Foiled attack on US carrier has little impact on Asian airlines


PETALING JAYA – The foiled attack on a US carrier on Christmas Day has had little impact on carriers in the Asia Pacific region, which sees a better year ahead as demand for air travel picks up.

A re-rating of domestic and regional airline stocks is not expected as a fall in their prices over the past two days had been minimal although airline stocks in the United States took a hit, but not too seriously, on the first day of trading since the foiled attack, according to one analyst.

“The likelihood is that more travellers will choose to fly to other destinations other than the United States to avoid undergoing strict security screening at the US airports and that bodes well for the region,’’ the analyst said.

MAS director of operations Capt Mohamed Azharuddin Osman said the incident (the failed attack on a Northwest flight on Christmas Day bound for Detroit from Amsterdam) would only have limited impact on global air travel as it was an isolated incident but agreed that it might impact long haul travel to the US due to the additional security measures.

“We expect there will be limited impact on air travel but the increased security measures will inconvenient those travelling to the US,’’ he said.

In yesterday’s trading, Malaysia Airlines (MAS) shed 2 sen to close at RM3 while AirAsia Bhd was up 2 sen to RM1.38.

MAS flies to Los Angeles as it has since pulled out of New York.

Singapore Airlines, Cathay Pacific and Qantas all fly to several cities in the US and the airlines have not reported any impact on demand for air travel thus far.

Asia Pacific is expected lead the growth in the air sector after being in the doldrums for more than a year.

Passenger demand figures are unavailable but if airport statistics are anything to go by, they show a healthy trend.

Malaysia Airports said this week its KLIA passenger traffic figures for October showed an 16.7% increase in from a year ago.

Singapore’s Changi also recorded a record number of flights in October.

Singapore Airlines (SIA) has begun restoring flights, Qantas will begin with domestic flights in March and MAS had begun adding flights since September.

All airlines remain hopeful that the upturn in the industry is imminent and are getting ready to benefit from the upturn.

But a lot hinges on the global economic recovery and a repeat of the incident in the US could dash hopes for a recovery.

Meanwhile, the International Air Transport Association (IATA) is concerned about the incident in the United States.

“As governments respond to the incident, it is important that they focus on measures that are harmonised solutions, and work closely with the industry to ensure that the measures are implemented effectively.

“We are monitoring the situation closely and are coordinating with the appropriate authorities to ensure safe and secure travel and passengers are advised to give themselves some extra time at the airport in view of the heightened security measures,’’ it said.

IATA is projecting industry losses of US$5.6bil in 2010, adding that it is premature to say what impact the incident in the US would have on the industry.