By Lydia Lim, Senior Political Correspondent (Picture: Minister Mentor lee Kuan Yew receiving the Global Aviation Leadership Award from International Air Transport Association CEO Giovanni Bisignani at the association's 65th Annual General Meeting in Kuala Lumpur yesterday. Mr Lee said the future of the airline industry will move in tandem with the shift of economic activity from the Atlantic to the Pacific. - ST Photo)

He was speaking to hundreds of airline chiefs and executives at the International Air Transport Association's (Iata) annual general meeting.

Iata predicted yesterday losses totalling US$9 billion (S$13.1 billion) this year, with carriers in the Asia Pacific likely to be the worst hit.

Mr Lee focused on broader growth trends. He noted that China's and India's economies will still grow this year, even as most other nations sink into recession.

During recent visits to Shanghai and Suzhou, he found the Chinese confident of achieving growth of 8 per cent this year.

They also have huge reserves and continue to build airports, certain that air travel will integrate China both internally and internationally, he said.

As for India, it should achieve growth of 6 per cent this year.

The other big players in the shift of activity from the Atlantic to the Pacific are the Gulf states.

Mr Lee said he watched with wonderment Emirates Airlines' huge order of 45 A-380s, the world's largest commercial aircraft. The order had not been cancelled despite the financial crisis.

By comparison, Singapore Airlines only has eight A-380s.

'We wonder where they are going and who they are carrying, but they are well placed financially,' he said of Emirates, a keen competitor of SIA's.

During the 40-minute dialogue hosted by BBC presenter Nick Gowing, Mr Lee also spoke of SIA's growth from a small carrier with few resources into one of the world's major airlines. His role in founding SIA and Changi Airport was lauded by Iata chief Giovanni Bisignani, who presented him with the trade body's Global Aviation Leadership Award.

Mr Lee said Singapore's decision to start SIA in 1972 was akin to 'whistling against the wind'.

He recounted how he made it clear to management and staff from the start that the carrier had to be self-supporting or shut down. SIA has stayed in business since then because it did things better than other airlines - it was more punctual, provided better service and flew newer aircraft.

He expressed confidence that an SIA deal with a China carrier would eventually come about because they know Singapore can help them re-invent themselves.

That followed SIA chief executive Chew Choon Seng's comment yesterday that the carrier remained interested in acquisitions in China and India.

On the current economic slump, Mr Lee said he agreed with top Obama adviser Paul Volcker that the American economy had nearly reached bottom, though there would be no quick recovery. Singapore was also beginning to see some small signs of recovery. Trade was down by about a third in April but picked up last month.

And in yet another sign, perhaps, of the shift in economic activity from the Atlantic to the Pacific, Mr Lee recalled that only three out of 12 first-class cabins on SIA's A-380 flight from Singapore to London were taken.

But it was almost full house on the flight back to Singapore from London, which 'greatly cheered' him.

Yesterday was the first day of Mr Lee's week-long visit to Malaysia. Last night, he met Transport Minister and Malaysian Chinese Association chief Ong Tee Keat, and other representatives from his party, part of the ruling Barisan Nasional coalition.

They had a frank discussion on Singapore's education system and language policy, Mr Lee's press secretary Yeong Yoon Ying said.