Economy

IATA projects rapid growth in APAC air traffic

14 Nov 2012 - {{hitsCtrl.values.hits}}

Barring drastic fuel price hikes, the aviation industry is expected to enjoy increased profitability over 2013, riding on a new wave of intraregional traffic in the Asia Pacific (APAC) region, according to Chief Economist, International Air Transport Association, Brian Pearce.

“In terms of passenger traf fic, t he Asia Pacific region has proven to be very important for the industry, particularly with a fall in traffic from Europe. As a result of a slowdown in China’s economy over this year, we have seen less traffic but there are strong indicators that over the next 10 years, the region will see rapid growth.”

“Growth will be spurred by a gradual increase in income levels. At present, average travel per person in Asia is low but as income levels rise, we expect that passenger traffic will increase significantly in the next 20 years.” Pearce said.

He made the comments during an interview with Mirror Business on the sidelines of the 2nd IATA Global Human Capital Summit, sponsored by Sri Lankan Airlines; the first IATA event to take place in the country.

Whilst passenger traffic continued to grow within the region, the industry’s air cargo sector did not fare as well, due to the economic climate in USA and Europe.

“Air cargo is a very important business for Asia which has become the manufacturing center for the world. However, since the emergence of economic issues in the US and Europe, demand for Asia’s exports has decreased and this in turn had a notable impact on air cargo.”

“In response to this trend, we have seen a lot of new trade routes being opened up, particularly between China and Africa, and also within the APAC region we are seeing some growth. Overall 2013 is expected to be a much stronger year for the industry and air cargo is also expected to show some growth,” he noted.

Pearce further observed that as the APAC region’s economies and aviation industries continued their current growth trajectories, the aviation industry within the region would also start to see some insulation from economic shocks generated in the West, although ultimately, due to the nature of the aviation industry, total insulation would not be possible. Energy costs will continue to be the key determining factor in the profitability of the aviation industry, which already sees as much as 30% of its operating costs arising out of fuel costs alone. “The airline industry is one of the most energy intensive industries in the world and therefore it is very sensitive to oil prices which unfortunately will continue to rise and inevitably make travel more expensive.” “Carriers have responded by looking to become more fuel-efficient, and this has succeeded to an extent. Today we can see that aircraft are twice as efficient as they were 15 years ago,” he said.

Improvement of air travel management will be another focus area for IATA, which has commenced studies on ways to straighten travel routes and thereby promote efficiency. “On average when a flight to Europe, will travel an extra 50 km due to unnecessary diversions, so we are working to try and straighten out routes but this is an on-going process and requires a lot of co-operation across many countries,” Pearce pointed out.

Climate change was also cited as another area of concern, particularly in the context of the implementation of stringent emission standards in Europe. “Climate change is an important issue for the aviation industry, and IATA is concerned about national and regional regulations which, when done in isolation, tend to have the effect of distorting competitiveness whilst still doing little to solve the issues of climate change. There needs to be a uniform global policy implemented and we expect this to take place around mid-next year.”

Economy

IATA projects rapid growth in APAC air traffic

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