Asia airline losses hit 4.3 billion in 2008

Preliminary financial performance figures for 2008 released by the Association of Asia Pacific Airlines showed that many leading Asia Pacific airlines suffered significant losses as a result of slowing traffic volumes and sharply higher fuel costs.

Combined revenues for AAPA carriers reached USD109 billion, 6% higher than the USD103 billion reported in 2007, but failed to keep pace with higher fuel costs. Oil prices for the year averaged USD97 per barrel, compared to USD72 per barrel in 2007. As a result, the AAPA fuel bill increased by almost USD 10 billion, to USD38.1 billion in 2008, accounting for 35% of total costs.

Since revenues failed to match the increase in fuel costs, airline profitability suffered a sharp reversal. For 2008, AAPA member airlines reported an aggregate net loss of USD4.3 billion, in marked contrast to the solid profits earned in 2007. In some cases, the results were exacerbated by losses on fuel hedging contracts and adverse currency exchange movements.

Following several years of sustained growth in travel demand, the trend reversed in the second half of 2008, with figures for the full year showing AAPA international passenger numbers down 2.2%, whilst the average passenger load factor fell two percentage points to 75%. AAPA international air cargo traffic for 2008 declined by 6.7%.