In the red
June 8, 2009
The International Air Transport Association (IATA) released this latest forecast at its annual meeting in Kuala Lumpur on Monday.
The figures are twice as bad as those released by the IATA just three months ago; at that point it predicted the airline industry would lose $4.7 billion in the course of 2009.
"Today's situation is unprecedented, the most difficult ever," IATA Director-General Giovanni Bisignani said. "There is no modern precedent for today's economic meltdown. The ground has shifted. Our industry has been shaken."
Recession hits airlines especially hard
Albert Jung, a corporate communications manager at IATA, says the airline industry has been one of the hardest hit by the global economic meltdown.
“Basically all regions of the world are affected. US carriers are going to be making losses as well as the Europeans and the Asians - because the drop in demand is similar in all regions. And as the global economic crisis unfolds, demand for air travel is down. But it's even more than that. Travel is one of the first expenses that companies want to save on. People are not sending their employees to business meeting. Thus airlines are affected much harder than other industries.”
Airlines are predicted to suffer up to a 10 percent decline in passenger demand in 2009, on top of an almost 20 percent drop in cargo demand – as the global economy continues to grapple with its worst recession since the Second World War.
The industry is also faced with rising prices of jet fuel, which reached a six-month high of 75 dollars a barrel last week.
Profits in the face of the crisis
But while most of the world's carriers have recorded significant losses this year, not all have been so quick to raise the white flag.
Easyjet is one of two European airlines, the other being the German carrier Lufthansa, which has shown a rise in profits during the financial crisis.
According to Easyjet spokesman Oliver Aust, the key to their success during the crisis has been the ability to attract both business and vacationing travelers.
“Since times started getting bad business travelers have shunned expensive business class flights when travelling within Europe. As a result, one fourth of our revenues now come from business travelers. Secondly, leisure travelers looking for a little sunshine this summer are now not going to Miami or Mexico, but rather to Italy or France, which definitely helps us as a European airline.”
Future looks grim
At the IATA meeting in Kuala Lumpur, industry officials were unmistakably pessimistic about the future for air travel. And that's despite recent positive outlooks from policy makers and economists that global economic recovery is on the horizon.
Albert Jung of the IATA said “there are estimates that air travel will recover early next year. But we've also heard others saying it will take up to two years until demand rejuvenates. So the big problem now is not only the absolute drop in numbers but also the huge uncertainty about when things are going to be becoming better.”
"Optimists see growth by the end of the year, but pessimists view this as a mirage," IATA Chief Bisignani said.
"I am a realist. I don't see facts to support optimism."
glb/dpa/AFP
Editor: Chuck Penfold