Asian airlines facing 'worst' crisis

NICHOLAS IONIDES / SINGAPORE

Continued spread of SARS virus also hitting manufacturers as carrier fleet expansion plans are put on hold

The Association of Asia Pacific Airlines (AAPA) has issued a dire warning that its member carriers are facing their worst crisis ever and is seeking urgent relief from airports, air traffic service providers and suppliers.

As the Severe Acute Respiratory Syndrome (SARS) outbreak continued to spread last week, more Asian carriers announced drastic cuts following a severe drop in demand.

Aircraft manufacturers and other suppliers are also starting to feel the effects, as airlines put expansion plans on hold. Cathay Pacific was considering orders for the Airbus A380 and other types, but has frozen all acquisition studies.

Singapore Airlines (SIA) is another that has deferred fleet modernisation plans, having grounded its three remaining Airbus A340-300s, which are being acquired by Boeing, and in June will take its nine Airbus A310-300s out of service - five months earlier than planned.

"The spread of SARS has created the worst-ever situation faced by the airlines of the Asia-Pacific region," says AAPA director-general Richard Stirland.

"Unlike a war situation or an economic downturn, the malaise is very focused on certain countries and cities and the airlines operating from and to those destinations are suffering disproportionately."

The AAPA's member airlines have together cut around 650 weekly flights in April. Some in SARS-affected areas, such as Hong Kong-based Cathay and Dragonair, and SIA, are suffering particularly badly. Cathay has cut more than 40% of its passenger services, Dragonair around 50% and SIA 20% as demand has plummeted since the middle of March. Cathay and SIA have reported sharp drops in load factor for March and warn that April traffic results will be far worse, although they say cargo demand remains healthy.

Asia has been hardest hit by travel fears and government advisories calling on their nationals to avoid visiting affected areas.

The AAPA, which represents 17 airlines in Asia-Pacific, says it is "vital to the survival of the existing air transport industry" that charges are reduced. It also wants suppliers "to take a realistic look at prices and payment terms in the light of the catastrophic situation".

Senior Airbus executives are playing down the seriousness of the virus, with chief executive Noel Forgeard saying that it is "extremely overstated by the media".

Executive vice-president customer affairs John Leahy believes the impact "will be relatively short term - it's mass hysteria".

Last week Cathay, which earlier this month issued its first-ever profit warning, was forced to deny reports that it may have to ground all its aircraft if daily passenger numbers continue to fall.

Source: Flight International