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Japan's disaster, fuel prices to affect air travel

IATA: Global air industry will face setback

Mar 21, 2011

The International Air Transport Association (IATA) has warned that fuel prices could increase and the global aviation industry will face a setback while Japan recovers from the earthquake.

While it is too early to assess the long-term impact of the Japanese tragedy on the global air transport industry, IATA said there would be a major slowdown in Japanese air travel in the short-term.

“The thoughts and prayers of the air transport industry are with the Japanese people at this most difficult time,” said Giovanni Bisignani, IATA’s director general and CEO. “Japan is an important link in global air transport.

The US$62.5 billion Japanese aviation market represents 6.5 percent of worldwide scheduled traffic and 10 percent 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,” he added.

In addition, Japan produces 3-4 percent 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.

Meanwhile, Hong Kong’s hotels are filling up as travellers are evacuated from Japan. Regal International Hotels told Travel Daily that its hotel at Hong Kong’s airport has been full for several days, and Air Charter Service has started to operate flights to other cities such as Singapore or Bangkok.

IATA: Global air industry will face setback
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