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OAG: Oag Reports A 7% Drop In Global Airline Capacityof 59.7 Million Seats In 4th Quarter(M2 PressWIRE Via Acquire Media NewsEdge) RDATE:05082008 --U.S. Hardest Hit as Travelers Face Unprecedented Cutbacks in Available Seats -- Indications for Asian Capacity to Drop Significantly -- 275 Airports Worldwide to Lose Air Service Altogether -- Transatlantic Routes Buck the Trend with 2% Year on Year Growth --OAG Adjusts its Fleet Forecast for 2017 Downby More Than 3,500 Aircraft --Schedule Reductions Could Trigger up to 15% Drop in MRO Spend Washington, D.C. -- The world's airlines will offer59.7 million fewer seats in the 4th quarter of 2008 than they did a year ago, according to OAG (Official Airline Guide)in its 10 year view of the global aviation industry. The latest figures from OAG's consolidated database reveal a 7% drop both in thenumber of flights and in seat capacity for October, November and December 2008 compared with the same time last year. TheU.S. domestic market will account for just under 20 million of that figure, or 33% of the global decline in capacity, in whatcould potentially be the most widespread crisis to hit the aviation industry in recent memory. The OAG analysis takes into account all future schedules filed by the airlines to date, to provide a comprehensive snapshot of planned airline activity for October to December 2008 with comparisons tracking back 10 years. The U.S.domestic market has traditionally been the largest theatre of airline activity in the world. However, largely due to the growth of low-cost carriers, intra-Europe and intra-Asia air transport markets have been growing quickly in recent years.In the 4th quarter of 2007, seat supply in intra-Asia markets outpaced the U.S. for the first time. However,as with the U.S., bothEurope and Asia will see their operations decline in the 4th quarter 2008. Asia is currently showing a 13% decrease in capacity (equivalent to a 3-year setback in growth) although this may not bequiteas severe as current figures show as a number of Chinese carriers have not yet filed theirfullwinter schedules. The transatlantic route, however, is showing continued growth, albeit at a much slower rate than a year ago, with flights up by 1% and capacity up by 2%. It is not only passengers who are facing reduced service and choice. Many airports will be severelyaffected by the announced cuts by airline operations, with 275 airports around the world losing scheduled air service altogether based on current filed schedules. Of these, 32 are in the U.S. while 116 are in the Asia Pacific region. Steve Casley, Chief Operating Officer of OAG, said, "The data speaks for itself. It took a good three years for the industry to recover from the downturn in 2001 when it had a 5% drop in capacity and a 7% drop in flights. Steady annual growth since 2002 looks set to plummet in the fourth quarter this year with an unprecedented global decline of 7%." "Commercial aviation marches in lock-step with the global economy, closely reflecting growth and declines in GDP, with on average a steady 3-4% growth year over year," continued Casley. "In the last 10 years this steady growth has been interrupted twice: first, by the meltdown of the global economy in 2001 following the burst of the Internet bubble, which was compoundedbya year of criseswith the traumatic events of 9/11, the Gulf War and the SARS epidemic within Asia; and second - on the immediate horizon - by the extraordinary impact that the rising cost of oil is having on the global economy. We tend to focus so much attention on the growth of Asian markets, but the projected 13% drop in Asian seat capacity is a significant metric that may have wider impact. "From OAG's statistics, it looks quite possible that we may be facing a far more severe global downturn than we have experienced before. The industry's resilience will be pushed to its limits in the coming months, with carriers, airports and passengers alike all waiting and watching for a glimmer of light at the end of the tunnel." OAG is able to track these trends using its 30 year repository of future and historic airline schedules that is available to industry analysts around the world. This 10-year view of global frequencies and seat capacity isolates the supply-side of the airline industry to the 4th quarter of each year from 1999 forward. The U.S. appears to be bearing the brunt of the downturn.While there has been intermittent growth since 2001, when seat capacity and volume of flights fell by 13%, it has not been steady, and the U.S. domestic industry is nowhere near the size it was in 2000. Another sharp 9% decline when the winter schedules start will bring the U.S. market to its lowest level in over 10 years. The growth of low-cost competition in local markets forces carriers to look at the potential of long-haul services for higher yields and better revenues. Airlines that have wide-body, long-distance aircraft at their disposal willredeploy these assets from domestic markets to long-haul international markets in an economic downturn.The results of these decisions can be seen inthe 4th quarter2008 capacity growth intransatlantic markets,up 2% from the previous year. Long-haul seat capacity in theEurope-Asia sector however is showing a 3% drop year over year, and there is a marginal decline of 0.2%ontranspacificroutes. OAG,whichalso maintainsthe world's leading fleetdatabase,has adjusted its 10-year forecast for the global scheduledaircraft fleet to shrink by more than 3,500 aircraft as a result of high jet fuel prices and to reflect the impact of these capacity cuts. Deliveries of new aircraft are expected to be reduced by 744 aircraft.Near-term firm orders are expected to be pushed back rather than cancelled. Maintenance Repair and Overhaul(MRO) spend could drop as much as15%, according to OAG analysts. Global capacity dropped 4.7% from calendar year 2001 to calendar year 2002 before recovering, while global MRO activity bottomed at -14.5% in 2003.From 2003 to 2005,growth inMRO spend trailed capacity growth, with an average annualgrowthrate of just 3% compared tocapacity growth of 6.2%. With the latest schedules showing a 7% drop in global capacity, OAG expertsestimate thatit is possible thatMRO spend could drop byas much as 15% in 2009-2011. Looking further ahead, OAGsuggests that MRO spendcould continue to lag seat capacity once growth returns. "We expect new aircraft will drive the growth, and the resultinghoneymoon effect' of low maintenance requirements could keep MRO spend down," said Casley. To accompany this report, 15 illustrative charts showing 10 year trends can be accessed athttp://www.oag.com/graphics/charts.htm Notes to Editors Downloadable images of 15 charts illustrating 10 year trends mentioned in this release are available athttp://www.oag.com/graphics/charts.htm The data used in this analysis is compiled from OAG's schedules database, which contains all schedules filed by the world's airlines, and its fleet database, whichcontainsa detailed accounting of every commercial aircraft currently in service, storage or on order. The figures are based on information available as at 30 July 2008, using all future published schedules for Q4 2008. These schedule filings are subject to change by the airlines, and some carriers - particularly in China - have not yet filed their full schedules for October onwards. Analysis of airports projected to lose air service was made by comparingDecember 07 to December 08. Airports had to have at least 4 departures for December 2007 (one per week) to be included in the list. About OAG (Official Airline Guide) OAG (www.oagcorporate.com) is a global flight information and data solutions company for the passenger aviation, air cargo logistics and business travel markets. The business is underpinned by its data management expertise.OAGis best known for its airline schedules database which feeds the world's global distribution systems and travel portals and drives the internal systems of many airlines, air traffic control systems, aircraft manufacturers, airport planners and government agencies. OAG is part of Commonwealth Business Media (www.cbizmedia.com) a wholly owned subsidiary of United Business MediaLimited (www.unitedbusinessmedia.com). CONTACT: Alison Pickering, Head of Corporate Communications, OAG, UK Tel: +44 (0)1582 695 477 e-mail: [email protected] David Beckerman, VP OAG Analytical Services, Washington D.C. 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