|Pic Credits : telegraph.co.uk|
■ Human cases and deaths reported from MERS (Middle East Respiratory Syndrome) virus in Korea:
95 human cases of MERS have been reported in Korea and seven people have died from the virus so far (source: CNN News). Hong Kong has just issued a formal travel warning advising against travel to South Korea.
■ MERS was first identified in 2012:
MERS is caused by a coronavirus from the same family as of Severe Acute Respiratory Syndrome (SARS) that was triggered in 2003 in China. There is no cure or vaccine available for MERS yet. According to WHO (World Health Organization), the virus does not appear to pass easily from person to person unless there is close contact, such as providing unprotected care to an infected patient, which limits its impact. According to WHO, the total number of MERS cases globally is at 1,190, with at least 444 related deaths. Since there is no cure/vaccine available, the fatality rate is the highest for MERS at 37% vs 11% for SARS and 2% for H1N1. More than 85% of cases have been reported from Saudi Arabia as camels are likely to be a major reservoir host for MERS and an animal source of infection in humans.
■ MERS cases have been limited in each year since 2012:
Since the first MERS case in 2012, there was a total of 9 cases identified in 2012 (5 deaths), 167 in 2013 (64 deaths), 778 in 2014 (283 deaths) and 300 in 2015 so far (95 deaths) (source: World Health Organization and J.P. Morgan) with more than 85% of cases originating from Saudi Arabia. However, this did not have much of an impact on air travel demand as it is very uncommon for MERS to transmit from human-to-human as mentioned above. As such, we have not seen any meaningful impact on Middle East traffic in 2013-14 from MERS yet.
■ The impact on passenger traffic and share prices would be much severe if it becomes much more widespread:
Based on our channel checks, more passengers have cancelled their trips to South Korea. If this becomes more widespread like the Severe Acute Respiratory Syndrome (SARS) pandemic in 2003, the impact of passenger traffic and airline share price performance could be much more severe. There were 8,422 reported SARS cases and 916 deaths globally in November 2002-August 2003 (source: World Health Organization). In mainland China, there were 5,327 reported SARS cases and 349 deaths. In Hong Kong, there were 1,755 cases and 300 deaths. In Taiwan, there were 665 cases and 180 deaths. In Singapore, there were 238 cases and 33 deaths. (See Table 8 below.) Following the painful SARS outbreak experiences, the Asian countries are better equipped and more well-prepared to deal with such emergencies and contain the disease spread more effectively. As such, we may not necessarily see a repeat of such a pandemic.
■ Learning from the SARS outbreak which significantly hurt travel demand and airline share prices:
In 2003, the Asia Pacific airlines’ passenger traffic fell 10% y/y in March, 45% y/y in April, 51% in May and 36% in June. It took the airline sector 5 months for their passenger traffic to recover to pre-SARS levels. (Read Report)
Read Related Report
Tracking Transport - Impact of MERS on airlines
Wednesday, 10 June 2015
Wednesday, 10 June 2015
- UBS Global Research
Source : JP Morgan Asia Pacific Equity Research