IATA predicts Asian aviation to fare better despite turbulent year ahead


(eTN) – International Air Transport Association (IATA) has said it expects Asia’s economic giants China and India to lead the growth in Asia’s aviation industry despite a gloomy picture in world aviation.

“Asia’s aviation industry can fare better,” said IATA chief Giovanni Bisignani, speaking to delegates at an aviation conference at the Singapore Airshow. “While the whole region is full of promise, there are some very big challenges ahead.”
Asia is now “home” to some of the industry’s strongest carriers, best and newest airport infrastructure, according to Bisignani.

The Middles East is mounting a serious challenge to Asia, not only as a financial center, but as an aviation hub. “Dubai now handles 35 million passengers. Jebel Ali Airport will serve 120 million passengers a year, as much traffic as Changi Airport in Singapore.”

In total, the Middle East is spending US$38 billion on airport and aviation infrastructure. “The competitive challenge will be broad and competitive for market share and infrastructure.”

The global aviation industry returned to profitability in 2007 on revenues of $490 billion, according to IATA figures. The revenue cycle peaked in 2006, leaving airlines $190 billion in debt, said Bisignani.

It suffered a massive hemorrhage of losses amounting to some $40 billion following the September 11 aftermath attacks, leaving many carriers in debt.

“Tough times are ahead for the global aviation industry. Airlines may be out of intensive care, but the industry is still sick.”

With rising fuel bills eating into profitability, many carriers are in debt. Fuel costs account for 30 percent of a carrier’s operating costs and oil is now pushing $100 dollars per barrel. There are fears a recession is looming in the US, while the impact of the US credit crunch is yet to be felt.

Meanwhile, in another notch of confidence in the region’s future, Middle East-based Gulf Petroleum announced it has chosen Manjung in Perak state, Malaysia as its hub for the Asia Pacific region.

The oil and petrochemical refinery complex to be sited on a 400-ha site, is a consortium of investments from Qatar, Saudi Arabia, Bahrain, UAE, Oman and Kuwait.

Its total investment in the project will amount to US$5 billion, said Hamad Al-Delaimi, president of Gulf Petroleum at the MOU signing ceremony with the state government of Perak in Ipoh recently.

Phase one, expected to start within 6 months will involve an investment of $1.9 billion for the construction of an oil refinery capable of processing 150,000 barrels per day, to be followed by phase two involving an investment of $1.9 billion on its petrochemical project. Under Phase three, it will invest $1 billion on the construction of an oil storage plant.

The company plans to export 60 percent of its refined products from crude oil supplied by partner countries.

An integrated oil and gas company majority-owned by the Qatar royal family, Gulf Petroleum has interests in West Asia, North Africa and Europe.