IATA warns of Japan disaster’s impact on aviation
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The International Air Transport Association (IATA) has reiterated its support to Japan in the aftermath of the recent earthquake and tsunami, but warned of the potential impact of the crisis on global air transport.
“The thoughts and prayers of the air transport industry are with the Japanese people at this most difficult time. In times of crisis, air transport takes on a critical role. Our members are rising to the challenge of bringing relief supplies, equipment and people to Japan as well as connecting families affected by this tragedy,” said Giovanni Bisignani, IATA’s Director General and CEO.
“The combination of crises and issues facing Japan is truly unprecedented. For aviation, global standards and coordinated efforts will provide the needed solutions as we move through this difficult time. IATA stands ready to assist in any way possible to ensure continued safe and efficient air transport,” Bisignani added.
IATA said that it is too early to assess the long-term impact of the Japanese tragedy on the global air transport industry. However, it warned of the potential short-term impact of a major slowdown in Japanese air travel.
“Japan is an important link in global air transport. The US$62.5 billion Japanese aviation market represents 6.5% of worldwide scheduled traffic and 10% of the industry’s revenues. A major slowdown in Japan is expected in the short-term. And the fortunes of the industry will likely not improve until the effect of a reconstruction rebound is felt in the second half of the year,” said Bisignani.
Japan’s 83 million passengers per year domestic market (US$19 billion in revenues) is the most exposed. Internationally, the top international markets connecting to Japan are: the US (9.2 million passengers, revenues of US$10.5 billion), China (8.6 million, US$6.5 billion), South Korea (9.6 million, US$3.1 billion), Taiwan (4.2 million, US$2.3 billion) and Hong Kong (3.2 million, US$1.9 billion).
The most exposed market to Japanese operations is China where Japan accounts for 23% of its international revenues. Taiwan and South Korea are equally exposed with 20% of their revenues related to Japanese operations, followed by Thailand (15%), the United States (12%), Hong Kong (11%) and Singapore (9%). France is the most exposed European market at 7%, followed by Germany (6%) and the United Kingdom (3%).
The extent to which these travel markets weaken will be largely shaped by what happens to the Japanese economy. Many economists are suggesting that once reconstruction begins the economy will rebound, but the length of the current downturn will depend critically on developments in the nuclear power situation.
Japan produces 3-4% of global jet fuel supply, some of which is exported to Asia. Some of this refinery capacity has been lost due to damages caused by the earthquake. This supply restriction could lead to higher jet fuel prices.
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