Asia Pacific to account for one-third of global airline loss

The Asia-Pacific region will account for more than one-third of the global airline losses this year, which is likely to touch a whopping $9 billion, due to recession impacting industry's bottom line.     

According to the International Air Transport Association (IATA), Asia-Pacific carriers will post the largest losses at $3.3 billion as the region's largest market Japan is in deep recession, while the global airlines will lose $9 billion this year.     

"The growth markets of China and India are delivering major losses as export-driven demand slows. This is a slightly better performance than the $3.9 billion that the region's carriers lost in 2008," IATA said in a statement.     

Explaining the reason behind the massive fall, IATA Director General and CEO Giovanni Bisignani said: "There is no modern precedent for today's economic meltdown. The ground has shifted. Our industry has been shaken. This is the most difficult situation that the industry has faced."     

The worldwide financial crunches and the ongoing recession has impacted the industry, which last year registered a loss of $10.4 billion, revised downwards from a earlier loss projection of $8.5 billion.

Bisignani further said total revenue for the airline industry would decline 15 per cent in 2009 to $448 billion, from $528 billion last year. This is higher than the seven per cent drop in revenue after the September 11 attacks.     

Carrier in all regions are expected to report losses in 2009. North American carriers are expected to show a loss of $1 billion, European ($1.8 billion), Latin American ($900 million), African ($500 million) and the Middle East, despite strong traffic growth, will see losses deepen to $1.5 billion.     

IATA said Air cargo demand is expected to decline 17 per cent when airlines forecast to carry 33.3 million tonnes of freight this year as against to 40.1 million tonnes in 2008.     

Passenger demand is expected to contract by 8 per cent to 2.06 billion travelers compared with 2.24 billion in 2008. "The revenue impact of falling demand will be further exaggerated by large falls in yields — 11 per cent for cargo and 7 per cent for passenger," IATA said.     

Going forward, Bisignani urged governments across the world to avoid protectionist policies. "The forces of de-globalization are gathering strength. World trade is already suffering with a 15 per cent downturn," he said.

"Protectionism is the enemy of global prosperity. In the 1930s, it prolonged the recession. And it will not work today. To build a strong global economy, we must fight hard to keep the world trading," he said.     

The major risks that impacted the airline industry were — fuel bill, efficiency gains, stronger cash reserves, careful capacity management, strong partnerships.