Source: Channel NewsAsia Author: May Wong 10/02/2009
Subject Concerned: Opinion Airlines Aviation Fuel
Industry players said on Oct. 2 that the performance of the aviation industry in the third quarter was sluggish and it will likely only return to full recovery in August 2010.
According to the International Air Transport Association (IATA), passenger load factors improved by 1.2 percentage points to 80.9 per cent year-on-year in August. And in July, the airlines filled 80.3 per cent of their seats - the same figure compared to a year ago.
However, declines were recorded prior to July, with the passenger load factors in June down 2.3 percentage points year-on-year to 75.3 per cent, and in May down by 3.3 percentage points year-on-year to 71.2 per cent.
Although the improving trend might bring good news for airlines, analysts warned that oil prices still remain relatively high.
"So even if traffic and passenger numbers are improving, airlines still have to bear a lot of costs in terms of the number of aircraft that they have put out of their fleet because of the decline in traffic and so on. It is improving but not enough to cause a celebration for many of these airlines," said Shukor Yusof, aviation analyst, Standard & Poor's.
"People like British Airways have considered changing their strategy from having perhaps all business to maybe somewhere between economy and business, a super economy class for example. These are some of the things that airlines around the world are looking at," he added.
According to Leithen Francis, the deputy Asia editor at Air Transport Intelligence, Garuda Indonesia may report a profit in the third quarter of this year. He added that Malaysia Airlines could possibly make a profit, but Thai Airways will most likely continue to report losses.
"I think Q4 can look really promising because Q4 last year was really a bad quarter as the fallout came in September. The only concern is the increase in fuel prices. Some airlines have reported some good profit figures because they've made money on fuel hedging. But I think for other airlines, the increase in fuel prices is going to really hit them," said Mr Francis.
With China being the fastest growing aviation market right now, analysts said that it might serve the regional airlines well to form an alliance with Chinese carriers, in addition to realigning their strategies.