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Chiefs of major airline alliance say slump is ending

The heads of major Asian and European airlines said on Saturday the slump in travel demand caused largely by the SARS virus had reached its bottom, though recovery from the current industry crisis would be slow.

Airlines worldwide have been hit by a sharp decline in traffic resulting from the sluggish economy, war in Iraq and more recently SARS, which has decimated air travel to Asia.

But airline executives from around the world, all members of Star Alliance meeting in Washington to welcome US Airways into the group, said the demand slump appeared to be leveling off.

"There are indications over the last couple of weeks that the traffic [drop] has bottomed out," Singapore Airlines chief executive officer Cheong Choong Kong said. "Barring unforeseen circumstances, I think we have seen the worst."

The leaders of the world's largest airline alliance said they were evaluating ways to reduce costs to offset the industry weakness.

Singapore Airlines is set to cut jobs for the first time in its history because of the decline.

The European airlines, hit by increasing pressure from low-cost carriers as well, also said demand appeared to be on the mend.

"I believe that for most of the European carriers that we will see a recovery starting now," said Jorgen Lindegaard, the chief of loss-making Scandinavian airline SAS.

Juergen Weber, the head of Germany's Lufthansa, which was the most exposed to Asia of the European airlines, said he expected double-digit growth to China once the SARS virus was under control.

Austrian Airlines Group CEO Vagn Sorensen said that even as the volume of passengers flying was increasing, yields, or profitability per seat, were still under pressure and may never recover to previous levels as a result of the low-fare airline revolution in Europe.
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