Asia Expected To Lead As Global Airline Industry Returns To Profits

Following 6 years in the red, the global airline industry is expected to return to profits in 2007; Asia expected to become the world's largest aviation market by 2010.

SINGAPORE (AP) - After six years of losing money, the global airline business is expected to be profitable in 2007, a top aviation official said Wednesday, and Asia will spearhead the industry's future growth.

By 2010, Asia will become the world's largest aviation market, accounting for one-third of the world's air traffic, said Giovanni Bisignani, the International Air Transport Association's (IATA) director general and chief executive.

"Aviation is the world's most exciting industry and Asia is the region that is going to drive it forward," Bisignani said in a lecture. "Asia's growing importance is clearly defining a new leadership role in all aspects of the industry."

Bisignani said the Geneva-based IATA, the governing body that regulates international air transport, expects the global airline industry to make a combined net profit of $3.8 billion this year.

The industry had suffered six years of losses, amounting to more than $40 billion over that time, as airlines hit a lull in travel after the Sept. 11, 2001, terrorist attacks, high jet fuel prices and health scares like SARS.

European airlines would account for $2.4 billion of the group's profit forecast, while Asia-Pacific airlines would make up $1.7 billion. The profits are largely due to higher traffic.

But North American airlines would likely lose a combined $600 million this year, the group said, citing high restructuring costs.

Bisignani said Asia can lead the industry by improving its standards in three areas - technology, policy and environmental protection through better fuel efficiency, and urged governments to develop a regional approach to policy-making on issues such as safety and liberalization.

He urged Asia to adopt electronic ticketing faster, noting that the penetration is only 68 percent in the continent, compared to the global average of 78 percent. The slow acceptance of e-tickets in Malaysia and Japan has lowered Asia's penetration despite a 95 percent penetration in China, he said.

According to industry estimates, the use of e-ticketing can save the industry a total of $3 billion annually.

Bisignani also called for better use of technology to simplify passenger travel and improve air traffic management including biometrics - systems that record a person's fingerprints, retinas or facial patterns, for identification - for immigration processing.

Bisignani, noting the recent crash of the Indonesian Garuda Airline jet, called for better safety standards.

"Governments are responsible for safety. However, not all governments in Asia are at the same level in safety oversight. Global standards need to be maintained by all," he said.

Asia is ahead of the curve in maintaining a younger fleet of aircraft with an average age of 10 years compared to the global average of 12 years, which makes them the most fuel efficient and environmentally-friendly.

Asia must continue to invest in fuel efficient technology as the industry grows - an area where Europe has fallen behind, he said. Also, airlines must push governments for more efficient infrastructure, manufacturers for more efficient equipment, and oil suppliers for research into alternative fuels, he said.

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