A mood of gloom hung over this year's annual assembly of the Association of Asia Pacific Airlines (AAPA). However, the association is working on several initiatives, including an advertising campaign and is studying an indemnity fund.

The AAPA opened its annual meeting, held in November in Bali, Indonesia, by releasing its members' operational figures for September. Unsurprisingly, the indicators revealed a plunge in traffic following 11 September, and group members were reluctant to predict when a recovery might be seen.

"When will [traffic] come back? We have no idea. Maybe a year, maybe 18 months," says Cathay Pacific chief executive David Turnbull. AAPA director general Richard Stirland adds that "it could be many months before the effects work their way into the system", as many airlines will be transferring long-haul aircraft capacity on to intra-regional routes, where demand is strongest.

This movement away from the transpacific market is catalysed by the fact - cited by Turnbull - that "the bigger the exposure to the USA, the bigger the damage". Stirland says that transferring capacity in this way, however, will not be without its problems, key among them being downward impact on yields.

In a bid to restore confidence in air travel, the AAPA is planning an advertising campaign. Members agreed to sell the message that it is "safe to travel" and that confidence in air travel is "the key to restoring quality of life". The association unveiled several likely television advertisements which it will show January through March.

The AAPA resolved to call on the region's national governments to aid in the industry's recovery efforts by providing relief from landing fees, terminal charges and taxes. It also resolved to ask the national governments to help by promoting tourism and otherwise facilitating international air travel.

In addition, the carriers are studying the feasibility of establishing a $1 billion mutual insurance fund that could be drawn on for indemnification in the event of a future war- or terrorism-related disaster. Airlines around the world were caught off guard when insurers withdrew third-party war-risk cover after 11 September, forcing many governments to step in to provide indemnities to keep their carriers flying. Even though coverage has been returning to the market, premiums have soared.

Stirland says the association acknowledges it will be difficult to establish a mutual fund for indemnification but that it must be considered. He also stated that such a fund would be open to non-AAPA members. "There has to be a starting point and there is no reason why the airlines in this part of the world shouldn't be pioneers," he says. "Somebody has to start somewhere because this is an urgent issue."

Source: Airline Business