Asia Pacific airline profits tipped to fall: CAPA

Sydney, Apr 2 (UNI) The Centre for Asia Pacific Aviation (CAPA) predicts Asia Pacific airline earnings will be depressed in 2007 and 2008 due to cost pressures, increasing liberalisation, rising capacity growth and rising competition from new entrants.

''Long-haul profitability will be weakened by rising competition from Middle East carriers and an intensified focus on Asia by European and North American airlines as well as increasing long-haul activity by the region's low cost carriers,'' said its executive chairman Peter Harbison.

The impact of fuel surcharges on revenue will diminish in 2007 as competitive pressures intensify and yields are predicted to resume their long-term downward trend from late 2007, with a softening of the fuel surcharge and premium demand-led rally in recent years.

The market's continuing acceptance of rising fuel surcharges has also been key to the growth in yield at numerous carriers as many Asian flag carriers held down capacity and load factors rose.

This unexpected level of customer acceptance has not gone unnoticed as carriers, citing volatility in fuel prices, continued to maintain high surcharge levels as oil prices shifted.

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