importation of the disease should be implemented, without unnecessary restrictions of international traffic.

The constant media coverage, including increasing cases across the world, has created a lot of attention that will naturally impact travel plans in and out of China, and the wider region. Hong Kong, a major regional gateway is particularly exposed, especially given its recent geopolitical situation.

Despite concerns over the impact on air travel, IATA analysis suggests that airlines will weather the storm in the long term. “In the past, the airline industry has proven resilient to shocks, including pandemics,” it says. “Even in the outbreak of SARS, monthly international passenger traffic returned to its pre-crisis level within nine months.”

Strong growth in the Chinese air transport market in recent years has seen an influx of 450 million additional passengers compared to a decade ago. As The Blue Swan Daily reported earlier this week, this is clearly evident in the virus’ host city of Wuhan where the number of international markets linked by non-stop services increased six-fold during the past decade.

What’s more, this outbreak is occurring at one of the busiest travel periods in the region as New Year celebrations take place. In fact, this travel peak is normally one of the largest migrations of travellers across the world, especially within China’s borders.

However, IATA says that any effect on civil aviation is likely to be “temporary”, based on its analysis of previous epidemics such as SARS and Avian Flu (bird flu). As previously mentioned, while global passenger traffic returned to pre-crisis level within nine months after SARS, the 2005 and 2013 bird flu crisis had a “much milder and short-lived” impact as air travel “rebounded quickly” once fears over the global spreading of the virus had lessened.

However, China has changed a lot since the SARS outbreak and just as the coronavirus appears to be spreading more quickly than SARS, a exponentially larger air transport system makes us believe that the industry will take a much more notable hit than it did then.

IATA says it is continuing to “closely monitor developments” related to the coronavirus outbreak and is engaged with WHO, ICAO and the US Centers for Disease Control. Based on the experience of different previous outbreaks, IATA has produced an Emergency Response Plan and Action Checklist for carriers which offers a series of guidelines and best practices for airline staff in the event of public health crisis.

Similarly, Airports Council International (ACI) World has highlighted guidance for airports covering the outbreak as it becomes increasingly likely that national regulators and health authorities will introduce measures directly affecting airports and the aviation industry more broadly.

The Advisory Bulletin: Transmission of Communicable Diseases reiterates a number of options and best practices that airports and national authorities can use to protect against communicable diseases that might pose a serious risk to public health. It is intended as guidance for airports that can be modified to the local situation as necessary and used in discussion with local authorities and national regulators when determining appropriate actions.

It is clear that the spread of the coronavirus is being taken seriously – the UK Government is planning to place returning nationals in quarantine for 14 days when they are repatriated this week – but health officials need to balance the infection risk against the mass hysteria that a pandemic could create. It is a tough balancing act that could change any minute.

More Like this