Asia airlines focus on restoring profit

CARGO            LOGISTICS

Asia - Asia carriers moved 11% less cargo last year and will be focused on rebuilding damaged balance sheets this year, the Association of Asia Pacific Airlines (AAPA) said.

In light of slow demand, airlines made corresponding reductions in cargo capacity, resulting in an average cargo load factor of 66.1%, almost unchanged from the previous year.

AAPA members carried 132.9 million international passengers last ear, 5.7% fewer than the previous year. Passenger traffic, measured by revenue passenger kilometres (RPK) fell by 6.5%, indicating particular weakness in demand on long-haul routes. Available seat capacity was reduced by 6.1%, resulting in a marginal drop in the average passenger load factor by 0.4 percentage points to 74.6%.

"We have been through downturns before, but none as severe as we've experienced in the past two years," said Andrew Herdman, AAPA director general.

"The business impact on airlines was even more dramatic as the collapse in corporate travel and intense price competition in a shrinking market saw airline revenues falling by 20-25%. Airlines responded by cutting capacity and redoubling efforts to reduce costs throughout the business, but were unale to fully offset the effects of sharply lower revenues.

"Meanwhile oil prices, representing our single biggest cost, fell back from their 2008 peak but remained extremely volatile. Overall, Asia Pacific airlines are expected to report significant losses for 2009, following similar heavy losses suffered in 2008," he said.

Looking ahead, Herdman said there are signs of recovery for the airline business, in line with the improving global economic outlook led by developing economies in the Asia Pacific region. "The cargo business is regaining some of its dynamism, and passenger demand on shot haul leisure routes within the region has already picked up, although business travel demand is recovering more slowly.

"Asia Pacific airlines remain focused on conserving cash, rebuilding damaged balance sheets, and carefully managing capacity to match demand as they work towards restoring profitability. Whilst we remain hopeful about future prospects, the outlook for 2010 very much depends on the sustainability of what still appears to be a rather fragile global economic recovery."

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