Asia-Pacific region to become world's largest aviation market

15:04, April 09, 2010      

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Global airline industry has improved significantly since late 2009, but the whole industry is now still operating at a loss, and it would possibly lose 2.8 billion U.S. dollars this year. Speaking at launch function in Beijing, the International Air Transport Association (IATA) director general and CEO Giovanni Bisignani Thursday halved the industry's loss forecast for 2010 to 2.8 billion dollars as it had continuously contracted since mid 2008.

The profit of 900 million dollars is expected to be realized by Asia-Pacific carriers this year, and the region has now become the world's biggest aviation market. As a matter of fact, with 647 million passengers in 2009, the intra-Asian air travel market overtook North America as the world's largest in 2009, according to IATA.

The recovery of regional aviation industry has been significantly different, nevertheless. The continuous improvement in the state of the regional aviation industry has been attributed mainly to the economic recovery of emerging markets in the Asia-Pacific and Latin American nations, while the situation in North America and Europe is slightly behind.

Airline industry in the Asia-Pacific and Latin America will be able to profit in 2010. Despite the improved forecasts, the global aviation industry will still have reported net losses in the Europe, North America, Middle East and Africa, and the Asia-Pacific region, however, driven by China's rapid economic recovery, is expected to make a profit of 900 million dollars this year.

The rebound in global economy has brought more demand for the air transport industry. “Aviation has restored‘half of the lost territory'and it is moving in the right direction; and the demand is improving,”said Bisignani, adding that“we are more optimistic about the future, but still very cautious.”

The industry has been wise in managing capacity, Bisignani acknowledged. prices are beginning to align… Important risks remain, and oil is a wild card, and over-capacity is still a danger...

Nevertheless, he predicted that Asia-Pacific will account for a one-third share of global aviation sector; he also spoke highly of China's aviation industry, and data show that the number of passengers, who departed from and arrived in China, accounted for 38 percent of the Asia market last year, and this ratio would continue to increase to 45 percent by 2013.

Moreover, with the rapid growth of China's aviation industry over the past decade, the total number of aircraft rose from 480 to 1,400; the domestic market grew by 350 percent from 1.6 million seats per week to 5.7 million per week, and the number of seats on China's international flights also rose from 500,000 to 1.4 million per week.

The rapid development of China's aviation industry enabled the regional aviation market to overtake North America and become the largest global aviation market in 2009. Related IATA figures show 647 million people in the Asia-Pacific traveled by plane in the year, and the number of air passengers surpassed the number of their peers in North America for the first time. By 2013, this region will take a one-third share of the global aviation market.

At the time when the airline industry strives to combat global financial crisis, Bisignani noted, industry structural adjustment was very crucial and important. He also appealed to governments to abandon the outdated aviation industry control measures to address transport market access, pricing, liberalize airline ownership and solve other related issues, so as to promote industry growth.

Bisignani highlighted the IATA commitment to the promoting“green aviation”and re-iterated the carbon emission reduction target for the aviation industry: By 2020, the annual average fuel efficiency will increase by 1.54 percent a year; it will stabilize carbon emission and raise carbon neutrality from 2020 onwards and, by 2050, carbon emissions will cut by a half than in 2005.

Meanwhile, Iberia Airline in Spain and Britain's British Airways, the biggest aviation company in their respective countries, announced Thursday that they had signed a merge agreement, and the new company, called the“Air Group”, would be placed high on the world's airline merger list. British Airways would account for 55 percent of the shares, whereas the Iberia Airline would own a 45-percent stake.

The new company will have 408 aircraft to reach more than 200 destinations in approximately 100 countries with an annual capacity of 5,800 million seats and a yearly income of 15 billion euros, and it would be the Europe's third largest airline. The merger accord has to subject to the EU Competition Regulators for approval, and this merge is expected to complete by the end of 2010.

Furthermore, the CEOs of the United Airlines and the U.S. Airways, the third and the sixth large American airline, have been up front about their desire to merge with another airline, and it now appears that they are talking to each other, according to media reports in the United States. Once the merger agreement is reached, the new airline would be the second largest airline with their operational advantages to be integrated in both the trans-Pacific and domestic routes.

Their merge talks has sustained for a full decade. In fact, the two sides had reached a merger agreement back in 2001, which had to be revoked however, because there were union protests and the anti-trust department threatened to resort to legal proceedings against them.

By People's Daily Online and contributed by PD overseas resident reporters Wu Chengliang and Ma Xiaoning


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