“Major slowdown” in Japan air travel expected

Most airports in Japan have fuel supplies for 10 days, IATA says

The International Air Transport Association has reiterated its support and efforts to maintain safe and efficient air links with Japan in the aftermath of last week’s earthquake and tsunami. IATA has also issued its first assessment of the potential impact of the crisis on global air transport. The body has mobilised its resources to support the aviation industry in several critical areas including settlement operations and fuel.
IATA manages $20 billion in industry settlements annually in the Japan market and its Tokyo office remains open and the settlement system is functioning normally. As regards, fuel, IATA says that some key fuel infrastructure facilities in Japan have been damaged and most Japanese airports have fuel supplies for the next 10 days. IATA is coordinating actions among airlines to maximise existing fuel supplies, including voluntary tankering of jet fuel. It is also briefing airlines and officials on industry agreed rationing regimes should supply shortages arise.
“The thoughts and prayers of the air transport industry are with the Japanese people at this most difficult time,” said Giovanni Bisignani, IATA’s Director General and CEO. “In times of crisis, air transport takes on a critical role. Our members are rising to the challenge of bringing relief supplies, equipment and people to Japan as well as connecting families affected by this tragedy.”
IATA’s role and actions also include coordinating information. IATA is working with the Japanese government and major United Nations and industry organisations such as the International Civil Aviation Organisation, the World Health Organisation, the International Maritime Organisation, the International Atomic Energy Agency, the World Meteorological Organisation and Airports Council International, to ensure that its 230 member airlines have the best medical and operational advice. IATA is tracking regulatory measures being imposed by governments around the world for flights and passengers arriving from Japan. A full list of regulations will be at www.iata.org.
“The combination of crises and issues facing Japan is truly unprecedented. For aviation, global standards and coordinated efforts will provide the needed solutions as we move through this difficult time. IATA stands ready to assist in any way possible to ensure continued safe and efficient air transport,” said Bisignani.
IATA stresses that it is too early to assess the long-term impact of the Japanese tragedy on the global air transport industry. However, understanding the structure of the Japanese air transport industry does give insight into the potential short-term impact of a major slowdown in Japanese air travel.
“Japan is an important link in global air transport. The $62.5 billion Japanese aviation market represents 6.5% of worldwide scheduled traffic and 10% of the industry’s revenues. A major slowdown in Japan is expected in the short-term. And the fortunes of the industry will likely not improve until the effect of a reconstruction rebound is felt in the second half of the year,” said Bisignani.
Japan’s 83 million-passenger-per-year domestic market ($19 billion in revenues) is the most exposed. Internationally, the top 10 international markets connecting to Japan are the USA, China and South Korea, with other major markets including France, Scandinavia, Germany and the UK. The extent to which these travel markets weaken will be largely shaped by what happens to the Japanese economy. Many economists are suggesting that once reconstruction begins the economy will rebound, but the length of the current downturn will depend critically on developments in the nuclear power situation.
Japan produces 3-4% of global jet fuel supply, some of which is exported to Asia. Some of this refinery capacity has been lost due to damages caused by the earthquake. This supply restriction could lead to higher jet fuel prices.
[pictured: Tokyo Haneda Airport]