Travel brands brace for coronavirus profit hit
Travel brands are bracing themselves for the economic impact of the spiralling coronavirus outbreak as containment measures wreak even more havoc on global business and holiday traffic.
easyJet is aiming to win back grounded customers by waiving flight change fees / easyJet
A collapse in consumer spending has already forced airlines and cruise operators to slash operations and services with analysts pessimistic about the sector's prospects, projecting a 15% year-on-year slide for the current quarter accelerating to 20% in the second quarter.
Such large swings will have an inevitable knock-on effect for the wider economy with the travel industry alone accounting for one-sixth of all online advertising, equivalent to $20bn of spending in 2019.
The latest evidence of real-world damage caused by the outbreak comes from Norwegian Air which has been forced to suspend half its staff until at least the end of May after cancelling 4,000 flights. Describing the present environment as "unprecedented" chief executive Jacob Schram has pleaded with governments to intervene now to stave off further losses.
If anything the situation is even bleaker on the high seas where travel group Saga has just announced the suspension of all cruises until the beginning of May, a decision which will cost it £15m in lost revenues and one that echoes an earlier two-month suspension by rival Carnival.
Looking further ahead the situation may not be as bleak as it first appears with Saga pointing out that bookings, as they stand, account for 80% of its full-year revenue target and that it has sufficient cash reserves to ride out the current storm.
Attempting to regain the initiative easyJet is aiming to win back grounded customers by waiving flight change fees, ensuring all passengers can switch flights online without charge in response to the evolving pandemic.
An already battered airline industry was dealt a hammer blow by president Trump on Thursday with the implementation of shock travel restrictions on 26 European nations within the border-free Schengen area.
Current estimates suggest that the US travel and tourism industry could be left nursing $24bn in losses this year as a result of reduced foreign travel.