Asian carriers hit by plunge in premium travel

Asian carriers hit by plunge in premium travel

Singapore: Casey Chan used to fly business class every other month to oversee his company’s electronics factory in China until late last year, when orders from Western buyers suddenly started drying up.

His employer, a Singapore-based multinational firm that makes components for items such as DVD players and digital cameras, is unlikely to put him back on a plush airline seat, with fine wines on demand, anytime soon.

“My company is keeping a very tight control on cost now," said the Singaporean chief engineer, who has not flown to China since January.

Business-class travel cutbacks by Chan and thousands of other executives as a result of the global financial crisis have dealt a major blow to airlines, with those in the Asia-Pacific region particularly hard hit, industry experts said.

Carriers such as Singapore Airlines Ltd are seen as the most vulnerable because they have poured extensive resources into business- and first-class travel, known as premium traffic. This is where Asia-Pacific carriers earn the bulk of their revenues and the dramatic fall in demand is devastating their bottom lines.

“It will be very difficult for any Asia Pacific carrier to make money in 2009," said Derek Sadubin, chief operating officer with the Sydney-based Centre for Asia Pacific Aviation. Premium traffic demand is down by 15-30% on average depending on the route, he added.

The International Air Transport Association (Iata) last month predicted the region would emerge as the world’s worst hit in 2009, with collective losses of $1.7 billion (around Rs8,449 crore).

Giovanni Bisignani, Iata’s director general, said last month that “2009 is shaping out to be the toughest year that (the) airline industry has ever faced". He noted that the three biggest Asian economies—Japan, China and India—are all badly affected by the global downturn.

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