Asia-Pacific to drive airlines' return to profit, Iata says

PUBLISHED : Tuesday, 08 June, 2010, 12:00am
UPDATED : Tuesday, 08 June, 2010, 12:00am

Rising demand for air travel in the Asia-Pacific will help global airlines return to the black this year after losing nearly US$10 billion in 2009, the International Air Transport Association (Iata) said yesterday.

The recovery in the aviation market, which has been battered by a series of challenges over the past two years including the global economic crisis, terrorism, soaring oil prices and volcanic eruptions, will not be as strong in other regions.

Iata expects global airlines will make a US$2.5 billion profit this year from a previous estimate of US$2.8 billion in losses in March after air traffic grew at a faster pace in the second quarter. About US$2.2 billion of profit will come from carriers operating in the Asia-Pacific, while North American carriers will earn US$1.9 billion. European carriers, which have been hit by the bond crisis and the weak euro, will see US$2.8 billion losses in 2010, compared with US$4.3 billion in red ink last year.

'There is some cautious optimism,' said Giovanni Bisignani, director-general and chief executive of Iata, which has more than 230 airline members. He said global traffic was back to pre-recession levels with the percentage of seats sold climbing back to 80 per cent and carriers pulling out from the trough.

Air traffic is forecast to grow 7.1 per cent year on year worldwide in 2010 while cargo traffic will expand 18.5 per cent from 2009. In the first quarter, passenger numbers were growing at an annualised rate of 9 per cent while cargo was increasing 26 per cent. The surge in cargo demand comes off a very low base as retailers in the West restock their shelves.

The airline industry was still facing several challenges including overcapacity, labour disputes, airport fees, taxes and volatility in oil prices, Bisignani said. Excess capacity is an overhang for the industry with 1,340 aircraft due to be delivered this year.