Asian airlines go dicline

Asia's airline industry is pulling out of a slump sparked by the global recession with signs passenger numbers are rising, a regional body said Friday, but there were warnings a rebound will be slow. 'Hopefully, we are at least through the worst of the downturn,' Andrew Herdman, director- general of the Association of Asia Pacific Airlines, 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. 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 4.8 billion US dollars in 2008. The International Air Transport Association has estimated that the global airline industry will lose 11 billion US dollars 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, he said. Airlines 'continue to face an extremely challenging operating environment' and 'it will take time to nurse battered balance sheets back to full health,' Herdman added. 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 158.8 million Singapore dollars (114.5 million US) in the September quarter, from 307 million Singapore dollars 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. 'The question is will they come back in sufficient numbers, in sufficient strength for us to get our yields up.' 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 per cent 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. He said regional airlines are forecast to buy almost 9,000 airplanes worth 1.1 trillion US dollars over the next 20 years. The expected boom in orders will be fuelled by a need to meet rising air travel demand as the region's economic growth outpaces that of the rest of the world, he said. 'What this means is that the Asia-Pacific market both in terms of units as well as in terms of investments will be the world's largest marketplace,' he told a media briefing on the sidelines of the aviation forum.