Hong Kong airline Cathay Pacific has been ‘hit hard’ by the global financial crisis with a significant drop in the number of first and business class travelers.

Cathay’s chief executive Tony Tyler said that concern had shifted from the sky-high price of oil earlier in the year to weak passenger numbers.

He said, ‘In the first half of the year the problem was very much a cost crisis caused by runaway fuel prices, but now — in the midst of a global financial meltdown —  we are also being hit hard on the demand side.

‘The fact that revenue growth is stalling in our biggest market, Hong Kong, is a serious worry.

‘We are very exposed to the financial industry here and when banks, our biggest corporate customers, cut or even just curtail their travel plans we know we can expect to be in for a rough ride.’

‘I wish I had something more optimistic to say but the truth is that Cathay Pacific — and the airline industry as a whole —  has entered another very troublesome period.’
Source: AFP

Xi'an airport

After flirting with China’s airports for several years, Frankfurt airport operator Fraport has finally settled down in Xi’an, Shaanxi province, in northwest China.

Fraport Asia has acquired a 24.5″ stake in the new Xi’an Xianyang International Airport, one of the top 15 cargo airports in China and a fast-growing passenger destination, for $71.79 million. The other main partners in the venture is China West Airport Group with a 50.9% stake and China National Aviation with 24.5%.

The $293 million joint venture began operations early last month. It owns the infrastructure and associated land at Xi’an airport and is responsible for all airside facilities.

Robert Payne, an official with Fraport, said the Xi’an deal was clinched more than a year ago and was just awaiting approval from Beijing authorities.
More HERE.
Source: Cargonews Asia

In happier, earlier times

Some airlines will not survive the worsening global economic situation and there is an industry association warning that the next 12-18 months will be ‘extremely difficult’ for Asia-Pacific carriers.
The Association of Asia Pacific Airlines (AAPA) said in a statement passenger numbers are falling.

AAPA director-general Andrew Herdman said, ‘The biggest challenges right now are weakening passenger demand, particularly for first and business class travel, and continuing uncertainty about the global economic outlook.

‘The next 12-18 months will be extremely difficult times for airlines and some won’t survive the current crisis.’

He added that the association ‘remains extremely cautious about prospects for the airline industry in 2009′.

The hammer comes at the front end of the aircraft where the profit lies. That is where the numbers are declining the fastest.

An example:

British Airways said first- and business-class travel fell 8.65% last month as the credit crisis and economic slowdown led to job losses and tighter budgets in the City of London and on Wall Street. For an airline the profit is always in the front end.

AAPA is a trade association of international airlines based in the region.
Source: Straits Times

Hainan Airlines

Massport CEO Thomas Kinton Jr. said he expects a deal will be reached with Hainan Aviation Group soon and that direct, nonstop flights from Boston to China could be offered in 2010.

Kinton said Logan’s passenger numbers are down 5% to 6% this year and operations are down 20% percent compared to 1999 when landings and takeoffs were at its height.

The deal with Hainan Airline (which changed its name to Grand China Air) hinges on the ability to obtain Boeing 787 Dreamliner aircraft.

Boeing is backed up in the production of the 787’s because of the huge demand for the fuel-efficient jets.

The Boston Business Journal previously reported that the flights would be daily, non-stop 13-hour, 20-minute flights. The nonstop service from Boston to China was a key goal of Gov. Deval Patrick’s trade mission when he visited China last December.
Source: Boston Business Journal

Continental Airlines  will start daily direct flights between Shanghai and New York from March 26, 2009 as was planned.

Interior economy cabin Continental Airlines

The direct flights focus on businesspeople, aiming to adapt to the flexible arrangements of these passengers, who are able to fly to more than 60 cities in the US and Canada with the help of Continental Airlines’ aviation hinge in New York’s Newark Liberty International Airport.

Boeing 777-200 will be used for the route, and make one flight per day.

The company has already operated routes from New York to Hong Kong and Beijing.

The seat kilometer utilization of the two airlines is very high, about 80% to 90%. Continental Airlines will become the sole airway to operate daily direct flights between the world’s two important financial centers, as well as between China’s three largest cities and New York.
Source: Trading Markets

Wuxi

China Eastern Airlines has announced it will re-open the route between Wuxi and Hong Kong, state media reports.

The airline will resume the daily flights on 1 October using Airbus A320 aircraft.

The morning flight will leave Wuxi at 8.10am and the return flight will leave Hong Kong at 11.50am.

Wuxi (it can be translated as meaning ‘Without Tin’) is in Jiangsu province. It is split into halves by Lake Taihu. Wuxi borders Changzhou to the west and Suzhou to the east. The northern half looks across to Taizhou to the north over the Yangtze River, while the southern half also borders the province of Zhejiang to the south.
Source: China Travel View

The International Air Transport Association (IATA) warns of a ’significant downward trend’ in travel growth, as the economic environment worsens.

The industry body added the sharp decline in premium travel — those are the poeple who sit in the pointy end of the plane — most likely reflects a fall in business travel driven by the increasing weakness of major economies.

1. According to IATA, the Lehman Brothers’ bankruptcy ‘underlines the shrinkage of M&A and other financial sector activity, leading of course to a reduced number of business travelers from financial services’, while falling air freight volumes and lower business confidence ’suggests that world trade and travel from the manufacturing sector is also in decline’.

Source: Centre for Aviation

Empty seats

Some of Asia’s leading full-service airlines have reported worrying declines in passenger load factors in August, as demand continues to fail to live up to expectations.

The outlook for premium demand is also wilting as global financial turmoil spreads. Lower load factors and lower prices spell an uncomfortable mix, even if fuel prices are dropping.

SIA load factor dropped 2.2 percentage points year-on-year to 79.4%.
Air China’s international load factors deopped 13.8 percentage points to 69.9%.
China Southern had an 8.7 percentage point reduction in its overall load factor last month.
China Eastern’s international passenger numbers fell by 32.9%.
China Eastern’s domestic passenger dropped 21.5% last month and load factors dipped 8.7 percentage points to 63.6%.
Cathay Pacific, carried just 0.5% more passengers in August year-on-year, despite growing capacity by 14%.

The latest Asian Development Bank forecasts point to continued reasonably strong GDP growth figures in China and the International Air Transport Association (IATA) also expects traffic growth in the Asia Pacific region to recover somewhat next year.
Source: The Australian

Shanghai Pudong International Airport

The financial outlook of international aviation industry released  by the International Air Transport Association (IATA), suggests the traffic growth in the Asia Pacific region should recover by the next year.

However, the down side is that overall, the airline industry is however, heading into a period of over-supply, and airline load factors (and yields) will fall as a result, putting further pressure on the industry bottom line.

Worldwide domestic or international traffic (passenger and cargo combined) is expected to grow just 2.9% in 2009 (down from a previous forecast of 4.5%) on the back of 2.2% growth in capacity. This indicates that IATA expects that the world’s airlines will try to maintain load factors in the increasingly tough economic environment.

(Note that the writer — a sample of one — cannot find a seat in economy on Qantas or British Airways from London to Sydney until the week before Christmas. Which suggests the forecast may be correct in an overall sense but that there will be bright and dark spots.)

Asia Pacific is one of just two regions (with Africa) that are expected to report a better domestic or international traffic and capacity performance in 2009 than 2008.

Beijing Airport

This year has been extremely challenging for the region’s leading growth markets, China and India. In China overall regional traffic is expected to ease up from 3.3% in 2008 to 3.9% over 2009.

Much of the traffic growth may be capacity led (leading to rising pressure on earnings), as the region’s airlines take delivery of large number of aircraft over the next 18 months. Load factors are tipped to fall, as Asia Pacific airlines grow their capacity by 4.1% this year and 4.3% in the next year.

But, the bottom line of these changes is that strong capacity growth in both regions will accelerate the shift in the balance of power in global aviation towards Asia Pacific and the Middle East in 2009. Whether it will be profitable is a different equation.
Source: TravelBiz Monitor

Air China cabin staff

Passenger traffic at China’s three major airlines fell sharply in August from a year earlier as strict security measures for the Beijing Olympics deterred travel.

Air China recorded the biggest monthly fall in passenger numbers since 2003, state media reports. In August, the carrier served 2.77 million passengers, 16.6% less year-on-year. It is the sharpest decline since the outbreak of SARS in 2003. The load factor for August fell 13%, to 71.1%.

The Olympics are to blame, state media say, with tightened visa regulations and a cut in flights to Beijing for security reasons singled out as major reasons for the drop, though slower travel demand is affecting all global airlines.

The airlines began posting year-on-year traffic declines in May, hit by a devastating earthquake in southwest China and security steps ahead of the Games, which reversed a steady record of growth fuelled by China’s booming economy.

Although many industry executives have said air traffic was likely to recover after the Games, Air China also cited a weaker tone in the overall economy as a factor weighing on its weak August data.
Source: BizChinaUpdate and Reuters