IATA eyes risks from Ebola, Russia to air travel demand

BERLIN Wed Aug 6, 2014 10:13am EDT

The logo of the International Air Transport Association (IATA) is on display at the venue of its 65th annual general meeting in Kuala Lumpur June 8, 2009. REUTERS/Zainal Abd Halim

The logo of the International Air Transport Association (IATA) is on display at the venue of its 65th annual general meeting in Kuala Lumpur June 8, 2009.

Credit: Reuters/Zainal Abd Halim

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BERLIN (Reuters) - The outbreak of the Ebola virus in West Africa, conflict in the Middle East and a possible trade war with Russia could all hurt air travel this year, a leading industry group said.

"All have the potential to dent demand," Tony Tyler, Director General of the International Air Transport Association (IATA), which represents around 240 airlines, said on Wednesday.

"We are optimistic that the industry will still end the year with an improvement in profitability over 2013. But the regional impact of some of these risks will challenge some airlines more than others," Tyler said in a statement.

The Ebola outbreak that began in West Africa in March has killed 932 people so far and governments and global health authorities are struggling to stop it spreading.

Tyler said Ebola could be one of the biggest challenges this year for some airlines, even though the World Health Organization says the risk to plane passengers from Ebola is low and has not recommended travel restrictions.

Nevertheless, France, Germany, Greece and the United States are advising their citizens to avoid travelling to the areas of West Africa worst hit by the virus.

British Airways (ICAG.L) has suspended flights to Liberia and Sierra Leone until the end of month, while Emirates [EMIRA.UL] has suspended flights to Guinea.

Two regional African airlines, Nigeria's Arik and Asky, have cancelled all flights to Sierra Leone and Liberia.

Africa's airlines are already struggling to fill seats, with planes on average around two-thirds full, and demand dropped 2.7 percent in June, IATA data showed on Wednesday.

The industry association put that drop down to economic factors, such as a slowdown in South Africa.

MEDICAL KITS

Brussels Airlines, one of the few still flying to Guinea, Liberia and Sierra Leone, said staff at airports and on its planes were equipped with thermo-scanners to check passengers for signs of fever, one of the main symptoms of the Ebola virus.

Planes are also stocked with special medical kits in the event of a passenger falling sick on board.

"But we have not seen a drop in demand, nor have we reduced our flights," a spokeswoman for the airline, part-owned by Lufthansa (LHAG.DE), said.

The threat of a trade war with Russia was also a growing threat to air travel this year, IATA said.

Russia has threatened to retaliate for the grounding of a subsidiary of national airline Aeroflot (AFLT.MM) because of EU sanctions. One newspaper reported that European flights to Asia over Siberia could be banned.

Ruxandra Haradau-Doser, an analyst at Kepler Chevreux, said avoiding Russian airspace could cost Lufthansa, for example, around 100-150 million euros($134-$200 million) a year.

"There's a high risk we could see more profit warnings in the industry," she said.

IATA forecasts global airlines will make a combined profit of $18 billion this year, up from $10.6 billion in 2013.

IATA said passenger traffic demand grew 4.7 percent in June, down from a 6.2 percent rise in May.

Capacity - the amount of seats offered - rose 5 percent after a 5.2 percent rise in May. Lufthansa and Air France-KLM (AIRF.PA) cited overcapacity as one of the reasons for their recent profit warnings.

(1 US dollar = 0.7491 euro)

(Additional reporting by Sabine Wollrab in Frankfurt; Editing by Kirsti Knolle and David Clarke)

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Comments (1)
speakfreely wrote:
Saw on CNBC Delta’s CEO interview about Russia’s possible air space ban. He made a good point: the cost of skirting Russia’s airspace is offset by the savings in the fee.

How’s THAT, Putin?

Aug 06, 2014 6:24pm EDT  --  Report as abuse
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