Low demand, volatile fuel prices still challenge airlines

      Foreign airlines active in Vietnam have pointed out low global demand for air travel and volatile oil prices as the major challenges for their performance this year.
Frank Püttmann, head of corporate communications at Lufthansa AG, said the business performance of the airline in Vietnam and elsewhere in the world had been hit as the global economic crisis was forcing customers to tighten spending.
“The economic downturn leads to less spending by our customers and changes in their travel policies,” Püttmann told the Daily.
To cope with the situation, Lufthansa has reduced business-class seats while increasing economy-class seats. Püttmann did not clarify how the economic slump had impacted seat occupancy on Lufthansa’s flights to and from Vietnam. “We cannot talk about figures on single routes or markets.”
Thierry Beragnes, country manager of Air France in Vietnam, gave information about seat occupancy when saying that the airline’s load factor had experienced a slight drop in recent months from the 85% as previously.
“Definitely, 2009 has brought us new challenges as the market is less dynamic,” Beragnes said. He noted the lower demand had been confirmed for the first quarter of 2009 though the carrier’s fiscal year ended on March 31 with positive results in Vietnam.
Beragnes said the world airlines’ average revenue per seat had dipped significantly because they had to offer promotions and discount fares by at least 20% to keep regular passengers and to attract new guests in the challenging time.
Thai Airways International now charges an economy-class round trip between HCMC and Thailand’s Bangkok for US$120, US$30 lower than normal rates, and also offers a 50% discount for the second ticket.
United Airlines is promoting economy fares from US$725 for a return trip between HCMC and San Francisco, Los Angeles or other cities in the Western coast of the U.S.
“It is important that we respond to our customers’ needs, especially at a time like this,” said Clodelsa Ty, general manager of United Airlines in Vietnam. She told the Daily that it had always been the airline’s focus to improve its products and customer experience.
In addition to better products and services, airlines now have to follow closely the changing oil prices and slow recovery for air demand as their major challenges for the rest of the year.
Püttmann of Lufthansa said the aviation industry was facing a host of difficulties and that the unpredictable movement of fuel prices was one of them.
The world’s oil price had fallen to less than US$60 per barrel by on Tuesday from the nearly US$73 per barrel earlier this month. However, airlines said it was hard to project the price in the current situation.
Asked about the impact of influenza A (H1N1) on airlines’ business, AirAsia regional head of commercial Kathleen Tan said the scare of the flu and the heightened competition were not good news to the aviation industry.
However, Tan told the Daily that the influenza pandemic had yet to hurt business of the region’s leading low-cost carrier. “We are defending our low cost market and in AirAsia we see no decline in air travel.”
Püttmann of Lufthansa said he did not see the influenza as a major threat to the aviation industry. “We discover adequate management by the World Health Organization and the national health authorities. Especially in Asia a lot has been learned from SARS.”
Ty of United Airlines said the industry still lacked data to illustrate how travel demand could have been affected by the H1N1 disease, especially on a country-by-country basis.
Sharing Ty’s view, Beragnes of Air France said there were not precise records about cancellations due to the pandemic though people were more careful with their travel plans, particularly to high-risk areas.