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IATA foresees growth to 2009 for airlines in Asia

"The growth is there, the issue is how we can make this growth into a profitable industry."

Giovanni Bisignani, chief executive officer of the International Air Transport Association

Singapore Airlines, Cathay Airways and Asia's carriers may post a 6.5 percent increase in traffic annually until 2009, as economic growth in the region boosts travel demand.

India and China, where traffic may expand as much as 10 percent this year, will lead the growth in international traffic, the International Air Transport Association's (IATA) chief executive officer Giovanni Bisignani said at the Asia Pacific Aviation Summit in Singapore yesterday.

Airlines' fuel costs in this year may surpass last year's US$100 billion, he said without giving details.

"The growth is there, the issue is how we can make this growth into a profitable industry," Bisignani said. "The solution is increasing efficiency of airlines, increasing the load factor and handling better capacity."

The increase in travel demand may help global airlines narrow their combined losses to about US$4 billion this year, from last year's US$6 billion, as the average price of crude oil rises to US$53 a barrel from US$48.

Asia-based carriers may increase their total profit for this year to US$2 billion from last year's US$1.5 billion, he said.

Improving performance by US carriers, which reported a combined loss of US$10 billion last year, as well as US$6.5 billion in cost savings from measures including electronic tickets may push the global industry to a profit of US$6 billion next year, he said.

Singapore Airlines, Cathay Pacific and other carriers have been increasing capacity to boost passenger and cargo traffic as economic growth and the emergence of discount carriers make travel more affordable.

Airlines worldwide will post passenger and freight traffic growth of between 5 and 6 percent this year, IATA said last month.

Airbus SAS and Boeing Co received a record of 2,057 net orders for planes last year, which will expand the global aircraft fleet by 5.7 percent over the next two years, compared with 7.5 percent in 1991 and 6.5 percent in 1999, Bisignani said.

"With new planes entering the fleet, we may face the problem of overcapacity as we did many years ago and this would affect the profitability of the industry," he said.

Losses at US airlines totaled about US$10 billion last year, while European carriers made a profit of US$1.3 billion for the year, said IATA, which represents 265 carriers.

The price of jet fuel surged to a record US$85.36 a barrel on Oct. 3, causing Singapore Airlines, Japan Airlines and other Asian carriers to report smaller profits or losses last year. Fuel, which rose 49 percent last year, accounts as much as 37 percent of total expenses for Asian carriers.

The world's passenger traffic grew by 7.6 percent last year, while Asian airlines reported 6.3 percent growth.

Asian airlines may move 8.5 percent more cargo a year until 2009 as demand for Asia's semiconductors and other electronic goods increase in the US and Europe, Bisignani said.

Hong Kong's passenger numbers last month rose 16 percent to 3.51 million, helped by the Lunar New Year holiday. Cargo volume rose 11 percent to 247,661 tonnes.
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