Airlines hit turbulence as Asia's economies plummet

Airlines hit turbulence as Asia's economies plummet

HONG KONG (AFP): Asia's financial turmoil is beginning to take
its toll on regional airlines, with Cathay Pacific reportedly
planning hundreds of lay-offs, Qantas cutting flights and Air
France moving its regional headquarters.

With stock markets and currencies plummeting, tourist and
business traffic within the regional are also drying up, and the
airlines are among the first to take the brunt.

Hong Kong flagcarrier Cathay Pacific Airways Ltd. plans to lay
off hundreds of staff amid the decline in travel due to Asia's
financial crisis, according to reports Thursday.

A spokesman for the airline declined to comment on the report
widely carried in the press here.

The reports said the airline was preparing to sack between 300
and 700 staff in Hong Kong and elsewhere in the world in a
restructuring of its international operations as travel worldwide
declined.

Two months ago, the airline laid off 500 ground service
workers as it combined operations under one roof.

Australian flag carrier Qantas Airways Ltd. announced at the
same time a new round of cuts in its Asian operations as the
crisis begins to bite deeply into Australian commerce and
tourism.

Services between Australia and Indonesia, Thailand and
Malaysia will be suspended or reduced in frequency because of
cancellations and plummeting demand for seats, the airline said.

This follows cuts by Qantas and three other airlines in
services to and from South Korea amid deteriorating economic
conditions in the country. Other airlines say they are also
reviewing services elsewhere in Asia.

The latest suspensions come amid mounting anxiety here that
the Asian crisis could lead to a sharp downturn in growth and
even warnings about the possibility of recession.

In some cases the plunging currencies are becoming an
irresistible attraction, with places like Hong Kong, which is
staunchly defending its peg to the US dollar, suffering by
comparison.

Air France announced Thursday that it will transfer its Asia-
Pacific headquarters from Hong Kong to Bangkok in a move that
will save US$750,000 a year -- an "irresistible" benefit of
Thailand's currency devaluation, the head of Asian operations
said Thursday.

Arthur Bullard, managing director of Air France Asia-Pacific,
said the move on July 1 will not affect the expansion plans of
the company, which wants to increase its capacity in the region
by 40 percent in three years.

The transfer to Bangkok, which involves a staff of only eight
people, will reduce costs by 70 percent from Hong Kong, saving
some 750,000 US dollars a year, he said.

"Bangkok has always been cheaper but with devaluations of the
currency, the trend has become irresistible," said Bullard.

Earlier this week Thailand announced the launch of an
emergency hot line for tourists in trouble as part of its bid to
lure more foreigners and their currency to the troubled country,
officials said Tuesday.

The service is aimed at protecting visitors in case "the
economic difficulties facing the country encourage some
unscrupulous elements to target tourists," Tourism Authority of
Thailand (TAT) governor Seree Wangpaichitr said.

"That would not be in the interests of tourism or the country,
especially at a time when foreign exchange earnings from tourism
are so vital to our economic recovery," he added.

Throughout the region, governments and tourist boards are
striving to bring back the tourist dollars, with flight and hotel
rooms cheaper.

Here in Hong Kong the problem has been exacerbated by
worldwide media coverage of the deadly bird flu virus which has
claimed six lives.