16 April 2009

More pain on the way for Asia Pacific airlines

SYDNEY ââ¬' The decision this week by Qantas to slash its workforce, delay aircraft orders and retire aircraft is only the beginning for Asia Pacific airlines, according to aviation analysts.

Speaking to Bloomberg, Jim Eckes, managing director of industry adviser Indoswiss Aviation, said, ââ¬ÅâœAll airlines in Asia will have to make similar tough decisions.

ââ¬ÅâœWith traffic falling so rapidly, itââ¬â¢s going to be difficult for many airlines to make a profit.ââ¬~

Cathay Pacific and Dragonair traffic figures for March 2009 show a drop in the number of passengers carried compared to the same month last year together with another sharp fall in cargo and mail tonnage. ââ¬~¨Ã¢â¬~¨

In March, Cathay Pacific and Dragonair between them carried a total of 2,096,011 passengers - a fall of 3.2 percent compared to the same month in 2008 - while the load factor fell by 3.0 percentage points to 79.1 percent.

Cathay is expected to ask staff to take mandatory unpaid leave, with an announcement expected shortly.

Singapore Air, which gets 40 percent of its revenue from premium travel, is removing 17 percent of its fleet.

Itââ¬â¢s slashing work days and freezing management wages to save costs. The carrier is also negotiating with pilots to take unpaid leave.

Overall, traffic for Asia-Pacific carriers sank almost 13 percent in February, the steepest decline since June, according to the International Air Transport Association.

Qantas is being battered on several fronts. ââ¬ÅâœWeââ¬â¢re experiencing significantly lower demand, particularly in premium classes, and considerable price pressures with extensive sales and discounting by all carriers,ââ¬~ said CEO Alan Joyce.

Joyce continues to look warily at the growth of Middle Eastern carriers Emirates and Etihad flying into Australia.

He told Business Spectator, the Middle Eastern carriers have a lot of money. They have a lot of aircraft. Theyââ¬â¢re not making money, but theyââ¬â¢ve certainly got a lot of government sponsorship, so for us itââ¬â¢s always worrying when you have competition thatââ¬â¢s not on the same playing field that you are operating on.ââ¬~

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