Worst may be over for Asian airlines but losses continue: IATA

Last Updated: Friday, October 30, 2009 - 16:39

New Delhi: The worst may be over for the Asian airlines including those from India, which have recorded the "most significant improvement" in passenger traffic last month by recording positive growth against negative in August.

Bucking the global trend, "Asia-Pacific carriers recorded the most significant improvement from minus 1.6 percent in August to plus 2.1 per cent in September," the International Air Transport Association (IATA) said.
The overall passenger demand "is now 5 percent better than the low point reached in March 2009, but 6 percent below the peak recorded in early 2008," IATA said in its latest global air traffic analysis.

Noting that three factors were influencing this growth, the IATA report said, while the government`s stimulus packages in the major economies were driving production increases, the Asia-Pacific region`s banking system was relatively strong and its consumers were not as burdened by debt as those in Europe and the US.

However, "it is far too early to call this a recovery. The worst may be over in terms of the fall in demand, but yields continue to be a disaster and costs are rising. The airline industry remains firmly in the red with a fragile business environment," IATA Director General and CEO Giovanni Bisignani said.

By contrast, European carriers saw a deterioration in demand from minus 2.8 percent in August to minus 4.2 percent in September. This partly reflects a loss of market share by network carriers on short-haul routes to low-cost carriers.

More significantly, there was a "deterioration" in demand on long-haul routes, the IATA analysis said.
For routes to Asia, this appeared to be the influence of "home-carrier-bias", which has seen Asia-Pacific airlines reap the benefit of stronger regional economies.

On routes to North America, lower demand was related with the dip in consumer and business confidence in economies on both sides of the North Atlantic. North American airlines saw demand largely unchanged at minus 2.4 percent in September compared to minus 2.5 percent in August.

While the Middle Eastern carriers experienced an 18.2 percent year-on-year increase in September, their Latin American counterparts experienced a jump in demand from minus 2.3 percent in August to plus 3.4 percent in September based on a relatively robust regional economies, the report said.

Noting that rising costs remained a concern, it said as airlines adjusted capacity to match demand, aircraft are flying fewer hours, which was in turn raising non-fuel unit costs.

At the same time, oil prices have risen to above USD 75 per barrel, considerably higher than the USD 43 level at the start of the year, the IATA added.

Bureau Report



First Published: Friday, October 30, 2009 - 16:39

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