SARS sideswipes HONG KONG >> While airlines around the world battled insolvency and fretted over the war in Iraq, Asian-based carriers rode out the industry's latest downturn a bit more smoothly. Then along came SARS.
Asian airlines
Thousands of flights are being
canceled as passengers are afraid to flyBy Elaine Kurtenbach
Associated PressAsia's aviation industry has been pitched into what some are calling its worst crisis ever, with thousands of flights canceled, passengers scared to fly and delays in some airports as passengers are checked for fever or symptoms of severe acute respiratory syndrome, or SARS.
An executive at Hong Kong's Cathay Pacific Airways recently warned that the carrier was hemorrhaging $3 million a day and might have to ground its entire passenger fleet next month if traffic kept falling. Cathay quickly tried to back away from such a dire warning but admitted it may have to consider further cuts on top of the 42 percent of its fights already canceled.
Analysts say it's impossible to know how badly the industry will be hurt by the disease, which has been concentrated in Asia.
"The best scenario is two months of pretty severe pain, and the worst scenario is, well, your guess is as good as mine," said Peter Harbison, managing director of the Sydney-based Center for Asia-Pacific Aviation. "It depends on what happens with SARS."
As the SARS crisis escalated last month the World Health Organization noted with alarm that the lung infection was spread by air travelers. The U.N. agency dealt Hong Kong a heavy blow as it advised people to stay away from the former British colony.
Cathay and Dragonair have cut back operations so severely that the airport authority that runs Hong Kong's Chek Lap Kok airport warned that its core business was threatened.
Other regional carriers are slashing costs, while U.S.- and European-based carriers are trying to minimize damage with quick cuts in flights to the worst affected regions.
Continental Airlines scrap-ped its five nonstop flights a week between Hong Kong and Newark, N.J. but says they will take off again on June 4.
"Hong Kong is a financial hub and New York is a financial hub. The demand is huge," said spokeswoman Bessy Hui. "Corporate clients are just postponing their trips. We see it as a temporary suspension."
The other U.S. carriers serving Hong Kong are United, which is now in bankruptcy, and Northwest. They've also been cutting back flights because of the war in Iraq or SARS.
Despite the major troubles SARS is handing Cathay, analysts said the carrier remains strong and it got a boost on Thursday when route licensing officials said it could resume services into China after more than a decade out of the lucrative and growing market. Dragonair, partly owned by Cathay, had fought the proposal.
A downturn like the one now hitting the industry could cripple a weaker airline. But with stable freight traffic and cash reserves of about $1.74 billion, Cathay "is very strong," says Richard Stirland, director general of the Association of Asia Pacific Airlines, based in Kuala Lumpur.
"It's got a minimal debt load compared to other airlines around the world," Stirland said.
The association, which represents 17 major airlines, yesterday urged Hong Kong's airport to help airlines by cutting rent and aircraft landing and parking fees.
Airlines this month canceled 650 flights a week region-wide, the group noted, and the situation could worsen. Airports in Singapore and Taiwan recently announced cuts in fees.
Mainland Chinese carriers, in the midst of a government-mandated restructuring, have been only partially sheltered from SARS by their limited reliance on international routes.
Singapore Airlines, which has its own local SARS outbreak to contend with, last week cut 206 trainee jobs and reduced flights for the third time in as many weeks.
Japan Airlines saw its bread-and-butter group tour business dry up virtually overnight as travel agencies canceled tours to China following the WHO and government warnings, said company spokesman Geoff Tudor.