Sabre global boss forecasts Asia slowdown

Sabre global boss forecasts Asia slowdown
By admin


Travel in Asia Pacific will continue to grow but not at the same pace as recent years as airlines become more disciplined with capacity, the global boss of Sabre Travel Network has forecast.

In a wide-ranging interview with Travel Today, the technology giant’s president Greg Webb said the rate of expansion is unlikely to be sustainable.
The aviation industry can only add capacity so quickly and a generally more restrained approach from airlines is limiting growth opportunities for the wider travel market, he said.
“Asia Pacific and Australia has been right where we expected it to be,” Webb said of region's performance this year. “That is, it’s still growing at a good pace but we're starting to see signs that it's not going to continue.
“For a period it was the only part of the industry that was growing at a rapid pace. I’m not sure it is sustainable.”
While sharing a belief among airlines that there remain growth opportunities – he cited the recent China Eastern and Qantas tie-up – airlines “can only add capacity so quickly”, Webb said.
Furthermore, aviation has adopted an untypical stance since the Global Financial Crisis and refrained from piling on capacity in favour of more moderate growth.
Operating such capital-intensive businesses that have expensive assets that depreciate, airlines have historically sought to “grow to survive”, he said.
“That has been the mantra of the airline industry," Webb explained. “But since the GFC airlines have been very disciplined in restraining capacity growth and been able to raise prices.
“Whether or not that will be the new way of thinking, I don't know. The jury is still out over whether airlines will continue to have a more disciplined view of capacity or whether we'll go back to the industry view of grow or die.
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“The industry can only grow as fars as capacity grows so if capacity is going to grow 3% to 5% it will be very difficult for the industry to grow much faster than that.”
In Australia, Webb said airlines, and hotels, have “done a good job” of limiting capacity growth in an environment where corporate travel demand rising.
“Naturally fares have gone up as have average rates in the hospitality industry,” he said. “But when corporate travel grows leisure travel gets depressed a little because rates go up and there are not so many good deals around.”

Email the Travel Weekly team at traveldesk@travelweekly.com.au

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