As you may know, I have recently been writing a column on Sri Lanka's Financial Times (FT) website. The following was sent to the Editor of the FT last week. Since the Aviation columns are published on Monday, he wisely held it back. This story was out of date within days!
SARS all over again?
Many readers will remember the outbreak of SARS (Severe Acute Respiratory Syndrome) in 2002, which affected East Asia quite significantly. Originating in southern China, the SARS scare lasted almost a year, with the virus infecting over 8,000 and resulting in 774 deaths in 17 countries.
A new mutation of the virus, dubbed coronavirus or 2019-nCoV for the moment, has again infected a number of people, this time centred on the city of Wuhan in Hubei Province, central China. The region, which has a population in excess of 57 million people, has been “locked-down” by the Chinese government. Over 7,000 cases of nCoV have been identified in China alone at the time of writing.
The primary difference between the SRAS outbreak in 2002 and today’s crisis is of course, China. Back then it was still a relatively isolated country, with most travellers transiting other places to get to China,. In fact, Hong Kong and Singapore, two of the most popular hubs at the time were severely affected by SARS. This writer remembers flying a Boeing B777 to Hong Kong with just five passengers on board – more than 300 empty seats.
Since then, China has transformed itself to being the world’s second largest economy, with huge numbers of passengers being carried to all parts of the world. The total number of passengers flying in and out of China (both domestic and international) was over 600 million in 2018, with more than 120 million of this number being tourists travelling outside of China’s borders.
What are the ramifications?
The effects of nCoV have already begun. Hong Kong’s airlines, especially mighty Cathay Pacific, have seen a 4% drop in traffic in 2019 – mostly due to the political unrest. The coronavirus will only make the pain greater.
Hong Kong Airlines, a privately owned carrier, has already been in serious financial trouble. This crisis could well see the demise of this airline.
China’s three giant airlines (see earlier FT column) carry over 30 million international passengers a year. They will likely be the most affected. The decision by British Airways to cancel flights to China has grabbed headlines, but with only one destination in the country (Shanghai) BA is a small player in the market. For the moment BA’s flights to Hong Kong are unaffected.
Effects on Sri Lanka
Over 260,000 Chinese tourists visited Sri Lanka in 2018, accounting for around 9% of the total. The national carrier has a market share of around 50-55%, which translates to over 100,000 passengers. The yields on this route are good, in excess of most other Asian destinations.
A sustained slowdown in arrivals from China will have a serious effect on the tourists industry, which has not yet recovered from the Easter bombings of 2019.