Impact of swine flu worse than SARS?

Airlines could suffer a steep drop in international traffic due to the outbreak of swine flu, worse than that of the emergence of SARS in 2003. That is the message coming from aviation experts across the globe.

“I think it’s still a bit early to know what the impact will be on the global airline industry, but if swine flu does continue to spread, yes, there will clearly be a negative impact,” said AT Kearney associate director Bill McKnight.

McKnight went on to say that the degree of impact will be dependent on the rate and extent of the spread of the flu, but warned that its affects on the airline industry could be far worse than those felt following the outbreak of SARS.

“Several years ago, SARS had a serious impact on international air travel.

“This could be even worse, but again, it depends on how the spread of the flu develops,” McKnight added.

According to reports in Business Week, Standard & Poor’s Ratings Services also agreed the swine flu outbreak could have a similar impact on airlines’ revenues and earnings following the SARS outbreak six years ago.

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Fears about SARS triggered brief but substantial declines in passenger traffic and caused financial damage to certain Asian carriers, such as the troubled airline Cathay Pacific. In March, Cathay Pacific reported profit losses of over US$1 million in 2008, compared to a profit of almost the same amount in the previous year. The result is a record annual loss for the airline and as it continues to suffer at the hands of the economic climate, the threat of a global pandemic of swine flu could cause serious long-term damage.

“Though swine flu has not yet caused health problems on a similar scale to that of SARS, we believe airlines are at risk of suffering reduced traffic because of government-imposed quarantines and travellers’ fears,” said credit analyst Philip Baggaley.

At the start of the crisis some governments urged airlines to allow customers to rebook flights or change their destinations. Following changed advice from the UK Foreign and Commonwealth Office, British Airways almost immediately allowed its customers, due to fly to Mexico in the week following the outbreak, to make changes to their bookings if they no longer wished to fly.

“Customers can rebook to a later date or change their destination,” a BA spokesperson told Aviation Business.

In addition, regional airlines stepped up their risk assessments. Gulf Air quickly established a taskforce to closely monitor the spread of swine flu.

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