Airlines cut back as crisis hits

Total capacity, or the number of seats available, from this month to December will shrink 5.2 per cent, 46.3 million seats fewer than a year ago.

Flight numbers will fall 6.1 per cent, or 451,000.

The British-based Official Airline Guide, which tracks flight bookings and trends, said in its most recent forecast that Asia especially was not looking good, with capacity set to fall a higher-than-global average of 6.5 per cent and flights 7.1 per cent.

Chief operating officer Steve Casley said: "Airlines are extremely vulnerable and quick to react to economic downturns and subsequent shifts in market demand."

Some expect reduced capacity to drive fares up even as the financial crisis wipes out the weak carriers.

Stephen Durrand, a managing director at Amadeus, a technology and distributions solutions provider, foresees the rise of so-called "super" airlines over the next five years.

"We are seeing survival of the fittest. The big are going to become bigger. The small will be forced to merge to achieve an economy of scale," said Durrand. "Super airlines will use their muscle to negotiate better rates, and we will see reduced capacity and higher fares."

Airfares have held steady, although ad-hoc promotions and discounted seats are more common now as airlines struggle to fill planes on poor-performing routes and during lull periods, say agencies and travel management companies.

With jet-fuel prices falling from a high of more than US$180 (Bt6,200) per barrel in July to less than $100 now, some carriers, including Singapore Airlines and British Airways, have also made recent cuts in their fuel surcharges.

Alicia Seah, senior vice-president for marketing and public relations at CTC Holidays, said it was too early to assess the real impact of the financial crisis on air travel.

But she expects consumers to be savvy about travel spending and options, as they have been the last few months when oil prices were climbing and inflation was at record highs.

"People are travelling less often and opting for cheaper destinations within the region, like Bintan and Batam in Indonesia, to stretch their dollar," she said.

The company plans to offer customers urban getaways to places like Sentosa and D'Kranji Farm Resort.

Haydn Long, spokesman for Flight Centre, one of Australia's leading travel agents, expects the business to grow about 4 per cent this year, down from 7-8 per cent previously.

Corporate travellers are feeling the pinch, too. Berthold Trenkel, president for the Asia-Pacific at travel-management firm Carlson Wagonlit Travel, said the biggest change in activity level was in Hong Kong, "which generally has a stronger exposure to the financial sector than Singapore, and in the Indian market, which is more volatile and also has a stronger exposure to the US".

Hong Kong's international airport recorded a sharp drop in passenger volume last month, registering a 4.7-per-cent fall year on year to 3.6 million people, data released on Sunday showed.

Some continued trends in consumer behaviour include companies looking for ways to travel "smarter"; for example, extending the number of flying hours required to fly business class or even moving to an economy-class-only policy.

But travel will continue, stressed Irene See, vice president of American Express and general manager for global business travel in the region.

While economic stresses have placed pressure on the bottom line, "business travel remains an essential component of effectively managing and growing a business", she said.