Will airlines regain altitude?

Globalization has been a boon for the airline industry, which has flourished as nations opened up to one another over the past 40 years.

Now business people and tourists can crisscross borders as easily as they travel close to home. Unfortunately, as the cascade of infections around the globe can attest, so can the coronavirus.

That frictionless movement has expanded the reach of the crisis to an unprecedented level. The lethal outbreak had been a multi billion-dollar headache largely for airlines in China and the rest of Asia until late February. Since then, the fear of flying has followed the virus westward, striking some of the biggest U.S. and European carriers. From Qantas and Cathay Pacific in Asia, to Lufthansa and Air France-KLM in Europe, to United and American in the U.S., airlines all share the common problem of virus-sapped bookings.

Amid the sudden plunge in global demand, commercial air traffic is poised to fall 8.9% this year, according to Jefferies Financial Group Inc. That would be the biggest decline in the 42 years of available data stretching back to 1978, dwarfing the impact of the Sept. 11 terrorist attacks. “The industry is facing its biggest challenge in modern aviation history,” says Yu Zhanfu, a partner at consulting firm Roland Berger in Beijing.

As government advisories, travel bans, quarantines, and growing worries about being confined at 30,000 feet for many hours seated next to a possible virus carrier drain customer demand, airlines are responding by making massive cuts along their routes. Lufthansa is cutting its schedule by as much as 50%. United chopped its April domestic schedule 10% and reduced international flying 20%. Delta will cut domestic capacity as much as 15% and its international flights 25%; American will decrease foreign flights by 10% in the peak summer season.