The new coronavirus outbreak could mean a reduction of $4-5 billion in worldwide airline revenue, the International Civil Aviation Organisation (ICAO) said on Thursday.
The UN agency reported that 70 airlines have cancelled all international flights in and out of China and 50 others have reduced their operations.
Preliminary estimates show this has meant a reduction of nearly 20 million passengers compared to expectations for the first quarter of 2020.
That figure equates to potential lost revenue of up to $5 billion, the agency said.
The virus has killed 1,483 people in China and infected more than 64,600 there. Overseas, nearly 600 cases have emerged in around 30 locations.
"Prior to the outbreak, airlines had planned to increase capacity by nine per cent on international routes to/from China for the first quarter of 2020 compared to 2019," ICAO said in a statement.
The reality has been a reduction in foreign airline traveler capacity of 80 per cent.
Japan looks to be hardest-hit from a reduction in Chinese air travellers in the first quarter, ICAO said. The country could lose $1.29 billion in tourism revenue, with Thailand not far behind at a $1.15 billion loss potential.
ICAO said the effects of the COVID-19 virus outbreak on the airline industry are expected to be larger than the 2002-2003 SARS epidemic because flight cancellations are more widespread this time.
In addition, China's international air traffic has doubled and its domestic air traffic increased five-fold in the last 17 years.
Chinese authorities have locked down Hubei province, the virus epicentre, and have restricted movements in several cities as part of an unprecedented effort to contain the virus.
Britain, Germany, the US, Japan and others have advised against travel to China.