Asia, Latin America hail world's top 5 airlines

ASIA and Latin America now control the world's five largest airlines, highlighting the shift in the aviation industry away from traditional markets in the US and Europe to emerging nations that are experiencing higher growth rates, according to the International Air Transport Association.

Air China is double the size of Delta in the US and Germany's Lufthansa, which have market capitalizations of US$10 billion each. Air China has a market capitalization of US$20 billion, followed by Singapore airlines with $14 billion, Cathay Pacific with $12 billion, China Southern with $11 billion, and newly created Latin American airline LATAM has a market cap of $11 billion, reports the Associated Press.

"The world is changing in aviation, and it's changing very, very quickly," IATA chief executive Giovanni Bisignani was quoted as saying at a news conference in Geneva. "Rapidly developing markets are shifting the industry's centre of gravity to the East."

However, IATA is warning that in spite of emerging markets' strength and the earnings rebound experienced this year, weak economic conditions in Europe and low margins are acting as a drag on profits, reported AP.

"2011 is going to be a much more challenging period," IATA chief economist Brian Pearce was quoted as saying, noting that heavy debts and new taxes will impact consumer travel spending in Europe and North America.

IATA anticipates the aviation industry will generate net profits of $9.1 billion in 2011, down from a net profit forecast of $15.1 billion in 2010. IATA attributed this year's "remarkable" turnaround to strong growth in developing countries and a rebound in North America, after the industry suffered a loss of $10 billion in 2009 and a $16 billion loss in 2008.

Asian carriers will contribute $7.7 billion to this year's global total, while North American airlines will earn $5.1 billion. Europe, with estimated net profits of $400 million, lags behind the Middle East with $700 million and Latin America with $1.2 billion. African carriers will earn $100 million this year, according to IATA.

The report said that Mr Bisignani is also warning that profit margins remain "pathetically low" and pose a threat to the industry in the event of another economic crisis.

He said that recently introduced air travel taxes in Britain, Germany and Austria, and efforts to introduce a regional carbon emissions trading market are harming Europe's competitiveness. Fuel price hikes are also anticipated to cut into profits in 2011, giving the industry further incentive to operate more fuel efficient aircraft and identify viable, alternative, renewable energy sources, the report added.
(Source:www.schednet.com)