Cathay Pacific premium revenues not back to pre-crisis levels; follows general global trend

Mr Tyler's comments echo those of Lufthansa Board Member Stefan Lauer who said the carrier's average yield on European services was "still at or below the level of the crisis year 2009". At the end of Sep-2010, Qantas CEO Alan Joyce similarly stated that while the carrier is seeing higher international yields of around 12-14%, it "still has a long way to go to get back to [pre-global financial downturn] levels". He added that the carrier's Asian yields are outperforming others, including Europe.

The comments by the individual carriers in the past fortnight echo those made by IATA in its Financial Forecast last month, in which the association stated that while there has been strong improvements in yields, they are yet to return to pre-crisis levels. A shift in the supply-demand balance will place pressure on yields again in 2011, with "gains likely to stall". IATA is expecting yield improvements of 7.3% for passenger and 7.9% for cargo this year, following slumps of around 14% in 2009.

Chinese carriers benefit from strong yuan; reduced fuel costs

In China, shares in Hainan Airlines, China Eastern and China Southern gained 2.4%, 1.0% and 0.4%, respectively, with Air China 0.9% weaker. The carrier's continue to benefit from a strengthened yuan (the value of the yuan reached a new high against the US dollar on 11-Oct-2010 of 6.6732 per USD) which reduces the cost of expenses such as fuel and aircraft purchases and debt and leasing expenses. China National Aviation Fuel Holding also announced that it has reduced the nation's domestic aviation fuel purchase price by CNY120 per ton to CNY5,490 per ton, effective 01-Oct-2010, under directives from CAAC.

Aviation fuel accounts for 40% of Air China, China Eastern Airlines and China Southern Airlines' total operating cost. Air China, China Eastern and China Southern, which consume up to 3.2 million tonnes, 3.3 million tonnes and 3.3 million tonnes, respectively, of fuel p/a, are expected to save up to CNY317 million, CNY277 million and CNY269 million, respectively, p/a.

JAL passenger traffic weakness continues in Aug-2010

Also in North Asia, unlisted JAL reported a 6% reduction in domestic passenger numbers to 3.5 million in Aug-2010, with international passenger numbers down 12% to 915,649 passengers, with passenger declines in all international markets expect Oceania (up 15% to 23,011 passengers). Passenger load factors for domestic and international services strengthened in the month, with domestic average load factor of 69.5% (+2.4 ppts) and international load factors 3.8 ppts stronger at 79.3%.

Asia Pacific selected airlines daily share price movements (% change): 12-Oct-2010

Source: Centre for Asia Pacific Aviation, Reuters & Financial Times