'Dark years' ahead for Asian airlines

Asian airlines face bleak business in the next two years amid a global recession and must deal with the challenges or risk extinction, an industry conference was told today.    

Carriers from Asia and the Middle East, which are generally seen as having healthier balance sheets, will not escape the financial turmoil which has spilled over to affect the global economy, speakers at the conference said.    

"Looking ahead, I think we are facing, frankly, a couple of dark years for the aviation business," said Peter Harbison, executive chairman of the Centre for Asia Pacific Aviation consultancy.    

"The thing we all realise by now is this is not just another downturn," he told the Aviation Outlook Asia conference in Singapore.    

Harbison warned against airlines being complacent, saying any carrier that refused to take the challenges seriously would be at risk.    

"There is no airline in this region -- and that probably goes for most of the world too -- that can be confident they will still be here this time next year," Harbison said.    

"This is going to be a watershed, if it's not already, not just for the industry but for the global economy... Any airline that thinks otherwise is seriously at risk."    

Apart from having to cope with slowing travel demand, particularly in the lucrative corporate travel segment, airlines also must deal with volatilities in foreign currencies which will impact their hedging strategies, said Harbison.    

Currency instability "has created massive problems for airlines in terms of their risk management, in terms of their hedging," he said. "If that stays as an issue, it is going to continue to be highly disruptive for the treasuries of the airlines."