While major carriers in Europe and North America showed a little more stability over the first half, traffic fell away sharply for Asian carriers as SARS struck, reports Mark Pilling
It comes as little surprise that the most dramatic shifts in traffic over the first half of the year have fallen to the major carriers of Asia-Pacific. Not even a shooting war has had the effect on traffic that Severe Acute Respiratory Syndrome (SARS) has brought about.
The traffic figures among the Asia-Pacific carriers that have so far reported for the half show an overall fall of 24%, led by the heavy falls in China. SARS has punched a serious hole in the balance sheets of carriers like Cathay Pacific and Singapore Airlines (SIA). "Clearly our passenger business has been badly affected by the impact of SARS, and will take some considerable time to recover," says Cathay Pacific finance director Robert Atkinson.
Both Cathay and SIA had looked set to cope with the effects of the Iraq War fairly comfortably, but the collapse in traffic caused by SARS in the second quarter more than wiped out the steady gains made over the first three months.
June rebound
The better news is that traffic was showing early signs of rebounding by late June, according to the Association of Asia-Pacific Airlines (AAPA). "Moves to restoring capacity have begun but at a controlled pace. Capacity is not expected to return to the pre-SARS level for the next two to three months unless demand picks up dramatically," says AAPA. Cathay, for example, aims to operate a full schedule by late September.
Carriers will be hoping that the Asia-Pacific market, with its built-in growth potential, coupled with some aggressive promotions, will be spurred back to life quickly in the second half. The prospects for a rapid bounce-back in North America are slim indeed. The Iraq War, and then SARS, quenched an optimistic start to the year when January traffic had actually risen. According to latest statistics from the USAir Transport Association (ATA) its members have posted a 2.9% fall in passenger traffic for the first half of the year, with the decline accelerating in the second quarter. The US airlines posted a fall of 6.9% in April alone.
On the whole, the USmajors pulled capacity back fast enough to show some modest gains in load factors. The major exceptions were the new-look Air Canada, which could not hope to compensate for a traffic fall of nearly 15%. A similarly reinvented US Airways also posted traffic down in double digits.
On the growth front, Alaska, America West and Southwest Airlines all posted modest traffic gains, while JetBlue Airways is still forging ahead with traffic up nearly 77% and capacity 75% higher.
By June, carriers were restoring some of the capacity suspended as a result of the Iraq War. Delta Air Lines, for instance, put back 4% of the 12% of system capacity it cut, although noted that demand had not returned to pre-war levels.
Like their North American counterparts, European majors were seeing reasonable traffic gains in the early weeks of the year before the Iraq War called a halt to growth. At worse, international traffic fell by 12.6% in mid-March, according to the Association of European Airlines. By late June, the recovery had started. Figures to date suggest that the European majors may have emerged with a modest traffic growth over the half as a whole.
Despite the market conditions, the only capacity cuts came from British Airways, Iberia and SAS, the latter being hit hard by weak intra-Scandinavian traffic.
Swiss shows the only major hike, but then it was only just building up its operations a year ago. With the radical fleet and network restructuring currently under way at Swiss, a large chunk of the capacity it added last year will be long gone by this time next year.
Source: Airline Business
