US and European Airlines Aren't the Only Ones Suffering
Friday, December 5th, 2008
In the past few years, China’s airlines have been among of the world’s best performers. But even they aren’t immune to the global air travel slowdown that has most airlines looking for any help that they can get. Even Cathay Pacific, the Hong Kong-based upscale carrier has announced that it is freezing recruiting and hiring until the industry turns around.
On the mainland, China’s airlines have asked Beijing for a bailout. Citing low demand and budget problems stemming from high fuel costs, China Eastern Airlines and China Southern Airlines went to the government in the hope of getting a little breathing room. The government has not yet responded officially, but analysts suggest that each airline could receive as much as $440 million in aid. Air China, the nations top carrier, would also be part of the bailout.
China recently announced an billion dollar economic stimulus package to help other sectors of its ailing economy. So, though it is not a forgone conclusion, all signs point to the airlines getting some sort of bailout.
In India, the world’s other emerging air travel market, things are not much better. Despite new airports and newly successful airlines, India’s major carriers are also tightening their belts. Jet Airways, an upstart that offered service from the US to India as well as a significant number of domestic flights, has cut back its flight numbers. Air India has grounded some of its flight crews in an effort to shore up its budget. Also Air India, citing fuel costs and competition form Jet and rival Kingfisher Airways, has sought government money for a bailout. Also, the airline decided to raise prices over the summer.
Chinese and Indian routes are expected to become highly competitive once the economic situation changes. Most economic projections point to a positive second half of 2009. Until then, it seems that all the world’s airlines will have to tighten their belts.