‘Asian airlines to be worst hit by slowdown’

Mumbai: The International Air Transport Association (IATA) said on Tuesday that the airline industry in Asia will be the ‘worst’ hit by the current global economic turmoil.

Of the $4.7-billion (Rs 23,500 crore) loss to be posted by the industry in 2009, Asia losses are pegged at $1.7 billion (Rs 8,500 crore), IATA said in its revised financial forecast.

Naming three key markets in the region Japan, China and India, the IATA’s Director-General, Giovanni Bisignani, said, “The largest market, Japan, is in deep recession with an expected 5.5 per cent drop in GDP. China is recovering domestically but international business is being held back by falling trade volumes. And India is suffering from slowing demand, high costs and poor infrastructure.” He was addressing a teleconference from Geneva.

Issues on hand

In some strong words specifically on Indian market, Bisignani said though the aviation market had great growth prospects and a lot had changed under the country’s current leadership, but (now) “we are going in the wrong direction”. He said delay and high costs involved in infrastructure development are “unacceptable”.

The air traffic control is still “weak”. If these issues are not fixed, it will become a “boomerang story”.

IATA had recently criticised a move by the private airport developers to levy airport development fees in Delhi and Mumbai.

IATA chief called 2009 as one of the “toughest years” for the global airline industry. A dramatic fall in revenues and demand for air travel-led IATA to revise its financial outlook for 2009. In its latest forecast, the losses for the industry have almost doubled from the industry body’s earlier forecast of $2.5 billion made in December last.

While the loss in revenues for the full year is pegged at $62 billion (Rs 3.10 lakh crore), it has projected 5.7 per cent drop in passenger traffic and a 13 per cent fall in cargo for the corresponding period. Bisignani said that carriers are not able to take capacity out fast enough to match demand. Overall the mismatch of demand and capacity will lead to yields falling by 4.3 per cent.

More India business stories

At $50 a barrel level, the industry’s fuel bill will be $116 billion. “The industry is in intensive care,” he said, with its size shrinking to $467 billion in 2009 against $530 billion in 2008.

IATA represents about 230 airlines comprising 93 per cent of scheduled international air traffic.

SEARCH