Airlines confident of rise in demand over next year

PUBLISHED : Wednesday, 25 April, 2012, 12:00am
UPDATED : Wednesday, 25 April, 2012, 12:00am


Top managers at global airlines are confident of an uptick in demand for cargo and passenger business over the next 12 months, a quarterly industry survey has found.

Airline industry confidence improved slightly this month on better passenger traffic figures over the last quarter, according to the survey conducted by the International Air Transport Association, which represents more than 230 airlines.

Top management in airlines were less pessimistic because economic conditions had improved in the US and emerging market economies remained robust, the IATA said.

Hong Kong International Airport, the busiest airport for international cargo, saw a marginal 0.4 per cent year-on-year drop in tonnage in March, compared with a 2.3 per cent drop in the first two months of this year and a 4.6 per cent decline for the 12 months last year, reflecting the improvement in international trade.

The percentage of airlines anticipating an increase in profit for the next 12 months rose to 36 per cent in April from 33.3 per cent in January.

Meanwhile, the percentage of respondents expecting a drop in profit slipped significantly to 36 per cent from 51.9 per cent three months ago.

The more positive view came after 56 per cent of the respondents saw an increase in passenger demand over the past three months, compared with 28 per cent in January.

The outlook for passenger demand also substantially improved, with 56 per cent of respondents saying they expected an increase in the next 12 months in April, from 27.8 per cent three months ago.

Outlook for cargo demand also bottomed out as those foreseeing a deterioration in tonnage dropped to 28.6 per cent from 43.5 per cent.

'We've started to see some positive signs in passenger demand but it's still too early to claim it's a sustainable recovery,' said Freddy Li, regional general manager Greater China & Korea at Qantas.

The percentage of seats sold improved year-on-year on legs from Hong Kong to Australia in May and June, but at the expense of profitability, Li said. 'We have to do more to lure passengers, such as price-cutting and more promotions.'

The survey found that airlines were more nervous about surging fuel costs as tensions in Iran could tighten the supply of oil. The percentage of respondents seeing an increase in costs in the next 12 months jumped to 55 per cent this month from 19 per cent three months ago.

Fears about oil prices and the drop in passenger yield have prompted Cathay Pacific to consider parking some older aircraft.


Fuel accounts for about one-third of airline costs. There are fearsthe Iran situation could affect oil supply and push up prices