KUALA LUMPUR- Andrew Herdman, director general of the Association of Asia Pacific Airlines (AAPA), has indicated that the recent turmoil in financial markets, and related tightening of credit conditions, have cast a shadow over prospects for the aviation industry in 2008.
“The potential combination of stubbornly high oil prices, and slowing global economic growth, could be especially challenging for the (aviation) industry, said Herdman, in a review compiled for AAPA’s Asia Pacific Perspectives.
“In recent years, capacity growth has been kept pretty much in line with demand growth.
“But the surge in new aircraft orders over the past three years, resulting in a backlog of over 6,000 aircraft, or roughly five years supply, raises the spectre of potential over-capacity in the years ahead, at a time when demand may falter.
“Regardless of business model and market focus, airlines will likely be tested, with a clear need to remain focused on tight cost controls throughout the business,” Herdman said.
