Asian airlines cautious about outlook for 2020: AAPA

By Jamie Freed

HONG KONG (Reuters) – Asian airlines are cautious about the outlook for 2020 after trade disputes undermined confidence and led to economic growth below initial forecasts this year, the head of the Association of Asia Pacific Airlines (AAPA) said on Monday.

Airline passenger growth in Asia has moderated this year to 4.4% in the nine months ended Sept. 30, down from 7.7% for the same period in 2018, AAPA statistics show. Asian cargo carriage fell 5.8% in the first nine months of the year amid a U.S.-China trade war.

“I think we need to be a little bit cautious,” AAPA Director General Andrew Herdman told Reuters of the 2020 outlook after having met Asian airline chief executives in Kuala Lumpur on Friday.

“If it turns out to be a bit better than expected then we will be ready to respond.”

AAPA moved the meeting to Kuala Lumpur after cancelling plans for a larger gathering in Hong Kong, citing the “unpredictability” of the situation following months of often violent protests in the Chinese-controlled city.

Several Asian airlines have cut flights to Hong Kong over the coming weeks as demand has fallen, which along with the grounding of the Boeing Co (N:) 737 MAX have made growth more challenging.

Herdman said he believed the capacity adjustments to Hong Kong would be reversed once the political situation improved and tourists returned to the city.

Hong Kong’s democrats romped to a landslide and symbolic majority in district council elections on Sunday in a rare lull in the unrest that has rocked the financial hub.

“The general feeling is Hong Kong will recover in due course,” Herdman said. “In the short term they (airlines) need to adjust to demand as they find it.”

AAPA on Monday announced Herdman, a former Cathay Pacific Airways Ltd (HK:) executive, planned to depart in March after 15 years in his role. He will be replaced by Subhas Menon, a long-time executive at member carrier Singapore Airlines Ltd (SI:).

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