The aviation sector is predicted to book profits of up to $4bn this year after losing more than $30bn since 2000.

Passenger traffic in the Asia Pacific region is tipped to increase 14% in 2004 after declining 9.4% the previous year due to the fallout from SARS, said Giovanni Bisignani, director-general of the International Air Transport Association (IATA).

This is double the projected rise in global passenger traffic of 7% this year from a 2.4% slump in 2003, he said on the final day of an IATA-sponsored aviation conference in Singapore.

"Without surprises, 2004 will be better," Bisignani said, adding that global profit this year could range between $2bn and $4bn.

In regards to the region, he said: "Asia Pacific is a vital part of our industry. The future holds great things for Asia Pacific and for our industry."

But Bisignani, along with other industry leaders who spoke at the conference, urged airlines and their business partners to step up the pace of reforms if the aviation sector is to realise its growth potential.

Cost of security

Security fears led to several BA
flights being grounded recently

In particular, Bisignani said governments must bear the extra costs arising from increased security measures implemented to guard against terrorist acts after the 11 September terror attacks in the US.

The extra cost of airlines' compliance with the new security measures totalled more than $5bn since the attacks.

"There is no argument that airlines must bear the cost of ordinary aviation security.

"But the situation is now extraordinary ... in many cases we are being asked to pay for what is national security," he said.

"This is not fair and must change. Our target is to get governments to accept the extraordinary cost of security ... like they do for any other national security issue."

Staying focused

"The pace of change in Asia will increase. As has happened in the US and Europe, the winners will be those countries in Asia whose governments liberally exchange traffic rights and expose their national airlines to market competition"

Lee Kuan Yew,
Singapore minister

Another area which also needs to be looked at again is the tendency for airlines to want to dominate every segment of the industry, he said.

This practice more often than not tended to work against the carriers, said Tony Fernandes, founder and chief executive of the popular Malaysian budget carrier AirAsia.

"I feel airlines and governments have caused a lot of the problems that they are in themselves.

"Airlines generally are not focused ... they try to do everything and try to control every part of the market in many ways.

"And in my three years, I have found it absolutely impossible to try and do anything else but stay focused on our core business."

Bright prospects

Singapore's founding father, Lee Kuan Yew, shared Bisignani's upbeat assessments of the region's aviation prospects.

But he said it would require governments to liberalise the aviation sector and increase competition.

"The pace of change in Asia will increase," he said late on Sunday in a keynote speech to the IATA conference.

"As has happened in the US and Europe, the winners will be those countries in Asia whose governments liberally exchange traffic rights and expose their national airlines to market competition."

In parts of Asia, this is already happening, said Lee, the city-state's first prime minister who remains an influential figure as senior minister in the government.

"Governments in Asia are beginning to liberalise their air transport regimes. They have seen the potential spin-offs in trade, tourism and investment flows," he said.