ASIA’S booming airline industry has led to high growth expectations among the region’s carriers but the failure of infrastructure development to keep pace could put a spanner in the works, cautions the Association of Asia Pacific Airlines (AAPA).
Speaking to journalists yesterday at the 57th Assembly of Presidents pre-opening in Hong Kong, AAPA director general, Andrew Herdman, said passenger traffic rises steadily at five per cent per annum with Asia-Pacific, South America and the Middle East seeing the fastest growth.
Passenger growth is strongest in the regional shorthaul markets served by narrow-body aircraft for two- to three-hour flights, Herdman commented.
Furthermore, many Asian airlines have placed massive aircraft orders in anticipation of future growth and for enhancing fuel efficiency. “People used to talk about buying (aircraft) in the dozens, but now you talk about buying 50, 100 (aircraft) at a time. It’s a good time to be an aircraft salesman,” quipped Herdman.
However, infrastructure development – from air terminals to runways to airspace management – must keep up, an issue especially critical for double-digit growth markets such as China, Indonesia and the Philippines.
He said: “The danger with (insufficient) infrastructure is that it doesn’t just hold you back, it’s a brick wall. If you don’t have the infrastructure, no matter how many aircraft you buy there comes to a point where you’re up against the wall in terms of bottlenecks of busy airspace or airport capacity.”
Regulatory issues are another area that could “put a drag on the innovation and healthy development of the industry”.
Despite surging passenger demand, revenues remain an elusive area for Asian airlines, particularly in a climate of high fuel prices.
“Margins are being squeezed (over the last few years) although they are supposedly bottoming out this year. That’s true for European and US airlines but Asian carriers collectively are still finding it tough; the profitability is not picking up and the outlook next year is still rather cautious as far as Asian airlines are concerned,” shared Herdman.
