Demand for air travel could decline further despite signs of a more stable global economy, and prospects of a recovery this year look slim. -- PHOTO: AFP
AMID an 'unprecedented' crisis, an industry body has warned that airlines around the world could lose US$9 billion (S$13.15 billion) this year, with Asia-Pacific carriers being the hardest hit.
The latest forecast by the International Air Transport Association (Iata) is almost double the US$4.7 billion loss estimate made just three months ago.
US airlines cut flights to China
BEIJING - US AIRLINES are postponing or reducing
services to China as air travel slumps due to the global economic slowdown, state media reported on Monday.
Of the six non-stop China-US services approved in 2007, only Delta Air Lines' Atlanta-Shanghai route and Continental Airlines' Newark-Shanghai route are in operation, the China Daily said.
With Japan in a deep recession, and the growth markets of China and India hit as export-driven demand slows, Asian carriers are expected to lose US$3.3 billion - more than a third of the global total.
Speaking at the association's annual general meeting in Kuala Lumpur on Monday, Iata director-general and chief executive officer Giovanni Bisignani said the industry is in survival mode.
He said: 'There is no modern precedent for today's economic meltdown. The ground has shifted. Our industry has been shaken. This is the most difficult situation that the industry has faced.'
Comparing the current crisis with the aftermath of the Sept 11, 2001, terrorist attacks in the United States, Mr Bisignani noted that back then, industry revenues fell 7 per cent and it took three years to recover lost ground - even on the back of a strong economy.
Revenues for 2009 are likely to fall 15 per cent compared with last year, to US$448 billion. Faced with the travel slowdown caused by the global recession, airlines are dropping capacity, cutting pay and in some cases, axing staff.
The fall in demand for first and business class seats especially is hurting top-end carriers like Singapore Airlines and Cathay Pacific which depend on so-called premium traffic for almost half their revenues.
To cope, SIA will, during the course of the current financial year which ends March 31, take 17 aircraft out of its operating fleet. Staff have also been asked to take compulsory leave.
Worldwide, passenger demand is expected to shrink 8 per cent from 2.24 billion travellers in 2008, to just 2.08 billion travellers this year. Air cargo demand could slide 17 per cent to 33.3 million tonnes of freight.
The industry has done much to put a lid on costs, Mr Bisignani said, adding that initiatives such as electronic ticketing and self check-in, achieved cost savings of US$4 billion last year.
He urged governments and regulators to do more to liberalise the business, including giving carriers access to global capital which today is restricted because of limits on foreign ownership of national carriers.
