Sat, Nov 27, 2004 - Page 10 News List

Aviation industry mostly confident about future

EXPECTATIONS Growth in Asia-Pacific markets has helped airlines to re-establish profitability, although oil prices, war and low-cost carriers could present problems

By Jessie Ho  /  STAFF REPORTER

The aviation industry is upbeat about the market outlook next year, but oil prices, war risks and the emergence of low-cost carriers are factors that may dampen the optimism, industry leaders said yesterday during the 48th Association of Asia Pacific Airlines (AAPA) As-sembly of Presidents in Taipei.

AAPA has 17 members based in the Asia-Pacific region, including the nation's two carriers, China Airlines (華航) and EVA Airways Corp (長榮航空), as well as Australian flag carrier Qantas Airways and Hong Kong's Cathay Pacific Airways.

"Overall, broad growth of Asia-Pacific markets has helped to re-establish profitability, and has given our member airlines renewed confidence in the future," Andrew Herdman, director general of AAPA, said yesterday.

"[This is] evident from the fact is that a number of Asia-Pacific airlines have been placing substantive orders for new aircraft," Herdman said.

Despite recovering from the Sept. 11, 2001, terrorist attacks and the SARS outbreak, the industry has been worrying about the soaring prices of crude oil and instability in the Middle East, which may again put the industry in the doldrums.

Nick Brown, senior vice president at AIG Aviation Inc, a US aviation insurance underwriter, suggested that carriers should be more meticulous when underwriting war insurance and oil-hedging plans.

Peter Harbison, chief executive of the Center for Asia-Pacific Aviation, highlighted the impact on the industry of the mushrooming low-cost, no-frills carriers, which are 25 percent or 50 percent cheaper than regular airlines.

In Europe, low-cost carriers grabbed 25 percent of the market, while the no-frills airlines accounted for 5 percent of air traffic in Singapore, Harbison said. The next target market for these carriers will be China, he added.

"The only limits on expansion are how quickly governments agree on new route rights," Harbison said.

To cater to this trend, US Assistant Secretary of Transportation for Aviation and International Affairs Karan Bhatia said the US is planning to deregulate the US aviation policy in the next four years.

Facing competition from budget carriers, as one such foreign carrier seemed to be interested in operating a Taipei-Singapore route, China Airlines said the impact is still limited.

Brian Chou (周國興), China Airlines' senior vice president of marketing, said that low-cost carriers need to cut costs by means such as using smaller airports to save on ground-service fees, although Taiwan has no alternative airports to facilitate this need.

Don Birch, president and CEO of Abacus International, a leading travel facilitator in Asia, said that in addition to using electronic tickets, the industry is considering the application of new technology to improve travel.

This includes using radio-frequency identification (RFID) systems in baggage tags to better track the flow of baggage, or using bar codes on boarding passes, which would allow passengers to print boarding passes at home, Birch said.

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