IATA sees slow Japan recovery

(Reuters) - Air passenger traffic is picking up in the Middle East after the region was torn by instability but airlines will have to wait until after the summer for a recovery in Japan, a top industry official said on Thursday.

Giovanni Bisignani, director general of the International Air Transport Association (IATA), which represents the majority of world airlines, said the industry was also reeling from a $30 billion rise in its fuel bill this year due to the Arab unrest.

“The concern today is fuel and the impact on revenues in Japan,” he told Reuters in an interview.

IATA had previously said the 11 March Japanese earthquake and subsequent nuclear crisis would cause a major slowdown from which airlines would not recover before the second half.

“We will have to see the numbers for April because March is not a big indicator, but there will be a big effect,” Bisignani said.

The high-yield Japanese market represents 6.5 percent of global passenger traffic but 10 percent of industry revenue.

Airline executives have reported a drop in regular traffic tempered by an influx of passengers and cargo to help deal with Japan’s worst crisis since World War II.

Asked how long it would be before ordinary demand recovered, Bisignani said: “We will have to wait until after the summer.”

Analysts say U.S. group Delta Air Lines (DAL.N) is the biggest foreign carrier in Japan, whose market is dominated by Japan Airlines (JALFQ.PK) and All Nippon Airways (9202.T).

“The Middle East is moving a bit faster, especially a market like Egypt which is recovering with the high season and is still seeing bookings coming in to the Red Sea,” Bisignani said.

“There is a problem of fuel and costs, not so much on traffic.

Traffic is picking up,” he added.

Oil prices have risen 30 percent this year to $124 per barrel for North Sea Brent crude on Thursday.

Bisignani, who is due to retire in June after leading the airline industry through one of its most tumultuous decades, was speaking in Paris after being voted on to the board of French aero engine maker Safran (SAF.PA).

“My big priority will be safety,” he said.