You have to wonder if in airline boardrooms around the world that there are not a few people muttering to themselves. “We just cannot catch a break”. 

TWC had high hopes for the summer travel season, even in the face of the credit crunch.   Now we are not so sure.  Along with everyone else we have been watching the Swine Influzena reporting closely.  Now that we in the EU has it’s first confirmed case of Swine Influenza in Spain- where does that leave us?  

Is the problem as serious as is being reported?

It is important to point out that a “pandemic” can only be declared by the WHO when it infection rates reach what is called “Level 6″.   As of today, the WHO is reporting we are at a “Level 3″.

We simply don’t know, but what we do know most of the infection reporting there is the proven statistical formula used by several gov’ts that shows that at this point in a infectious epidemic, the numbers are probably being reported too low intially.  In general the reality could be up to 15% higher than reported.   The less developed the country and their healthcare infrastructure- the higher that gap between reported and reality will be.  

Is this like the SARS outbreak, and is the SARS outbreak a good financial model for this pandeminc? 

Our analysis says no.    SARS was contending with a small recession, a new military action in Iraq, and a travelling public still jittery from 9/11.  While there were signifigant downturns in the forunes of many Asian carriers at the time, and the ripple effect was felt accross the world.    

So, will the SARS outbreak serve as a financial model?  Probably not.  We are at a different point in global finance, and the effect is likely to be deeper and felt for longer than the SARS incident.

So what is the bottom line?

We beleive that the impact of the current Swine Influenza will be better on the health front, and worst on the financial front. 

From the Health Front, SARS helped us meet this challenge

SARS forces all governments to seriously consider a pandemic, and all important plans and pharmacuticals are in place to help some populations (in the UK we have enough doses to treat 1 in 4 citizens).  With improvements in eary diagnosis and general quality of medical care- we should not see the numbers killed that we have during past pandemics.

From the Financial Front, SARS has not prepared us for how deep this lowpoint may be

From a financial standpoint, well how can we not all take a brace position.  We are already standing at the abyss, and this could tip the balance for airlines and travel companies.   Even if governments and NGOs do not put out travel advice people will make their own choices. Most people may not want to take the risk. (Poland, Hong Kong, China, Japan are already advising their citizens not to travel to affected areas)

Ironically, the Swiss Pharmacutical company Roche, who manufactures one of the main retro-viral medications that gov’t stockpile, are finding their fortunes rise at the moment.

As we head off into this summer travel season, we beleive that the mix of financial crunch and some reserve over the potential pandemic that could last through June and July- people may just stay home.