The deadly earthquake in Japan and ensuing nuclear crisis are expected to lead to a sharp short-term slowdown in air traffic in the country before improving in the second half of this year, the International Air Traffic Association (IATA) said on Friday.
Damage to fuel infrastructure facilities in Japan could also push jet fuel prices higher, IATA said.
“Japan produces 3 to 4 percent of global jet fuel supply, some of which is exported to Asia. Some of this refinery capacity has been lost due to damages caused by the earthquake,” it said. “This supply restriction could lead to higher jet fuel prices.”
PLUMMETING
Overall, the country’s travel demand is expected to fall sharply in next several weeks.
“A major slowdown in Japan is expected in the short-term. And the fortunes of the industry will likely not improve until the effect of a reconstruction rebound is felt in the second half of the year,” IATA chief Giovanni Bisignani said.
He said that the Japanese aviation market is worth about US$62.5 billion and makes up 10 percent of the overall industry’s revenues and 6.5 percent of traffic worldwide.
Most exposed to the crisis is its domestic market, which generates US$19 billion in annual revenues.
REGIONAL IMPACT
However, a slowdown in Japanese travel could also have an impact elsewhere.
Most exposed is China, where Japan makes up 23 percent of its international revenues. For Taiwan and South Korea, the corresponding figure is 20 percent.
“Many economists are suggesting that once reconstruction begins the economy will rebound, but the length of the current downturn will depend critically on developments in the nuclear power situation,” the IATA said.
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