Aviation 2006: Lull before the storm?

CAPA report says that this is the year to consolidate

BY A CORRESPONDENT
February 27, 2006

The Center for Asia Pacific Aviation has released its Annual Outlook 2006, which offers a peek into the future of aviation in Asia. The report, released by executive chairman Peter Harbinson says that 2006 could be the "lull before the storm" for the aviation and tourism sector.

The history of Asia-Pacific aviation suggests that aviation growth here is cyclical, with growth in three years followed by a bust. The CAPA report says that 2006 is the year to tap the opportunities for airline consolidation to face the challenges of 2007.

The CAPA report points at the severe shortage of talent in aviation industry. It said that the region will need to add another 1,47,000 employees to service the aircraft on order. It also adds that China, India and the Middle-East will be the worst-affected.

After the CAPA report was released, airlines have placed orders worth billions of dollars at the Asian Aerospace Show in Singapore, meaning the talent gap has grown wider than the CAPA estimate.

The CAPA report said that passenger traffic will grow broadly in line with the capacity increases. However, there are looming shadows of uncertainty, since air freight trends have shown only a lukewarm growth in the past.

The CAPA report is broadly on the lines of recent predictions that 2006 may not see the kind of growth that 2005 has seen. last year was a record year for the aviation industry with Boeing and Airbus clocking record orders. The growth was largely on the basis of an unprecedented boom in the Asia Pacific.

Rates of economic growth and fuel prices can have unforeseen effects on the airlines in region. The report also points out that airports will be the investment of choice for aviation investors.

The CAPA report also points to the possibility worsening employee-employer and airline-airport relations in 2006. It has also predicted a 10% tourism growth in the region.