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Asian airline crisis: “Tentative signs we may be through the worst” – AAPA

The Association of Asia Pacific Airlines’ (AAPA) Director General, Andrew Herdman, has suggested the worst may be over for Asian flag carriers, as latest traffic figures for April were “not quite as bad” as the deeply depressed first quarter. However, Mr Herdman cautioned that business conditions for airlines remain “extremely difficult”, with a combination of aggressive revenue-generating and cost-cutting initiatives “proving critical to riding out the ongoing economic storm”.

April traffic “poor”, but not as bad as 1Q2009

Preliminary figures released by AAPA show member airlines carried 11.1 million international passengers in Apr-2009, down 5.8% year-on-year. International RPKs terms, fell by 8.2% year-on-year, indicating the relative weakness in demand for long-haul travel.

AAPA RPK growth and ASK growth: May-08 to Apr-09

Overall seat capacity (ASKs) were cut by 5.4%, leading to a further 2.0 ppt fall in load factor to 72.3%.

AAPA passenger numbers growth and passenger load factor (%): May-08 Apr-09

Air cargo remains depressed

Air cargo demand remained depressed in April, with AAPA international FTKs down 21.9% year-on-year. Average AAPA international cargo load factor was a concerning 5.0 ppts lower, at just 62.8%. Bearish cargo yields from leading Asian carriers and similar depressed cargo reports from Asian hubs would suggest this will be a tough market for some time.

AAPA FTK growth and FATK growth: May-08 to Apr-09

Outlook: Continued challenges, but “tentative signs we may at least be through the worst”.

Mr Herdman concluded, “despite the slump in exports, some Asian economies are holding up reasonably well, with Mainland China seeing a strong rebound in domestic travel after a weak performance in 2008. Nevertheless, the outlook for the remainder of the year is one of continued challenges”.