The economic impact of Covid-19 travel bans

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The International Civil Aviation Organization (ICAO) has produced some preliminary forecasts relating to the expected economic impacts from COVID-19 travel bans on international air connectivity.

ICAO currently reports that some 70 airlines have cancelled all international flights to/from mainland China, and that a further 50 airlines have curtailed related air operations. This has resulted in an 80% reduction of foreign airline capacity for travellers directly to/from China, and a 40% capacity reduction by Chinese airlines.

Prior to the outbreak, airlines had planned to increase capacity by 9% on international routes to/from China for the first quarter of 2020 compared to 2019.

ICAO’s preliminary estimates indicate that the first quarter of 2020 has instead seen an overall reduction ranging from 39% to 41% of passenger capacity, or a reduction of 16.4 to 19.6 million passengers compared to what airlines had projected. This equates to a potential reduction of US$4 to 5 billion in gross operating revenues for airlines worldwide.

The above estimates do not include potential impacts due to reductions in international air freight movements on cargo-only aircraft, airports, air navigation service providers, to Chinese domestic air traffic, or to international traffic with respect to the Hong Kong and Macau Special Administrative Regions of China, or its Taiwan Province.

With respect to major tourism-related impacts in the first quarter of 2020 due to reductions in Chinese air travellers, ICAO estimates that Japan could lose US$1.29 billion in tourism revenue, followed by Thailand at US$1.15 billion.

The agency also noted that COVID-19 impacts are expected to be greater than those caused by the 2003 SARS epidemic, in light of the higher volume and greater global extent of the flight cancellations being seen. Seasonal passenger load factors are another extenuating factor, as is the fact that China’s international air traffic has doubled, and its domestic traffic increased five-fold, since the 2003 period.

ICAO stresses that these are preliminary figures and forecasts, and that they do not yet take into account the more comprehensive assessments of direct and indirect COVID-19 economic impacts, which will eventually be determined.

About ICAO

The International Civil Aviation Organization (ICAO) is a UN specialised agency, established by States in 1944 to manage the administration and governance of the Convention on International Civil Aviation (Chicago Convention).
ICAO works with the Convention’s 193 Member States and industry groups to reach consensus on international civil aviation Standards and Recommended Practices (SARPs) and policies in support of a safe, efficient, secure, economically sustainable and environmentally responsible civil aviation sector. These SARPs and policies are used by ICAO Member States to ensure that their local civil aviation operations and regulations conform to global norms, which in turn permits more than 100,000 daily flights in aviation’s global network to operate safely and reliably in every region of the world.
In addition to its core work resolving consensus-driven international SARPs and policies among its Member States and industry, and among many other priorities and programmes, ICAO also coordinates assistance and capacity building for States in support of numerous aviation development objectives; produces global plans to coordinate multilateral strategic progress for safety and air navigation; monitors and reports on numerous air transport sector performance metrics; and audits States’ civil aviation oversight capabilities in the areas of safety and security.
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