Singapore: With a 'honeymoon' lasting around two years, the Asian airline sector is set to lose some altitude in 2008.
According to a study by industry group Centre for Asia Pacific Aviation (CAPA), the global credit crunch will hit consumers and dampen demand for air travel.
The CAPA report also says that the increased capacity driven by deliveries of larger-sized planes, coupled with staff shortages will also impact the sector in 2008.
The report goes on to say that CAPA is projecting a downturn in early 2008, that could perhaps be even a steep downturn, as credit shortage and high oil prices hurt consumer demand. Economic conditions could deteriorate quickly, as credit pressures make themselves felt. These negative pressures are already powerful in Europe and the US, and it is only a matter of time before the influence starts to dampen consumer demand.
According to the CAPA report, business travel, often by far the most lucrative for airlines, will be the first affected, being an ''early casualty of softening demand.''
Expansion of fleet capacities at a time of slackening demand, plus staff shortages, mainly of flight crew and engineers, will drive up hiring costs, and add to pressures. Asia is a key market in the battle for supremacy between Airbus and Boeing in new aircraft sales.