Demand for air travel has continued to return far more quickly than expected following the containment of SARS, and major Asian carriers are now reporting a return to normal or near-normal pricing levels.

Hong Kong's Cathay Pacific Airways, which was one of the hardest hit by SARS-related travel fears between the end of March and early July, said in reporting August traffic figures that yield remained depressed that month due to discounting but an improvement was finally in sight.

"Indications are that yield will improve in September as special promotions tail off and front-end demand picks up," said Cathay, which is traditionally pessimistic in its statements regarding yield.

In Taiwan, another area badly affected by SARS, China Airlines (CAL) and EVA Air both said that pricing levels had returned to normal and full capacity levels had been restored. Both carriers reported that they no longer had to discount heavily as aircraft were flying near full, and as a result second-half profits were forecast. CAL, for example, said August load factor stood at 86% and as a result it planned to boost capacity by leasing additional aircraft.

Asian airlines slashed capacity during the SARS-induced downturn but with demand returning far more quickly than expected, many are scrambling to return aircraft to service.

Hong Kong's Dragonair is reporting a sharp rebound in business, leading it to return to pre-SARS capacity expansion plans. In May it said Airbus had agreed to push back deliveries of four firm-ordered A320-family aircraft. Deliveries of two A321s originally due in June and August were deferred to the end of this year, while two A320s due in 2004 were deferred until 2005. However, Dragonair has since brought forward deliveries of the A321s, while the two A320s will be delivered in 2004 in line with its original plan.

In Japan and South Korea, most major airlines returned to pre-SARS capacity levels by early September, while Chinese carriers generally said they did the same. Cathay, which slashed services by nearly half at the height of the downturn, expects to be back to a normal passenger flight schedule by the end of September and has unveiled growth plans effective from the winter operating season late in October.

Cathay has seen passenger loads approaching impressive levels. For August, the airline reported a 3.2 percentage point increase in passenger load factor to 85.3%. Seat capacity was down 6.3% for the month, however.

Malaysia Airlines is another seeing rising demand. It is adding back capacity in stages and hopes to return to the black in the next few months.

Singapore Airlines, which has been coy about when it will return capacity to normal levels, said in releasing August traffic figures that seat capacity was down 10.9% for the month. Revenue passenger kilometres were down 7.9%, and passenger load factor improved 2.6 points to 81.7%.

But the airline also says it has been benefiting from pent-up demand. And while it has been hesitant about predicting what market conditions will be like in the second half of its financial year in case SARS returns during the northern hemisphere winter months, analysts are generally upbeat about its prospects - and those of other Asian carriers. For now at least, it seems SARS is firmly a thing of the past.


Source: Airline Business