The International Civil Aviation Organization (ICAO) has published a comprehensive study of recovery scenarios for the airline industry, examining both a V-shaped recovery and a U-shaped path compared to a baseline scenario—for originally planned international traffic. The V-shaped recovery would result in a potential $90 billion loss in gross revenues for the first half of the year from lost international passenger traffic. The U-shaped recovery predicts an international passenger revenue loss of $115 billion.
Passengers bound for Frankfurt wait at a terminal of Dubai International Airport on April 6, 2020, … [+]
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Under a V-shaped path, ICAO estimates that airlines will reduce their seats offered by 37%, with an overall reduction of 411 million passengers. The U-shaped path foresees a 48% reduction in seats offered by airlines, with an overall reduction of 535 million passengers.
The V-shaped scenario sees airline international seat capacity reduced by 77% of a baseline scenario in April 2020, with the reduction lessening to 63% down from baseline in May and 33% down from baseline by June of this year. The U-shaped recovery sees international seat capacity falling by 77% by April of 2020 and continuing a further decline to 78% down from baseline in May and June of this year.
Asia/Pacific and Europe would be the two worst affected markets in either scenario. ICAO forecasts a seat capacity loss of 42.9% of baseline in Asia/Pacific under the V-shaped scenario, resulting in a loss of 132.33 million passengers and $31.02 billion in passenger revenue. In the U-shaped scenario, Asia/Pacific would lose 52.3% of seat capacity, or 162.67 million passengers and $38.26 billion in passenger revenue. Europe is expected to lose 38.5% of international seat capacity under a V-shaped scenario, resulting in 186.74 million lost passengers and $32.4 billion in lost revenue. Under the U-shaped scenario, Europe would lose 50.2% of international seat capacity resulting in 245.73 million fewer passengers flying and a passenger revenue loss of $42.75 million.
North America would see the third highest losses. ICAO forecasts a reduction of 31.8% in seat capacity and losses of 30.92 million passengers resulting in $9.94 billion in lost revenue under the V-shaped scenario. Under the U-shaped scenario, airlines in North America are expected to lose 47.6% of international passenger capacity, equivalent to 42.16 million passengers and $13.55 billion in lost passenger revenue.
Airports will also be affected by the decline in international air traffic. Airports Council International estimates a global reduction of 38.1% in passenger numbers will result in $76.6 billion in lost revenue. Again, airports in Asia/Pacific and Europe are expected to suffer the highest losses, $23.9 billion and $24.6 billion respectively, while North America’s airports will rank third with $16.9 billion in lost revenues.
As a result in the drop in demand for international air service, ICAO references UNWTO (World Tourism Organization) estimates that anywhere from five to seven years worth of tourism growth fill be lost due to the coronavirus pandemic, which represents $300 billion to $450 billion losses in international tourism receipts.