Asian airlines stem decline; passengers rise: aviation body

“Hopefully, we are at least through the worst of the downturn,” Andrew Herdman, director-general of the Association of Asia Pacific Airlines (AAPA), said at an industry forum in Singapore. Figures released Thursday by the 17-member AAPA showed its airlines carried 11.1 million passengers in October, a slight improvement over the previous month. However, the figures were still below levels seen a year ago and despite signs of a recovery, the regional airline industry is still expected to turn in a collective loss for 2009, Herdman said. He did not give a figure for the losses expected this year but said the industry lost US$4.8 billion in 2008.

The International Air Transport Association (IATA) has estimated that the global airline industry will lose US$11 billion this year.

“In recent months, most airlines have seen load factors recover but low yields mean continuing losses for the industry and rising oil prices are certainly not helping,” said Herdman. Given the severity of the global recession, the worst since the 1930s, it will likely take some time for the industry's health to return to pre-crisis levels, he said.

Chew Choon Seng, chief executive of Singapore Airlines (SIA), an AAPA member, pointed to a recovery, saying: “The evidence, thankfully, is that we have passed the bottom of the downturn and that we are into a gradual recovery, month-on-month if not yet year-on-year.”

But he said risks remained, including the sustainability of the global economic recovery and worries the A(H1N1) flu virus will disrupt travel plans during the northern hemisphere winter season. SIA narrowed its losses to S$158.8 million (US$114.5 million) in the September quarter, from S$307 million the previous three months.

One of the key questions is whether demand for business- and first-class air travel, generally known as premium traffic, will return strongly, delegates at the forum were told.

“Premium traffic has stopped flying because businesses have stopped, that's what the recession is all about,” said Tony Tyler, chief executive of Hong Kong carrier Cathay Pacific Airways. Cathay Pacific, along with SIA, relies considerably on premium traffic, which has suffered after business executives cut down on air travel to reduce costs.

SIA, which draws 40 percent of its revenues from premium traffic, said it was already seeing some improvement in bookings for business- and first-class seats. For the long term, the Asia-Pacific looks set to become the biggest market for the world's aircraft makers, said Randy Tinseth, Boeing vice president for marketing, commercial planes.

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