The ability of Asia-Pacific airlines to recover from the disruption of the Coronavirus pandemic may be more challenging when compared to previous epidemics, owing to lower growth rates in the regional economies, says Alton Aviation Consultancy at the Singapore Airshow 2020.
Coronavirus struck during a time of seasonal peak travel demand in China, with Chinese New Year significantly increasing movement to and from the region. This timing has only exacerbated the impact of the virus and there is currently no clear end to the restrictions.
Adam Cowburn, managing director at Alton says: “The scale of global restrictions and flight suspensions has been faster and more significant than experienced during the SARS period in 2003, and the promise of recovery in the near-term is certainly not guaranteed. At the time of the SARS outbreak in 2003, the Chinese economy was growing close to 10.0 percent, cushioning the negative impact on air travel. Coronavirus comes at a time when the Chinese economy is estimated to grow at a more modest 6 percent, and with the aviation industry intrinsically more connected globally today, air travel is less likely to remain as resilient.”
Although the impact of Coronavirus on air travel will be felt worldwide, clearly the Chinese and South East Asian airlines will be hit hardest.
Cowburn continues: “Chinese and South Eastern airlines will be disproportionately affected, with the suspension of domestic and international Chinese tour groups – set in place to contain the virus – impacting the airline and tourism markets especially hard. Airlines serving the top Chinese destinations, namely Hong Kong and Macau, will undoubtably endure the full brunt, and these markets are served extensively by Chinese and South East Asian carriers.”
Globally, the aviation industry is highly exposed to all manner of macroeconomic and geopolitical factors, yet the industry has demonstrated a remarkable resilience across economic cycles and global shocks by achieving sustained growth over many decades. IATA’s most recent forecast, prior to the Coronavirus expansion, called for the global airline industry to generate US$29.3 billion in net profits in 2020, ahead of the US$25.3 billion estimated to have been earned in 2019.
Jonathan Berger, managing director at Alton, will be at Singapore Airshow this week – where Alton is the exclusive MRO knowledge partner – leading the MRO business forum panel discussion entitled “Next generation MRO in a digital world”.