IATA: 'Major slowdown' in Japan will affect airlines worldwide

IATA warned there will be "a major slowdown" in the Japanese air transport market in the near-term that could impact a number of key markets worldwide.

"Japan is an important link in global air transport," IATA DG and CEO Giovanni Bisignani said in a statement Friday. "The $62.5 billion Japanese aviation market represents 6.5% of worldwide scheduled traffic and 10% of the industry's revenues."

IATA said Japan's domestic airline market, which generates $19 billion in revenue annually carrying 83 million passengers per year, "is the most exposed" in the aftermath of the March 11 earthquake, tsunami and subsequent nuclear crisis (ATW Daily News, March 16). Outside Japan, China's air transport market is the most exposed since 23% of its international revenue is generated from Japan travel, according to IATA. Taiwan and South Korea generate 20% of their international revenue from Japan-related operations, followed by Thailand (15%), the US (12%), Hong Kong (11%) and Singapore (9%). Regarding Europe, the French market generates 7% of its international revenue from Japan operations followed by Germany (6%) and the UK (3%).

"The extent to which these travel markets weaken will be largely shaped by what happens to the Japanese economy," IATA stated."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."

The organization noted that Japan produces 3%-4% of global jet fuel supply and "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."

IATA cautioned that it is "too early to assess the long-term impact" of the Japan crisis on the global airline industry.