China’s struggle with coronavirus outbreak hits global travel

Several airlines and cruise companies have canceled routes to China, Walt Disney Co. has temporarily closed its two theme parks in China and the Chinese government is prohibiting travel from the Wuhan region because of a coronavirus outbreak that has already killed more than 100 people and infected thousands more.

As the most populous nation in the world struggles to contain the outbreak, travel and tourism experts worry that the virus — besides becoming a global health threat — could play havoc with surging multibillion-dollar global travel and tourism industries unless the illness can be contained quickly.

The outbreak comes at a particularly inopportune time as China recently began to celebrate the Lunar New Year, one of the most popular travel periods in the country. China has become one of the world’s fastest-growing sources of international travel because of the expansion of the Chinese middle class with money to spend and a taste for international adventure.

The Centers for Disease Control and Prevention warned Americans to avoid all nonessential travel to China because of the new coronavirus. The U.S. State Department raised its warning on China to Level 3, which urges people to “reconsider travel.” The agency also has a Level 4 (“do not travel”) warning for Hubei province, where the disease was first identified in Wuhan.

CNBC reported late Tuesday that Trump administration officials told airline executives that the White House was considering suspending flights from China to the U.S., citing people familiar with the matter.

On Wednesday, American Airlines announced it would temporarily halt flights between Los Angeles and Shanghai and Beijing because of the virus. American will suspend flights Feb. 9 through March 27, according to the Associated Press. Delta Air Lines also cut daily flights to Beijing and Shanghai in half, down to 21 flights a week. Operations will be cut back between Feb. 6 and April 30, and includes L.A.-Shanghai flights.

United Airlines on Tuesday announced it would cut 24 flights between hub cities in the U.S. and China because of the coronavirus outbreak.
Citing a “significant decline in demand,” United said it is suspending flights starting Saturday through Feb. 8 to Beijing, Hong Kong and Shanghai.

British Airways and Asian budget carriers Lion Air and Seoul Air suspended flights to China while several other airlines — including Finnair, Hong Kong-based Cathay Pacific and Singapore-based Jetstar Asia — reduced the number of flights.

Various elements of the industry, including multi-billion dollar airlines and cruise companies and mom-and-pop travel agencies, are already feeling the pinch.

“We are very concerned that we have seen a lot of cancellations and closure of airports,” said Gloria Guevara, president and chief executive of the World Travel & Tourism Council, a trade group for the world’s travel industry. “Yes, we are concerned about the spread of the virus and to stop that spread as soon as possible but panic is spreading faster than the virus.”

She noted that previous virus outbreaks in Asia have inflicted financial blows of up to $65 billion on the travel and tourism industries.

“This could be a bigger hit if we overreact,” Guevara said. “It could be huge.”

In Southern California, some are already noticing a slowdown.

Albert Eng, the owner of Chosen Travel in Monterey Park, estimates that his travel agency business specializing in Chinese vacations is down about 95% from previous years. Travel to China increases in late January and early February to celebrate the Lunar New Year and other events in the spring.

“In the past, we had a lot of people inquiring about travel to Shanghai and Hong Kong,” he said. “But this year, no one asks. Everyone is scared of the virus.”

Shanghai Disneyland closed Saturday and Hong Kong Disneyland followed suit the next day “as a precautionary measure in line with prevention efforts taking place across Hong Kong.” Park management said both would remain closed until further notice.

Airlines that travel in and out of China are already absorbing a hit.

United is offering full refunds, even for nonrefundable tickets to travelers holding air fares through March 29 to Wuhan, the center of the outbreak. (Tickets have to have been bought by Jan. 21.) Travelers with tickets to Beijing, Chengdu or Shanghai may change the date of travel through Feb. 29 without incurring change fees.

Delta Air Lines is also waiving change fees for flights to Beijing and Shanghai through February.

Hong Kong-based Cathay Pacific earlier suspended flights to and from Wuhan until March 31, according to its website. The airline also is offering refunds and fee waivers on tickets to the city.

Fitch Ratings, the credit rating agency, issued a memo Tuesday saying the impact on air carriers is expected to be minimal but added that “a prolonged ban on traveling from and to China may have more negative implications” on airlines, depending on the severity and duration of the interruptions to international routes.

“China is one of the largest growth countries for air traffic, to which many Fitch-rated [airlines] have a significant exposure,” according to the Fitch memo.

The coronovirus is not the first outbreak to hit parts of Asia.

A trade group for the world’s airlines analyzed the effect on the airline industry of several previous illnesses, including Middle East respiratory syndrome in 2015 and the avian flu outbreak in 2013. The analysis, released last week, by the International Air Travel Assn. found that air passenger revenue dropped from 8% to 35% during the previous outbreaks but air travel returned to pre-crisis levels within nine months.

Still, the trade group cautioned that the latest outbreak could have a much bigger effect than the previous events.

Although air travel eventually returned to normal, “there are risks that this outbreak could cause a sizable disruption,” the group said

The global cruise industry had only begun in the last few years to recognize the growth potential from China and its estimated 83 million annual cruise passengers. The outbreak could slow that growth.

Over the last few days, Costa Crociere, MSC, Royal Caribbean and Genting Cruise Lines have suspended all cruise operations in mainland China.

Carnival Corp.’s Costa canceled sailings on the Serena for Saturday and Jan. 31; the Atlantica on Jan. 27 and 31; the Venezia on Jan 26. Sunday and Feb. 2 and the neoRomantica on Jan. 25 and 30 and Feb. 2. The cruise line issued a statement, saying passengers are eligible for a full refund or can choose an alternative sailing date before the end of the year along with a $50 onboard credit, according to Cruise Industry News.

MSC canceled its Jan. 28 departure aboard the Splendida from Shanghai while Royal Caribbean canceled its Jan. 27 sailing on the Spectrum of the Seas, also scheduled to depart from Shanghai, according to the Cruise Industry News site.

Genting’s Dream Cruises brand canceled a turnaround call in Guangzhou for the World Dream ship but will continue to operate from Hong Kong, according to a statement.

Other travel industry experts remain cautiously optimistic.

“As we head toward a busy period for business and leisure travel, all of the current expert advice indicates that travel in the U.S. can and should continue as normal,” Roger Dow, president and chief executive of the U.S. Travel Assn., said in a statement.