Security and tourism among top issues at Asian airlines summit

Security and tourism among top issues at Asian airlines summit

Reuters, Cebu, Philippines

Security and threats to tourism will top the agenda on Thursday as executives from 17 Asian airlines start a two-day annual meeting in the Philippines.

The hijack-suicide attacks on the United States over a year ago are still fresh in the minds of the officials, but the summit also comes a month after bombings in the Indonesian resort island of Bali killed more than 180 people. Most of the dead were foreign tourists.

The health of the world's largest economies and a leap in the price of fuel in the event of a U.S.-led war on Iraq are other key issues.

Asia, particularly China, is the fastest-growing market for air travel, making passenger safety and confidence paramount in the wake of the Oct. 12 bombings in Indonesia.

"The further north you go, the less carriers are affected," said Philip Wickham, an analyst at ING Financial Markets in Hong Kong. "But if there was another attack, say in Phuket (in Thailand), then the outlook would be different."

Philippine Airlines President Avelino Zapanta said Asian carriers weathered the September 2001 attacks on the World Trade Center and the Pentagon better than their U.S. counterparts, largely due to the region's geography.

"Land transportation in both Europe and the United States is very efficient," he told Reuters.

"Here in Asia, most countries are archipelagos, so they (travelers) have to fly. Aside from that, the market these areas serve is a real mix of fliers -- tourists, businessmen, overseas workers."

But Zapanta, who is chairing the meeting of the Association of Asia Pacific Airlines in the central Philippine city of Cebu, warned that tourists from Europe and North America were the first to disappear from the region if security was in doubt.

"The region is on the whole classified by Western countries as unsafe now," said Anson Sng, an analyst at Phillip Securities Research in Singapore.

"Indonesian routes are definitely affected but you can see tangible diversion to countries such as Malaysia."

Despite security and tourism concerns, industry watchers said the biggest threat came from the risk of recession in the United States, Europe and Japan along with higher fuel costs that would result from a U.S.-led attack against Iraq.

"Fuel is the biggest cost, but economic activity is still the biggest driver of profits," said Peter Hilton, an airline analyst at Credit Suisse First Boston. "We need to know what will happen with the U.S. economy in 2003."

Fuel typically accounts for 15-25 percent of an airline's costs.

China, with its booming economy, looks set to be the region's bright spot.

U.S. plane maker Boeing Co. has forecast that China would need more than 1,900 new jets worth US$165 billion over the next 20 years.

"The fastest growth is in China," said Hilton. "It will be a very large market."