Taiwan’s major airlines, China Airlines and EVA Air, reported further worrying declines in yields last month, further demonstrating the global economy has not bottomed and Asian carriers are dramatically discounting fares and freight rates to fill excess capacity. As oil prices hover around USD60 per barrel, both carriers are facing further deep losses in 2009.
EVA Air cargo yields and volumes down almost 30%
EVA Air, which relies on the freight market more than any other major Asian carrier, reported its cargo yield tumbled 29.8% year-on-year last month, while volumes were still down a massive 28.3% to 45,192 tonnes. The carrier’s passenger yield fell 10.3% last month – the third consecutive monthly decline – to just USD 5.6 cents per RPK.
EVA Air passenger yield growth vs freight yield growth: May-2008 to Apr-2009
China Airlines’ passenger yield slumped 10.9% last month to USD 5.4 cents per RPK, but discounting helped the carrier generate a load factor of 76.1% in April, up 0.7 ppts year-on-year.
China Airlines passenger yield growth vs freight yield growth: May-2008 to Apr-2009
Outlook: Searching for the bottom
Airlines around the region are searching for some bottoming of the economic downturn – and are resorting to dramatic discounting on the way down. One of the world’s best managed airlines, Singapore Airlines, suffered a rare first quarter operating loss as yields slumped, while US carriers have reported unprecedented reductions in international yields in April. Qantas reported a hammer blow on yields in March, while Air New Zealand has put 1,000 staff on a salary freeze as its yields deteriorated sharply in April.
China Airlines’ Chairman, Philip Wei, told Bloomberg earlier this week that the carrier would “do our best to turn a profit” with oil at USD60 per barrel, helped by an increased number of services to Mainland China this Summer. He added passenger demand was currently running around 7% below expectations, with traffic affected by the swine flu outbreak.