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Airlines in the Asia Pacific region are expected to see
better business next year as the number of passengers and destinations
continues to increase, speakers told a conference on the aviation
industry in Singapore on Thursday.
Even so, volatility in fuel prices would still pose a significant
threat to the future of the airline business.
"Globally, there were 808 million arrivals in 2005 and the number will
continue to rise," John Koldowski, the director of the Pacific Asia
Travel Association's Strategic Intelligence Center, said during the
Aviation Outlook Summit
He explained that the South Asian region saw 10 percent growth up to
the end of November, with 572,000 additional international arrivals
compared to the previous period. Meanwhile, Northeast Asia booked 5
percent growth with 130 million arrivals, including an additional 6
million travelers, and Southeast Asia recorded an 8 percent increase to
18.5 million arrivals.
Koldowski said that the number of passengers would continue to grow in
line with the long-term growth trend in the global aviation industry,
which averaged 4.4 percent a year.
One of the factors that promoted growth, Koldowski said, was the
growing number of baby boomers around the world, who currently made up
the largest proportion of the world's population.
"When we talk about baby boomers in the Asian population, you have
never had as many young people ever before. These are the next
generation of air traffickers," he said.
Another reason for future growth, according to Koldowski, was the
growing number of new destinations globally. He mentioned how more and
more destinations were coming onto the market, including ones in the
Middle East, Africa and Eastern Europe.
Despite the positive outlook on the demand site, Kodolwski acknowledged
that the volatility of fuel prices imposed high operating costs on
airlines.
Another speaker at the summit, Shell Aviation global marketing regional
manager Mike Lumley said there was only around two billion barrels of
spare capacity globally, which was the equivalent of Iran or Iraq's
daily production.
"This means that the market is very sensitive to any geopolitical
instability. But then again, we have been very fortunate as in the last
four months, it has been very quiet on the geopolitical front," Lumley
said.
Lumley also said the expected decline in the future supply of the crude
oil, about 70 percent of which is provided by members of the
Organization of Petroleum Exporting Countries (OPEC), would continue to
pose a major problem for the world's airline industry.
"The lack of investment made by OPEC members is also a factor in the
projected oil production decrease. They are looking at investing more
in order to expand their production from 10 million barrels a day to 12
million, but there is a time lag for that," he said.
Lumley suggested that cutting operating costs was the best way for
airlines to cope with future fuel price rises.
Adam Air, a growing Indonesian player and the only airline from here
participating at the summit, has greatly benefited from its low
operating costs.
Adam Air communications director Dave Laksono said that since the
implementation of its budget program, the company had succeeded in
lowering costs by around 30 percent, about one-third of which was due
to lower fuel consumption.
"One of the most significant tricks in reducing oil consumption is to
bypass the taxiway. This can save up to 10 percent of oil consumption,"
the company's deputy director of flight operations, Captain Ade
Salmiar, said.
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