• Lufthansa buys BA/Air France, Delta moves hub, Air Canada-Emirates to codeshare, Ryanair air charge

• Malaysia Airlines and Virgin Blue confirm major aircraft orders

• Virgin Blue orders up to 105 B737s, Cebu Air defers IPO
• Virgin Blue declares war on the domestic market; global alliance in the wind?
• Thai Airways receives govt support for capital raising; SIA to raise fares; Asia sees strong demand
• More analysis from Asia Pacific Airline Daily...

Asia Pacific full service airlines have seen a pick-up in passenger travel and air
cargo demand in the early stages of 2010, according to the Association of Asia
Pacific Airlines (AAPA). The industry body added that the double-digit year-on-
year increases in international passenger and freight traffic provides “further
confirmation of an ongoing economy recovery”, which first became evident in
4Q2009.

AAPA members transported 14.2 million international passengers in Feb-2010, a 16.9%

year-on-year increase, with a 14.0% gain in international passenger traffic (RPKs),
indicating the “relative strength” of demand on routes within the region. For the first two
months of 2010, AAPA members have reported a 2.8% increase in international
passenger numbers.

AAPA PLF and pax growth: Feb-2009 to Feb-2010

Centre for Asia Pacific Aviation & AAPA

Capacity increased for first time in over 12 months

The average passenger load factor for the month was 79.2% - for seven consecutive
months of year-on-year load factor improvements, reflecting stronger demand and
continued capacity restraint. Capacity (ASKs) increased 2.4% year-on-year last month,
representing the first capacity increase in over 12 months for AAPA members.

AAPA RPK growth and ASK growth: Feb-2009 to Feb-2010

1
Centre for Asia Pacific Aviation & AAPA

“Dramatic rebound” in international air cargo rebound

International air cargo demand (FTKs) for the first two months of 2010 has recorded a
“dramatic rebound”, rising 33.5% from 2009 - when the industry was suffering from the
worst effects of the slump in international trade.

AAPA FTK growth and FATK growth: Feb-2009 to Feb-2010

Centre for Asia Pacific Aviation & AAPA

In Feb-2010, AAPA members reported a 29.8% increase in air cargo demand (FTKs)
compared to Feb-2009 levels (close to the bottom of the downturn). The average
international air cargo load factor for Asia Pacific carriers surged 10.3 ppts year-on-year
(to 68.5%), even with a 10.2% increase in freight capacity.

Mr Herman commented that whilst the recent recovery has been led by the more
dynamic Asia Pacific economies, “it is worth noting that the rebound in demand for

2
international air cargo has been broadly based, with both exports and imports from other
regions showing renewed vigour.”

Outlook: Cautiously optimistic about prospects for 2010, but

long road to full recovery
The AAPA traffic results for Jan-2010 and Feb-2010 reveal a “positive start” to 2010,
following a disastrous year in 2009, in which Asia Pacific airlines were forced to
aggressively cut capacity, reduce costs (though some did better than others) and
discount fares to simulate demand.

The prospects are better for 2010, with AAPA stating it is “cautiously optimistic about
prospects for the coming year”. However, Mr Herdman commented that while the
demand improvement is “certainly welcome”, it needs to be “coupled with careful
management of costs and available capacity, if airlines are to succeed in restoring
profitability following two years of heavy financial losses.”

By arista –Indonesia airline analist