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Washington/Singapore (Reuters): The coronavirus epidemic could rob passenger airlines of up to $113 billion in revenue this year, an industry body warned on Thursday, while the head of a large U.S. airline said the drop-off in travel demand seemed driven more by fear than economics, similar to what happened after the disasters of 11 September 2001.
“We could discount prices tomorrow and it wouldn’t do any good,” Southwest Airlines Co Chief Executive Gary Kelly said at an aviation conference in Washington.
Earlier, Kelly told CNBC: “9/11 wasn’t an economically driven issue for travel, it was more fear, quite frankly, and I think that’s what’s manifested this time. I think there’s elements of both but it has a 9/11-type feel. Hopefully, we’ll get this behind us quickly.”
The estimated revenue hit to the sector was made by the International Air Transport Association (IATA). It was more than three times a projection it made just two weeks ago and came as British regional carrier Flybe became the first big casualty of the slump in travel demand due to the crisis.
Airlines across the globe are rushing to cut flights and costs, and warning of a hit to earnings, as the new virus that started in China spreads, raising fears of a pandemic that could plunge the global economy into recession.
“There are lots of airlines that have got relatively narrow profit margins and lots of debt, and a cash flow shock like this could certainly send some into a very difficult situation,” IATA Chief Economist Brian Pearce told a media event in Singapore.
