Our current base case for global air passengers in 2020 assumes a decline of 20%-30% from 2019, with full recovery achieved only in 2022-2023
S&P Global Ratings believes the coronavirus pandemic is likely to have an unprecedented impact on global air travel, according to the article "The Coronavirus Pandemic Could Reduce Global Air Passengers By Up To 30% In 2020," published today. The rapid spread of the new virus across the globe has caused air traffic demand to plunge in recent weeks.
"Our current base case for global air passengers in 2020 assumes a decline of 20%-30% from 2019, with full recovery achieved only in 2022-2023," said Julyana Yokota, S&P Global Ratings credit analyst.
This view takes into account the coronavirus's rapid spread to over 125 countries and the severity of lockdown measures to contain the coronavirus, given the risk of contagion. Various European countries have now taken extreme measures to restrict travel, while the U.S. has restricted anyone who has been in 28 European states in the prior 14-day period from entering the U.S. Controlling the coronavirus, as well as reestablishing passenger confidence, may be more challenging than similar efforts for previous viruses, such as 2009's H1N1 virus, also known as swine flu, or SARS in 2003. Recovery is likely to take longer, given the lockdown measures.
The impact on each airport rating will depend on several factors, including the speed, scale, geography, and duration of the crisis; measures taken by each airport to mitigate passenger declines and administrate fixed costs; potential government extraordinary support; and the financial flexibility of each airport prior to the virus outbreak, as well as their liquidity cushions.
"Over the coming weeks, we will conduct reviews of our airport ratings to reflect our updated views in this highly uncertain and fast-moving situation," said Ms. Yokota.
This report does not constitute a rating action.