AVIATION

Asia-Pacific airlines to lead recovery

Asia-Pacific airlines are expected to spearhead the recovery in the aviation industry in 2010 due to improved economic conditions in the region, the head of an industry group said Friday.

“Economic conditions showed welcome signs of improvement in the latter part of 2009, with a rebound in international trade and renewed consumer and business confidence, led by strong growth ...,” Andrew Herdman, director general of the Association of Asia Pacific Airlines (AAPA) said.

“Positive sentiment has been maintained into the first quarter of 2010, and both cargo and passenger demand are close to returning to the levels seen before the recession,” he said in a statement.

Painting a bright outlook for the aviation industry which suffered two years of heavy losses, Herdman said he expected Asia-Pacific airlines to post better financial results this year.

“Provided the current momentum is sustained, Asia-Pacific airlines are poised to spearhead the recovery in the aviation industry, with an anticipated further improvement in financial performance for the year 2010 following two years of heavy losses,” he said. Herdman made the remarks after Asia-Pacific carriers posted lower losses last year amid falling fuel prices and effective cost control measures.

Airlines in the region faced an aggregate loss of 2.0 billion dollars in 2009 compared to 8.8 billion dollars the year before, AAPA said.

It said the combined revenues for Asia-Pacific carriers fell from 136.1 billion dollars in 2008 to 114.2 billion dollars last year while operating costs fell by 19.8 percent to 112.1 billion dollars.

“Asia-Pacific carriers were particularly hard hit by the sharp declines seen in the premium business travel and air freight markets,” Herdman said.

AAPA said fuel expenses, the single largest cost item for airlines which accounted for 29 percent of operating costs last year, dropped by 34.9 percent to 32.2 billion dollars in 2009 due to the fall in oil prices.

Herdman recently said Asia-Pacific airlines had lost an estimated 40 million dollars a day from the closure of European airspace due to ash clouds spewing from a volcano in Iceland.

Thousands of flights had been cancelled and hundreds of thousands of passengers were stranded worldwide.

AAPA groups 17 carriers in the Asia-Pacific region, including Singapore Airlines, Cathay Pacific, China Airlines and Australia’s Qantas.

AFP

Oman Air adds new destinations

Oman Air, the national carrier of the Sultanate of Oman during the first week of May will launch services between Muscat, capital of the Sultanate of Oman, and two new destinations in the UAE.

The carrier will offer passengers daily flights from Ras Al Khaimah and Al Ain marking Oman Air’s 34th and 35th destinations worldwide. Oman Air flies to two other locations in the United Arab Emirates: Dubai and Abu Dhabi.

Oman Air’s Chief Executive Officer Peter Hill says: “Ras Al Khaimah is the fourth largest emirate in the UAE in terms of area and population and is a growing leisure destination. Oman Air’s foray into this new destination is sure to open a new market both for inbound and outbound travellers.

With Oman Air’s daily service between Muscat and Ras Al Khaimah, the residents of this beautiful Emirate will surely enjoy the services of Oman Air.”

Oman Air’s CEO also added: “Al Ain, referred as the fourth largest city in the United Arab Emirates is also called the ‘Garden City of the Gulf’. The daily flights of Oman Air between Muscat and Al Ain will give the residents of Al Ain an opportunity to try the services of Oman Air.”

Currently, Oman Air flies to 32 destinations with Kuala Lumpur in Malaysia joining the network from May 1st. Going forward, Oman Air will commence flights to Lahore, Islamabad, Dar-Es-Salaam and Kathmandu and Milan will join the network in the winter schedule.

Market for business jets perks up

The market for corporate jets, which came to symbolize conspicuous consumption before the recession, is staging a timid recovery ahead of what should be a profitable future, analysts say.

The sector will be in the spotlight May 4-6 at a meeting of the European Business Aviation Convention Exhibition in Geneva, with experts debating prospects for an industry that before the crisis was worth about 20 billion euros (26 billion dollars) to the European economy.

The market for corporate jets shrank sharply between 2008 and 2009, when deliveries fell 24.3 percent as strapped companies imposed spending cuts and had trouble securing credit, according to US research company Teal Group.

In the previous five-year period the sector expanded by 17.2 percent.

“The good news is that the market has stopped falling and some of the leading indicators offer encouragement,” said Teal Group Vice President Richard Aboulafia.

“The bad news is that this a three-year downturn. The key driver, corporate profits, show only limited signs of a recovery.” Deliveries of business jets should not start to rise until 2012, he said.

For Max Kownatzki, an aviation expert at the Oliver Wyman research group, the recession of 2009, unlike that of 2001, “created a widespread public perception of business jets as symbols of ‘excessive and unreasonable’ spending, which led many companies to actually sell their aircraft as opposed to just cancelling existing business jet orders.” In North America, where US President Barack Obama publicly criticised the use of corporate jets at a time of crisis, deliveries plunged 39 percent in 2009.

“Business jets have always triggered emotional reactions,” said Oliver Fainsilber, also of Oliver Wyman.

“Public opinion often links them with a glamorous life style.... However, managers who travel on these jets do so because there is a real need and in most cases they have no choice.”

In a globalized economy, companies must look further and further afield for business opportunities, sending personnel to relatively remote locations little served by traditional airlines.

“The market remains extremely challenging but we are seeing tentative signs of some recovery in the fourth quarter,” Air Partner, a provider of private aviation services, said in a statement.

Phil Matthews, Air Partner director in Britain, added that “if we look at who is chartering we see that some of the big name banks and financial institutions are returning, although it is still very early days.” Manufacturers of business jets are also seeing an improvement. France’s Dassault reported a 50-percent jump in sales in the first quarter, when order cancellations fell to four from 27 in the first three months of 2009.

In the longer term, according to Aboulafia of Teal Group, “emerging markets... all offer strong macroeconomic growth rates, low business jet penetration levels, which should be conducive to a healthy growth in jet demand.”

AFP

Air traffic demand improves

The International Air Transport Association (IATA) announced that March 2010 international scheduled air traffic showed continued strengthening of demand.

Compared to March 2009, passenger demand was up 10.3 percent, while cargo demand grew 28.1 percent. Both are improvements from the 9.0 percent and 26.3 percent growth for passenger and freight demand recorded in February.

These are strong gains, but the data is being compared to March 2009, which was the low point for international air travel during the recession.

March results show that the pace of the upturn is strong. But the trauma of the recession is not over.

The industry has lost two years of growth, and passenger and freight markets are still 1 percent below early 2008 highs.

Nonetheless, the pace of improvement, based on an improving global economic situation, is much faster than anybody would have expected even six months ago,” IATA Director General and CEO Giovanni Bisignani, said.

IATA noted that the International Monetary Fund revised global GDP growth forecasts from 3.0 percent to 4.3 percent for 2010.

With a 78.0 percent load factor recorded in March, passenger load factors remain at record highs. While demand expanded by 10.3 percent in March, capacity increases stood at 2.0 percent, boosting the load factor and creating much tighter supply and demand conditions. Global capacity remains 3-4 percent below pre-crisis levels.

International freight markets are also experiencing tighter supply and demand conditions. The 28.1 percent improvement in demand outpaced the 5.3 percent capacity expansion in March. This drove freight load factors to 57.1 percent - the highest since November 2002 when international freight load factors stood at 58.8 percent.

Regional demand patterns continue to reflect the asymmetrical nature of the economic rebound.

Asia-Pacific carriers posted strong demand growth of 12.6 percent, against a capacity expansion of 1.3 percent.

Japan’s ANA posts annual net loss of US$ 610 million

Japan’s All Nippon Airways (ANA) reported Friday a net loss of 57.4 billion yen (610 million dollars) for the year to March, citing weak air travel demand, despite its cost cutting efforts.

The figure was smaller than the company’s own net loss projection of 65 billion yen announced in March.

ANA’s operating loss reached 54.2 billion yen, compared with an operating profit of 7.6 billion a year ago. Sales fell 11.8 percent to 1.23 trillion yen. The airline called the business climate “severe”.

For the year to March 2011, ANA said it expected to return to the black, forecasting a net profit of 5.0 billion yen and operating profit of 42.0 billion yen, on sales of 1.36 trillion yen.

High oil prices, movement in foreign exchange rates and Japan’s falling consumer prices continued to deteriorate business conditions “to an extent not experienced in recent years,” ANA said in a statement.

AFP