IATA sees sharp slowdown in Japan air traffic

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The deadly earthquake in Japan and an ensuing nuclear crisis is expected to lead to a short-term sharp slowdown in air traffic in the country before improving in the second half of 2011, IATA said Friday.

Damage to fuel infrastructure facilities in Japan could also push jet fuel prices higher, warned the International Air Traffic Association.

"Japan produces 3-4 percent of global jet fuel supply, some of which is exported to Asia. Some of this refinery capacity has been lost due to damages caused by the earthquake," it noted.

"This supply restriction could lead to higher jet fuel prices," it warned.

Overall, the country's travel demand is expected to fall sharply in immediate weeks.

"A major slowdown in Japan is expected in the short-term. And the fortunes of the industry will likely not improve until the effect of a reconstruction rebound is felt in the second half of the year," said Giovanni Bisignani, who heads the International Air Transport Association.

He noted that the Japanese aviation market is worth some $62.5 billion and makes up 10 percent of the overall industry's revenues and 6.5 percent of traffic worldwide.

Most exposed to the crisis is its domestic market which generates $19 billion in annual revenues.

However, a slowdown in Japanese travel could also have an impact elsewhere.

Most exposed is China where Japan makes up 23 percent its international revenues. For Taiwan and South Korea, the corresponding figure is 20 percent.

"Many economists are suggesting that once reconstruction begins the economy will rebound, but the length of the current downturn will depend critically on developments in the nuclear power situation," said IATA.

© 2011 AFP

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