Airline industry growth and environmental health are a zero-sum game
The global airline industry revised up projected 2009 losses to $9 billion
The global airline industry has now nearly doubled its forecast for the 2009 losses to $9 billion, blaming it on the “economic meltdown.”
The International Air Transport Association, IATA, has revised up its forecast to $9billion saying that airline industry revenues could fall 15 percent to $448 billion in 2009, nearly twice its March projected losses of $4.7 billion.
“There is no modern precedent for today’s economic meltdown. The ground has shifted. Our industry has been shaken,” said Giovanni Bisignani, IATA’s director general. “Our future depends on a drastic reshaping by partners, governments and industry.”
The state of airline industry:
- “Global economic downturn” has affected both passenger traffic and freight volumes.
- “High-fliers” have switched from first- and business-class to economy class, dramatically affecting a major source of revenue for most carriers worldwide
- “Whether this crisis is long or short, the world is changing. Travel budgets have been slashed and consumers will need to reduce their debt. It will not be business as usual in the post-crisis world,” Bisignani said.
- Many airlines face substantial losses as the global recession lingers on.
- To cut costs, Japan Airlines, the largest Asian carrier by revenues, is cutting capacity on international routes by 10 percent.
- State-owned Air India is reportedly considering delaying planes on order from Boeing.
- Carriers in the Asia-Pacific region will bare the full brunt of the downturn to the tune of about $3.3 billion due to the recession in Japan and economic slowdown in both China and India.
- North American airlines 2009 losses are forecast at about $1 billion (down from $5.1 billion losses in 2008, which were caused by soaring fuel prices).
- European carriers are expected to post losses of about $1.8 billion.
The impact of the global recession is thought to be greater than the Sept. 11 aftershocks on the industry, when revenues fell by 7 percent, IATA director said. “It took three years to recover lost ground, even on the back of a strong economy. This time we face a 15 percent drop — a loss of revenues of $80 billion — in the middle of a global recession.”
IATA said its 230 member carriers expected air freight volumes to fall by 17 percent, and passenger traffic by 8 percent to 2.06 billion (2.24 billion in 2008).
Soaring oil prices in 2008 forced up the industry’s fuel bills to $165 billion and precipitated losses of about $10.4 billion. IATA projects total fuel bills of $106 billion for 2009, however, it warned members that oil prices could be hiked up again if the global economy recovers.
“Thank God men cannot as yet fly and lay waste the sky as well as the earth!” —Henry David Thoreau
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