Abu Dhabi, UAEThursday 20 February 2020

Coronavirus: impact on global airlines could be 'worse than Sars', expert warns

Companies restrict travel and shut down operations amid growing fears of deadly virus

Leading airlines across the world are cancelling flights to China and companies are halting operations as part of a major drive to contain the spread of the deadly coronavirus.

British Airways suspended all daily flights to Beijing and Shanghai from London's Heathrow airport while it assessed the situation, the UK flag carrier said in a statement on Wednesday.

The spread of the virus could have a more significant impact on airlines then even the Sars virus, an expert said.

"China's escalating coronavirus outbreak could deal a heavier blow to airlines' and airports' passenger traffic than 2003's Severe Acute Respiratory Syndrome (Sars) epidemic did, as Chinese outbound travellers have multiplied over the past 17 years," Denise Wong, a Bloomberg Intelligence (BI) analyst said in a research note on January 29.

China is the biggest outbound travel market in the world, recording an eight-fold surge in Chinese outbound tourists to more than 160 million in 2018, according to BI data. The country has about 1,700 international flight routes, with more than 100 million annual seat capacity, according to VariFlight and CAAC.

Global airlines are seeing the impact of intensified government efforts to contain the spread of the virus, which first appeared in the central Chinese city of Wuhan.

With cases of infections being reported in a growing number of countries, from Australia to the UAE, carriers around the world are increasingly axing flights to Chinese destinations, denting jet fuel demand, as load factors drop.

"Air China and Shanghai Airport may see the biggest profit impact from a pandemic originating in China, though regional operators including Cathay Pacific, Singapore Airlines, Airports of Thailand and Japan Airport Terminal are also vulnerable due to their strong China business ties," Ms Wong said.

The UAE on Wednesday became the first country in the Middle East to declare cases of coronavirus infections when a Chinese family of four were diagnosed with the disease.

Dubai-based Emirates said on Wednesday its flights to China were operating as normal. The UAE is a major global air transport hub, with Dubai operating the world's busiest airport by international travel.

Both Emirates and Abu Dhabi carrier Etihad have confirmed medical screenings for passengers flying in from China.

Global corporations have taken actions to ensure the safety of their employees, ranging from travel restrictions to shutting their operations in China.

Starbucks said it closed more than half its stores in China and warned its annual financial results would be hit by the coronavirus impact. Retailers such as Uniqlo and H&M closed dozens of stores in the country.

China's Alibaba requested staff to work from home for a week after an extended Chinese New Year break ends on February 2, while Tencent extended holidays until February 9. Toyota is halting production in China until February 9.

Airbus, the world's biggest plane maker, which has assembly lines in China and counts the country as one of its biggest markets, said it is monitoring the situation.

“Airbus is following the situation very closely, including World Health Organization (WHO) travel advisories that would affect our staff globally," an Airbus spokesperson said in an emailed statement on Wednesday. "Airbus is updating employees regularly on the situation and any precautions to take.”

Updated: January 29, 2020 07:34 PM

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