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IN RECENT weeks, even some of the most pessimistic market watchers seem to have become less cynical about the notion that there could indeed be some green shoots sprouting here and there. This comes amid evidence suggesting that the worst financial crisis in recent memory may be over.
OECD economic data - especially in the three global powerhouses of the United States, Germany and Japan - seem to be at an inflexion point after a year-long slide. Meanwhile, domestic consumption in the two most populous nations in the world - China and India - seems to be picking up more strongly than projected. The effect is being felt, even in export-driven economies across the region.
One sector which is poised to enjoy the effects of this creeping sequential recovery is global aviation. The industry has been stuck in its worst slump in memory since last October amid falling demand and deteriorating yield.
After losing more than US$10 billion last year, the industry is bracing for a loss of some US$9 billion this year. But even here, there are some green shoots. There have been sequential, albeit weak, improvements in operating numbers on both the passenger and cargo fronts.
Freight utilisation improved to 47.3 per cent in June. Passenger markets also appear to be stabilising, although much of this has been due to substantial fare discounting, rather than improvement in economic conditions.
But when the recovery kicks in, the industry is likely to face very different market dynamics.
Asia-Pacific carriers, largely based in populous and high-spending economies of the Pacific, are likely to see faster growth. As a result, these players could dominate the skies.
But the rules of the game are still largely defined in the US and Europe. So this has to change.
With more market power and presence comes more responsibility. Asia, which is home to more than half the world's population, has to take more responsibility for setting new rules to reshape the industry.
This is particularly necessary in the context of liberalisation, security and the environment. If Asian governments and airlines act together, they can help balance the traditional leadership of the US and Europe, and bring to the table bold approaches and explore new ways of doing business. In particular, they will have the opportunity to change an archaic bilateral system of air agreements which has created a fragmented and protected industry which lurches from feast to famine every few years.
For a start, perhaps both governments and industry should get together to set up a new regional institution for coordination of air policy issues involving Asia and the Pacific.
Aviation's future belongs to Asia - but only if the region comes together and figuratively grabs it with both hands.
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