The continuing spread of coronavirus may lead to the bankruptcy of most airlines as early as May-end, said Centre for Asia Pacific Aviation, a leading industry advisory.

It added that a catastrophe could be avoided only if governments came together and coordinated to limit further damage.

"Cash reserves are running down quickly as fleets are grounded and what flights there are operate much less than half full," CAPA said in a statement on March 16.

And as governments impose travel restrictions, many airlines have probably already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants, it added.

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Nearly 5,800 people have died from the coronavirus that first broke out in China. About 1,60,000 persons have been infected.

"Depending on the extent of the spread in India - impact on Indian airlines with weaker balance sheet will be severe," Kapil Kaul, CAPA's CEO for South Asia, told Moneycontrol.



While the situation in India is not as grim as in other countries, he added,

"Reducing GST on air turbine fuel may be critically required, but this may not be enough to compensate for a sharp demand slump."

Recently, Civil Aviation Minister Hardeep Singh Suri had signalled that the government may announce a change on GST soon. "We are at a point where we need to bring aviation turbine fuel under GST and by and large, there is acknowledgement across the states to make it happen," he had said on March 14.

In India, the virus has resulted in two deaths, with 110 infected.

The Indian government has suspended tourists visas till April 15 and has asked people to limit travel within and outside the country.

Similar steps have been taken by several countries. Many in the Middle-East, including Qatar and UAE, have suspended flights.

Indian airlines, including IndiGo, Vistara and SpiceJet, have already seen a drop in bookings, and reports say up to 50 aircraft could be grounded.

CAPA has come down heavily on the government, for what it says is a lack of coordinated steps.

"While governments are grappling with the health challenges of coronavirus, it is clear that there is little instinct to act cooperatively...Each nation is adopting the solution that appears best suited to it, right or wrong, without consideration of its neighbours or trading partner," it said.

The advisory pointed out the example of US President Donald who announced cancellation of airline access to most Europeans without advising his European counterparts in advance.

"Even before the worst of this pervasive health attack has washed through, it is imperative that the world’s aviation forces – ICAO , the EU IATA , the regional aviation associations and the key aviation nations – start the dialogue towards cooperation and establishing a 21st century regime that will truly satisfy the needs of the world’s social and economic needs," it said.