Tue, Feb 02, 2010 page10

• IATA chief expects slow recovery for airlines

  TRAVEL SLUMP The association said that the global airlines industry saw revenues drop by US$80 billion last year and would take three years to recover

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  The global airline industry will take at least three years to recover from a travel slump caused by the worst recession in six decades, said Giovanni Bisignani, chief executive of the International Air Transport Association (IATA).

  The airline industry globally lost US$50 billion in the past 10 years, including US$11 billion last year alone. Revenues declined by US$80 billion last year, Bisignani said.

  “These numbers are really shocking,” Bisignani said in an interview in Singapore on Sunday. “We’ve had a terrible 10 years. It would take at least three years to recover the level of growth we have lost.”

  

  Workers carry a model plane into an Airbus A330-200F cargo plane at the Singapore Airshow yesterday. Asia’s largest aerospace and defense exhibition, which runs from today to Sunday, features 800 exhibitors from more than 40 countries.

  PHOTO: AFP

  Airlines worldwide suffered the worst drop in passenger demand since World War II last year, IATA said last Wednesday. The global travel slump has pushed carriers —including Singapore Airlines Ltd and British Airways PLC —into losses and forced Japan Airlines Corp to file for bankruptcy.

  “It’s going to be a bumpy road,” said Chris Tarry, an independent analyst in London, who has followed the industry for more than two decades. “A lot of capacity is going to come into the industry. Capacity will mean that prices and fares go down, so it will make it even more difficult for a recovery in profit.”

  Globally, airlines will probably post losses totaling US$5.6 billion this year, the trade group estimated. That’s about half of last year’s estimated US$11 billion deficit.

  Traffic, a measure of passengers flown multiplied by the distance traveled, dropped 3.5 percent last year, with declines exceeding 5 percent in Europe, North America and the Asia-Pacific region, said IATA, which represents 230 carriers.

  The economic slump and credit crisis have cost carriers two-and-a-half years of growth in passenger markets and three-and-a-half years in freight, so that this year will be “another spartan year” of cost controls and capacity caps, Bisignani had said earlier.

  British Airways, Europe’s No. 3 carrier, expects a “bigger loss” in the 12 months ending on March 31 than it had in the last fiscal year, chairman Martin Broughton said on Jan. 25.

  Singapore Airlines, the world’s second-largest carrier by market value, may have its first annual loss as a publicly traded company, the carrier said in July.

  Japan Airlines last month became Asia’s first major flag carrier to seek bankruptcy protection after four government bailouts failed to revive the region’s most indebted carrier.

  Passenger yield, or the average price a traveler pays to fly one kilometer, would remain “flat” this year and increase only next year, Bisignani forecast.

  While the industry’s worst loss to date was almost US$13 billion in 2001 following the Sept. 11 terror attacks, an US$80 billion revenue decline last year was “vastly bigger” than anything previously experienced, IATA chief economist Brian Pearce said.

  More airlines will go bankrupt, Bisignani said.

  About 34 carriers have gone out of business since 2008, IATA said.

  “I don’t think bankruptcies are over for airlines anywhere across the world,” Tarry said. “Although 2009 has been difficult for airlines, for some airlines, 2010 may be more difficult still.”
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