Airlines sound mayday call


  • Business
  • Wednesday, 16 Apr 2003

SINGAPORE: A grouping of Asia-Pacific airlines urged governments yesterday to cut airport fees and other charges and consider providing war risk insurance to prevent the industry’s collapse from the impact of the Severe Acute Respiratory Syndrome (SARS) outbreak. 

Richard Stirland, the director-general of the Association of Asia-Pacific Airlines (AAPA), called on other stakeholders in the aviation industry to share the burden now borne by the airlines due to a sharp drop in air travel. 

“Airports and air traffic management services can and must reduce their charges, rents and other burdens which they impose on the airlines regardless of the fluctuations of the markets,” he said in a statement. 

Stirland noted that much of the infrastructure for global travel like airports, air-traffic control, security, immigration, customs and quarantine authorities was both “government operated and monopoly providers of services”. 

“It is not just desirable but vital to the survival of the existing air transport industry that these entities share the financial consequences of SARS,” he said. 

Stirland said governments “should look again at state provision of war risk insurance and at security charges for both passengers and cargo being paid for out of general taxation, rather than by impositions on the airlines”. 

He cited the example of US carriers that were receiving government assistance in the areas of insurance and security costs. 

Airlines in the region are reeling from the SARS outbreak, which has claimed some 140 lives worldwide and infected more than 3,200. Bookings have plunged and airlines are drastically cutting flights as tourists and business travellers choose to stay home. 

Stirland said that AAPA’s 17 member airlines had slashed about 650 flights a week in April, with some trimming up to 50% of frequencies. “I expect airlines to cancel more flights if the situation does not get better,” he warned. 

Stirland also called on aircraft manufacturers, fuel companies and ramp handling agencies to “take a realistic look at prices and repayment terms in the light of the catastrophic situation”. 

He pointed out that the industry had played a key role in Asia’s decades of economic growth and said that “in this dire situation, its distress must be recognised and its crushing burden shared by those who benefited in the past from this prosperity”.Meanwhile, ratings agency Standard & Poor’s (S&P) said the outbreak of SARS would slow economic growth in most parts of Asia but added that the countries’ sovereign ratings were unlikely to be affected. 

“The outbreak...will lower growth rates of most economies in Asia for 2003,” S&P said in a statement. “The gravest damage will be inflicted on Hong Kong.” – Agencies  

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