Aviation industry sees break in the clouds

PUBLISHED : Monday, 31 August, 2009, 12:00am
UPDATED : Monday, 31 August, 2009, 12:00am

Next week will see the return of the Asian Aerospace International Expo and Congress to Hong Kong. The event will showcase the best that the aviation industry has to offer in the region and include more than 400 exhibitors.

Taking place from September 8 to 10 at the AsiaWorld-Expo, the show could not have come at a more crucial time and place for the industry, which has witnessed a sharp decline in passenger numbers and air cargo volumes as a result of the global economic downturn.

Airlines in Asia are no exception, with the Association of Asia-Pacific Airlines (AAPA) reporting that its member airlines carried 11.5 million passengers in July, 7.8 per cent fewer than in the same month last year, a promising rise from June's figure that showed 17 per cent fewer.

Focusing on some of the issues facing the industry will be more than 300 aviation business leaders attending the congress, which will take place alongside the expo.

'The expo and congress will be a major event and an opportunity to exchange ideas about the situation,' said Andrew Herdman, AAPA director general. 'More importantly, it will be an opportunity to look through the economic downturn and take a fresh look at what we see for the rest of the year and further into the future.'

The biggest areas to be hit recently have been business and first-class travel, and cargo which typically makes up about 20 per cent of revenue for most major Asian airlines.

International freight tonne kilometres in July were 11.4 per cent less than the figure for the same month last year, again an encouraging rise from the figures for June.

Mr Herdman explained that a decrease in passenger and cargo numbers had intensified competition among airlines to offer the best prices, but this has had to come hand in hand with lower yields.

'Premium traffic has been particularly badly affected,' he said. 'There are still individuals travelling in business class, but many companies have implemented austerity programmes and are making their people travel in economy rather than business.'

However, the news is not all bad and signs of a recovery may be starting to show. Anecdotal evidence, Mr Herdman said, was starting to suggest that some organisations in the region were responding to positive news coming from Asian economies and were beginning to relax their travel policies.

'Also, a couple of major banks have announced significant profits that have led them to restore travel privileges to their staff,' he added.

Figures for cargo are also showing signs of a slow recovery, with numbers bottoming out last December and showing a slow rise since then.

However, the region's heavy reliance on exports will mean that a full recovery will probably not come about until economies in Europe and North America begin to stabilise.

A major focus of the expo and congress will be on the mainland market. Part of the focus of day one of the congress will address the 'outlook for aerospace and aviation in China'.

Topics covered will include major developments on the mainland, including an overview of the establishment of the Airbus A320 final assembly line in Tianjin, a major step in the development of the industry in the region.

Other topics in this session will include a segment on the lessons learned in East-West partnerships, with a focus on the experience of having the fuselage for the upcoming Bombardier C Series commercial jet manufactured on the mainland.

The mainland's most ambitious commercial aerospace programme, the C919 aircraft being built by the Commercial Aircraft Corporation of China (Comac), is expected to launch in 2016. A mock up of the 150-seat aircraft will take centre stage at the expo, with Wang Wenbin, assistant general manager of Comac, speaking on day one.

'The mainland is a huge domestic market, second only to the United States in terms of size,' Mr Herdman said. 'The market has shown very strong growth this year after a disappointing 2008. We have seen a very strong rebound in the domestic market, which has really benefited Chinese carriers.'

Before the economic downturn, the global outlook for the aviation industry was for it to see growth of about 5 per cent, with predictions for Asia being the most positive.

'Quite frankly, I don't think this prognosis has really changed,' Mr Herdman said. 'The caveat is that if you don't survive the downturn, you don't get to enjoy the future growth.'

Ultimately, although short-term survival is a primary aim of all airlines - almost all of whom are losing money - Mr Herdman said that airline managers had to focus on long-term issues. Plans for fleets and maintaining a skilled workforce were essential factors that would enable airlines to see positive growth again once the industry started to pick up.