Air travel demand in India will fall, forum forecasts

December 9th, 2008 - 9:37 pm ICT by IANS  

New Delhi, Dec 9 (IANS) Demand for air travel in India will fall following the recent terror attacks in Mumbai, International Air Transport Association (IATA), an international forum of airline industry, said Tuesday.IATA chief Giovanni Bisignani, who in Geneva released the organisation’s annual financial forecast and reports on industry trends, also said airline operators in the Asia-Pacific region would see losses more than “doubling” from $500 million now to $1.1 billion in 2009.

The IATA has predicted a fall of three percent in passenger markets next year worldwide, and a five percent drop in the cargo sector.

Maintaining that India’s airline industry for the next year was bleak, Bisignani said: “The chronic industry crisis will continue into 2009 with $2.5 billion in losses. We face the worst revenue environment in 50 years or since the Second World War,” he added.

Bisignani in a statement said the global industry losses forecast for 2008 calendar year stood at $5 billion, a slight improvement from the earlier prediction of $5.2 billion.

He urged the governments of India and China, both two emerging economies, to initiate corrective steps, saying the aviation sector would witness further slowdown in 2009.

According to him, one step the Indian government should take is to create the Airport Economic Regulatory Authority (AERA) - the legislation for which cleared over a month ago.

The AERA bill, awaiting presidential assent, empowers the government to fix tariff structures and ensure a level-playing field for airlines.

“The region’s largest market Japan is already in recession. And the two main growth markets - China and India - are expected to deliver a major shift in performance,” IATA economist Brian Pearce said in a press statement. Growth in China would slow as a result of a drop in its exports, he added.

“India’s carriers, which are already struggling with high taxes and insufficient infrastructure, can expect a drop in demand following the tragic terror incidents (Mumbai attacks) in November,” Pearce said.

However, the European carriers would experience a 10-fold increase in losses, which are expected to touch $1 billion, while airlines of the Middle East and Latin America would see losses doubling to $200 million.

“For governments, it’s a wake up call to stop crazy taxation, fix the infrastructure, give airlines normal commercial freedoms and regulate monopoly suppliers,” Bisignani said.

He said there could be five percent (1.7 million) job cuts worldwide in the aviation industry, which employs over 32 million people.

Moreover, substantial numbers of jobs “are likely to be lost and as a result, damage consumer incomes and could further effect people’s confidence,” the IATA economist said.

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