February 27, 2020  ·  David Dixon

Coronavirus impact still evolving

The outbreak of coronavirus continues to evolve, along with the travel advice, and restrictions have been placed on all aspects of flight, including business aviation which are being updated almost daily.

This is déjà vu for me as I recall only too well the outbreak of SARS in 2002/2003 and the devastation this brought, especially to Asia. The difference today is, unlike 17 years ago, China was less integrated into the world’s economy. As such, the impacts were far more regional, and Asia was hit hard economically. Today, the world is a different place. China is the second largest economy having grown many times since 2002, supply chains are being impacted and travel is far more restricted than before. Millions more Chinese travel externally, so tourism and the hospitality industries will feel a huge impact.

In terms of aircraft manufacturing, Boeing, Airbus and engine maker Safran have all confirmed disruption due to factory and assembly line closures and travel restrictions. For the service facilities in China the work has slowed significantly, but the China owned/based fleet was in a slight decline mode before this factor emerged. It’s hard to say what the long-term impact will be as it’s simply too early.

If SARS is a pointer to the impact on business aircraft sales there were, in my experience, some buyers who were unconvinced they needed or wanted a private aircraft until the health threat changed everything. I sold a few arising from this problem. In that sense, it may not be all bad for the industry. Charter has seen an increase in requests, but restrictions on crews having been in certain countries complicates the situation.

Anyone’s assessment or understanding of the economic impact of coronavirus is still evolving, but ratings agency S&P has already cut its forecast for 2020 Chinese economic growth by 0.75. China has already instigated an economic stimulus drive, but that might have been brought forward by the coronavirus. If the business interests of aircraft owners come under pressure, one result may be some restructuring.

All events present their own challenges, this one is seemingly going more global than SARS and is becoming a worldwide, not only Asian, problem. We know it is certainly slowing economic growth. One thing for sure, most people now know where Wuhan is.

Hong Kong

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