Asia-Pacific air carriers are expected to suffer a heavy blow next year with losses mounting to over $1 billion in 2009.
Unlike other regions, Asia-Pacific carriers are going to experience heavy losses, according to the International Air Transport Association’s (IATA) forecast made public today. The total loss to these carriers is estimated at about $500 million this year.
While global airlines are likely to have a soft-landing with less dramatic losses next year than initially feared, mainly due to continued drop in fuel prices, Asia-Pacific carriers are witnessing a different trend, IATA’s chief Giovanni Bisignani told reporters. IATA said its forecasts for next year were based on an average oil price of $60 per barrel.
The total losses in airline industry which are estimated at US $ 5 billion this year are expected to shrink to $ 2.5 billion next year, the director general indicated.
In sharp contrast, Asia-Pacific carriers which currently account for 45% of the global cargo market are disproportionately hit largely due to a precipitous drop in trade, he suggested.
The airlines industry is in a “sick” state, he said, adding, “the outlook is bleak.” Further, “ the chronic industry crisis will continue into 2009,” he said. “We face the worst revenue environment in 50 years.”
Early this year, IATA’s forecasts suggested a $ 4.1 billion loss for next year which was largely based on an oil price of $ 110 per barrel.
Further, international air traffic may decline three percent next year, the major drop since 2001. The IATA chief said it would be “another gloomy year” in 2009 with all regions except North America will generate losses.
Total revenues of the global airline industry are likely to drop by 6% to US $ 501 billion, against an estimated $ 536 billion this year, with air cargo traffic which accounts for about 35 of goods trade globally will experience sharp drop, Bisignani said.
The gloomy market conditions might force many airlines to reduce their orders for new aircrafts from Boeing and Airbus. “I would think that some of these orders and deliveries are likely to be at least deferred and some cancelled,” said IATA’s chief economist Brian Pearce.
Worse still, the downturn in the global airlines industry is expected to result in job losses between 300,000 and 400,000 next year.
