• July 12th, 2020

Air Nam passenger demand down by 24%...UN warns coronavirus could disrupt global economy

The national airline has confirmed a reduction of already at least 24% on its passenger load on the Windhoek to Frankfurt route alone for January and February compared to the same time last year as a direct result of coronavirus fears. This is as international travellers avoid flying and stay away from large crowds, particularly in countries where outbreaks of the virus have been confirmed. 

According to Air Namibia’s Manager for Corporate Communications, Paul Nakawa, the already struggling airline “is impacted by the effects of the virus through reduced travel, by means of choice customers choosing to avoid travel due to the fear of the virus, avoiding large crowds and events. In essence the travel behaviour has changed and this results in reduced passenger loads.” Responding to questions by New Era, Nakawa noted that several exhibitions and events in Europe have been cancelled, in particular the ITB (a major travel trade fair) where organisers made the unanimous decision, supported by Germany’s federal ministry of health and its federal ministry of economic affairs, due to the spread of coronavirus in Europe. 

“The ITB in Berlin is an essential consultation platform for Air Namibia to meet and engage with trade partners, showcasing Namibia the destination. This event was cancelled and has a negative result on the business development of the Frankfurt-Windhoek route,” said Nakawa.  

He added that the withdrawal of airlines from China and other affected countries shows a downturn of inbound passengers from neighbouring counties into Namibia.

 “Some regional and domestic routes are sturdily supported by Frankfurt influx passengers, in particular our Victoria Falls route, and have already shown negative passenger loads. Operating internationally exposes Air Namibia to the negative effects of coronavirus,” Nakawa stressed. 

He said that Air Namibia continues to work with health and relevant authorities to monitor exit and entry points at the international airport, saying: “The virus spreading globally will certainly have a ripple effect on Air Namibia’s inbound tourist numbers.” 

Meanwhile, the latest estimate on 2020 global revenue losses for airlines by the International Air Transport Association (IATA) now stands at between US$63 billion (in a scenario where the virus is contained in current markets with over 100 cases as of 2 March) and US$113 billion (in a scenario with a broader spreading of the virus). These estimates only include passenger services as no estimates are yet available for the impact on global cargo operations. 

IATA’s previous analysis (issued on 20 February 2020) put lost revenue at just over US$29 billion based on a scenario that would see the impact of Covid-19 largely confined to markets associated with China. Since that time, the virus has spread to over 80 countries and forward bookings have been severely impacted on routes beyond China. 

Since the advent of the outbreak global airline share prices have fallen nearly 25%, some 21 percentage points greater than the decline that occurred at a similar point during the SARS crisis of 2003. The drop in global passenger demand translates to an 11% worldwide passenger revenue loss equal to US$63 billion, where China would account for some US$22 billion of this total. Markets associated with Asia (including China) would account for US$47 billion of this total.

Oil prices have also fallen significantly (-US$13/barrel Brent) since the
beginning of the year. According to IATA this could cut costs up to US$28 billion on the 2020 fuel bill (on top of those savings which would be achieved as a result of reduced operations) which would provide some relief but would not significantly cushion the devastating impact the virus is having on demand. 
“The turn of events as a result of Covid-19 is almost without precedent. In little over two months, the industry’s prospects in much of the world have taken a dramatic turn for the worse. It is unclear how the virus will develop, but whether we see the impact contained to a few markets and a US$63 billion revenue loss, or a broader impact leading to a US$113 billion loss of revenue, this is a crisis. Many airlines are cutting capacity and taking emergency measures to reduce costs. 

Governments must take note. Airlines are doing their best to stay afloat as they perform the vital task of linking the world’s economies. As governments look to stimulus measures, the airline industry will need consideration for relief on taxes, charges and slot allocation. These are extraordinary times,” said Alexandre de Juniac, IATA’s Director General and CEO.

Edgar Brandt
2020-03-12 10:11:08 | 3 months ago

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