Novel coronavirus flight cancellations top 200,000, making jet fuel prices to more than 2-year lows
To date, several airline companies have canceled more than 200,000 flights as the novel coronavirus continues to spread worldwide, prompting travel restrictions and a strong drop in demand for trips to and within China. More than 76,000 people have been sickened by the said virus and killed at least 2,250. Almost 98% of the reported cases are in China but still, officials are being worried about a crop of new infections like in Iran and South Korea.
Airline companies around the globe including the three U.S carriers namely Delta Airlines, United Airlines, and American Airlines have also canceled its services to mainland China, and Hong Kong due to the virus outbreak. According to the aviation consulting firm, CIrium, for this month alone, the number of scheduled flights to, from, and within China is almost down by 80% from a year ago.
Starting January 23 up to February 18, 99,254 scheduled flights were not able to fly which is almost close to 90% of the domestic China trips. In line with that, the airlines’ second-biggest expense after labor which is jet fuel prices diminish sharply.
Normally, lower costs would be good news for airline companies but weaker demand is also expected to hit revenue and profits this year. The International Air Transport Association (IATA) said that the air travel demand worldwide is set to fall for the first time since 2009 and with that, it cost airlines some $29 billion revenue which is mostly in the Asia Pacific region.
The benchmark jet fuel prices in the United States and even in Singapore have recovered some ground from hitting the lowest way back in 2017 and so far, this year they are both down by 17%. This data came from the S&P Global Platts.
To date, airline companies are starting to assess the financial damage of this outbreak. Australia’s Qantas Airways already warned investors that the novel coronavirus would most likely take off almost 150 million Australian dollars which is equivalent to $99.5 million from its earnings in the second half of this year and it would cut almost 16% of its Asia flights which is until the end of May. This airline also suspended all is China flights.
The Air France-KLM also did the same, this airline company also suspended China flights. Besides, it says that they expect that novel coronavirus-related demand reductions will drive down results through April by up to 200 million euros or equivalent to $217 million.