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International Airline Group Warns of Severe Consequences to Trump's Travel Ban

By Lou Whiteman - Mar 12, 2020 at 10:31PM

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Some airlines could be driven to the brink by the latest round of restrictions.

An international travel group has warned that the latest round of travel restrictions put in place by the United States to counter the spread of the COVID-19 coronavirus could push some airlines to the brink, calling on governments to weigh the financial implications of new restrictions.

On Wednesday night, U.S. President Donald Trump announced plans to halt passenger traffic from Europe for 30 days beginning March 13. The ban applies to foreign nationals who have been in certain European countries within 14 days of their scheduled arrival in the U.S. It's similar to restrictions already put in place by Israel, Spain, and Kuwait.

A traveler wearing a safety mask at an airport.

Image source: Getty Images.

The International Air Transport Association (IATA), which last week estimated the novel coronavirus outbreak would cost global airlines more than $100 billion in lost revenue, said that these new, more severe restrictions were not included in that estimate. In a statement, IATA head Alexandre de Juniac called on governments to limit restrictions to what has been recommended by the World Health Organization, and to weigh the risk of permanent damage to the industry when considering bans.

Juniac said:

Governments must impose the measures they consider necessary to contain the virus. And they must be fully prepared to provide support to buffer the economic dislocation that this will cause. In normal times, air transport is a catalyst for economic growth and development. Suspending travel on such a broad scale will create negative consequences across the economy. Governments must recognize this and be ready to support.

European airlines were already showing signs of stress before the ban was announced. Last week, British domestic carrier Flybe collapsed and transatlantic discounter Norwegian Air Shuttle said Thursday it would suspend 4,000 flights and temporarily suspend about half of its workforce.

U.S. airlines are generally thought to be in better shape than international carriers, but if nothing else, their balance sheets are sure to be bruised by the outbreak-related travel slowdown and restrictions. Shares of U.S. carriers have all fallen dramatically in recent weeks, with shares of American Airlines Group (AAL -2.69%), United Airlines Holdings (UAL -0.73%), Hawaiian Holdings (HA -0.62%), and Spirit Airlines (SAVE 6.38%) all down more than 50% year to date.

In 2019 there were about 200,000 scheduled flights between the U.S. and countries included in the latest travel plan, equivalent to about 550 flights per day. About 46 million passengers flew on those routes last year.

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Stocks Mentioned

United Airlines Holdings, Inc. Stock Quote
United Airlines Holdings, Inc.
UAL
$35.42 (-0.73%) $0.26
Spirit Airlines, Inc. Stock Quote
Spirit Airlines, Inc.
SAVE
$23.84 (6.38%) $1.43
Hawaiian Holdings, Inc. Stock Quote
Hawaiian Holdings, Inc.
HA
$14.31 (-0.62%) $0.09
American Airlines Group Inc. Stock Quote
American Airlines Group Inc.
AAL
$12.68 (-2.69%) $0.35

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