For some airlines, the Coronavirus outbreak may actually bolster profit, not inhibit it.
While the focus has been on service suspensions when it comes to airline-related Coronavirus news, there’s another side of the coin: cheaper jet fuel.
CNBC reports that jet fuel prices are near a two-year low. Although prices have slightly rebounded over the last week, jet fuel is 17% cheaper than this time last year.
For airlines that do not fly to China or have limited operations there, the Coronavirus has proved to be good news, at least on a short-term basis. Obviously, this depends upon controlling the virus sooner rather than later.
Take Air France, for example. The carrier flies to China and expects to take a €150 – €200 million hit in revenue due to Coronavirus-related flight cancellations.
But on the flipside, Air France expects to save €300 million on its annual fuel bill due to lower prices.
Jet fuel is traded on a global market and carriers with limited service to China or East Asia will find significant savings in fuel expenditures. Ironically, one of the world’s most profitable airlines, Delta, may greatly benefit from these cheaper prices precisely because its footprint in Asia has been dramatically scaled back since the Northwest Orient days.
This news is not anything to celebrate. Coronavirus has sickened more than 77,000 people and killed more than 2,000. Beyond the human cost, there will be a ripple effect in supply chains and air cargo demand as commerce in China faces continued curtailment. But some airlines will benefit. In fact, some may even benefit handsomely.