Aviation industry in Asia Pacific region to recover by 2009 : IATA

Shanghai Pudong International Airport

The financial outlook of international aviation industry released  by the International Air Transport Association (IATA), suggests the traffic growth in the Asia Pacific region should recover by the next year.

However, the down side is that overall, the airline industry is however, heading into a period of over-supply, and airline load factors (and yields) will fall as a result, putting further pressure on the industry bottom line.

Worldwide domestic or international traffic (passenger and cargo combined) is expected to grow just 2.9% in 2009 (down from a previous forecast of 4.5%) on the back of 2.2% growth in capacity. This indicates that IATA expects that the world’s airlines will try to maintain load factors in the increasingly tough economic environment.

(Note that the writer – a sample of one – cannot find a seat in economy on Qantas or British Airways from London to Sydney until the week before Christmas. Which suggests the forecast may be correct in an overall sense but that there will be bright and dark spots.)

Asia Pacific is one of just two regions (with Africa) that are expected to report a better domestic or international traffic and capacity performance in 2009 than 2008.

Beijing Airport

This year has been extremely challenging for the region’s leading growth markets, China and India. In China overall regional traffic is expected to ease up from 3.3% in 2008 to 3.9% over 2009.

Much of the traffic growth may be capacity led (leading to rising pressure on earnings), as the region’s airlines take delivery of large number of aircraft over the next 18 months. Load factors are tipped to fall, as Asia Pacific airlines grow their capacity by 4.1% this year and 4.3% in the next year.

But, the bottom line of these changes is that strong capacity growth in both regions will accelerate the shift in the balance of power in global aviation towards Asia Pacific and the Middle East in 2009. Whether it will be profitable is a different equation.
Source: TravelBiz Monitor