Source: Channel NewsAsia Author: Valarie Tan 03/18/2009
Subject Concerned: Opinion Airlines Human Resource
Airlines in Asia Pacific look set to cut more flights as demand continues to decline sharply. According to the International Air Transport Association (IATA), demand from high-value passengers remains weak.
IATA said there was a 16 per cent decline globally in travellers flying premium classes in January and the drop in Asia was the steepest - at 23 per cent.
For example, Singapore Airlines saw a 20 per cent decrease in passenger numbers in February compared to a year ago.
IATA said bookings for first and business class worldwide are falling as passengers trade down to economy. But that does not mean passenger loads in economy are holding up well.
With demand sliding, industry watchers said full service airlines, which are heavily reliant on business passengers, will have no choice but to further slash capacity.
Leithen Francis, deputy Asia editor, Air Transport Intelligence, said: "Normally an airline would cut capacity by single digit percentages. But with Singapore Airlines saying that they're going to decommission 17 aircraft out of about 100, we're going to see more double digit cuts in capacity."
Giovanni Bisignani, CEO, IATA, said: "We have to be faster in adjusting capacity. So far when we mention the numbers of January, traffic is down eight per cent and capacity is down four per cent. So we have to move effectively and more faster in adjusting capacity."
Analysts expect more airlines to report record losses as in the case of Hong Kong-based Cathay Pacific, whose losses totalled more than US$1 billion in 2008, its largest in a decade.
Airlines are already slashing ticket prices to stimulate demand, but industry watchers said jobs are clearly on the line.
Mr Leithen Francis added: "Airlines are sort of going through the process. They're cutting capacity, trying to limit workers' working week. So maybe there will be some airlines that will get to the part where they've exhausted all the avenues and they'll retrench staff."
Observers said the turbulence is only likely to end at the end of 2010. Airlines seen among the first to recover are those with a strong domestic market and benefiting from government stimulus measures.