Africa: Coronavirus wipes out 164 million seats from Chinese Aviation Market in 5 months as airlines, businesses count loses

Coronavirus

As the novel Coronavirus continues to spread to more countries with new cases being conformed globally, businesses across the world are beginning to count their loses as the dread disease takes its toll on nations.

According to a report by anna.aero, the coronavirus impact on China has been stark, with all seats to, from, and within the country down 164 million seats in February to June 2020 versus the year-ago period. And in just one month – February 2020 versus January 2020 – seats were down 55 million, or 57%.

With a decline of 135 million, domestic China is overwhelmingly responsible for this drop. But no region was spared capacity cuts, albeit not always fully from coronavirus. For example, service to Mexico and Ukraine ended in this period, impacting their regions.

Across 82 countries from China, the seat cull was an average 333,000 per country. Predictably, most of the hardest-hit are close to China, including tourist- and VFR-focused destinations. After all, tourism and ‘unnecessary’ spending takes a backseat in such circumstances, with the inevitable economic and financial consequences. Thailand saw the greatest decline both from Bangkok (-2.59 million) but also beach resorts.

Phuket, for example, is the sixth hardest-hit airport globally: its seats to/from China declined 843,000 to 1.2 million. While Vietnam is also in the top-10 countries for cuts, leisure destination Nha Trang was responsible for over half of this. It is the seventh-worst globally, down 753,000 to just 178,000. For such places, China is an important source of visitors. On a volume and percentage basis, Australia (-56%), Vietnam (-48%), Taiwan (-45%), and USA (-42%) are notable.

Big coronavirus impact, but 11 of 82 countries see capacity growth
Despite the impact, Portugal (+50,000) and Hungary (+34,000) lead the pack of 11 countries that didn’t have seat cuts. Portugal was up from zero as Beijing Capital Airlines added Beijing – Xian – Lisbon. In Hungary, Hainan Airlines began Chongqing – Budapest, while Shanghai Airlines started three: Shanghai Pudong – Chengdu – Budapest, Shanghai Pudong – Xian – Budapest, and Shanghai Pudong – Budapest.

Morocco also grew strongly (+33,000) from Royal Air Maroc’s Casablanca – Beijing Daxing service starting in January 2020. Rwanda (+24,000) was from Kigali – Mumbai – Guangzhou commencing in June 2019, almost outside the period being examined. Little wonder that Africa’s cut was ‘just’ 11%.

The impact of the coronavirus on China alone is significant. And as the virus spreads away from China, other countries and regions are bracing themselves. This week, the potential full economic implications on the world economy began to scare global businesses and financial communities.

Moreso, the International Air Transport Association, IATA, says airlines stand to lose $29.3bn (£23.7bn) of revenue this year due to the coronavirus outbreak.

According to bbc.com, the international body predicts that demand for air travel will fall for the first time in more than a decade.
Airlines in China and other parts of the Asia Pacific region are expected to take the vast majority of the impact.
It comes as carriers around the world have been forced to reduce flights.

In total, airlines in the Asia Pacific region are set to see a $27.8bn revenue loss in 2020, while those outside Asia are expected to lose $1.5bn in revenue, IATA has forecast.

Of that figure, IATA predicts that carriers in China are set to lose revenue of $12.8bn in their home market alone.

“Airlines are making difficult decisions to cut capacity and in some cases routes,” said IATA’s director-general Alexandre de Juniac. “This will be a very tough year for airlines.”

Furthermore, South African beer manufacturer, AB InBev, makers of beers such as Castle Lager and Budweiser says it has already lost sales of R4.3 billion to the coronavirus.

A report by businessinsider.co.za, says the novel coronavirus behind Covid-19 has already cost it an estimated R4.3 billion worth of sales in China, just in the first two months of 2020.

AB InBev happens to own the Corona beer brand – which seemed to cause some confusion in the early days of the outbreak in January, with searches for terms such as “beer virus” spiking.

Corona, classed as a “super premium” brand, saw strong growth in 2019, AB InBev said in full-year results, “with major contributions from markets such as China and South Africa”. In SA, the company recorded its highest-ever market share in the premium beer segment “led by Corona”.

AB InBev believes Corona beer is the number one brand in China’s super-premium segment.

But quarantine measures, and other developments related to the virus family named for its crown-like protuberances, will not see a repeat performance in China this year.

“The outbreak has led to a significant decline in demand in China in both on-premise and in-home channels,” AB InBev told shareholders.
“Additionally, demand during the Chinese New Year was lower than in previous years as it coincided with the beginning of this outbreak.”

It currently estimates the lost revenue at $285 million, or some R4.3 billion, with lost earnings before interest, tax, depreciation, and amortisation (ebitda) of $170 million, the equivalent of around R2.5 billion.

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