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Asia's airlines stem decline

AFP | Fri, Nov 20 2009

They carried 11.1 million passengers in October, a slight improvement over the previous month.

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SINGAPORE (AFP) - Asia’s airline industry is beginning to pull out of a severe slump sparked by the global recession with signs that passenger numbers have started to recover, a regional body said Friday.

“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. “There are some encouraging signs that air traffic is starting to recover.”

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 but still below levels seen a year ago.

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 (S$6.7 billion) in 2008.

The International Air Transport Association (IATA) has estimated that the global airline industry will lose $US11 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. “Asia Pacific airlines are expected to report heavy losses this year.”

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, said Herdman.
“We still do not know whether the nascent recovery will be self-sustaining given the need for further adjustments and some more rebalancing of the global economy,” he said. “So airlines continue to face an extremely challenging operating environment... It will take time to nurse battered balance sheets back to full health.”

Singapore Airlines (SIA), an AAPA member, also sees a recovery under way.

“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,” said SIA chief executive Chew Choon Seng.

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 lost $158.8 million in the quarter to September, much narrower than its losses of $307 million in the previous three months.