Global airlines are heading for $2.5 billion of losses this year as the economic crisis bites, the International Air Transport Association (IATA) announced last month.
It looked set to return total losses of $5.0 billion in 2008, which was slightly less than the $5.2 billion loss that the industry body predicted in September, due mainly to a rapid decline in fuel prices, while the 2009 figure was lower than the $4.1 billion previously forecast.
Its 230 members, which represent 93 percent of scheduled international air traffic, face a difficult time.
“The outlook is bleak. The chronic industry crisis will continue into 2009 with $2.5 billion in losses. We face the worst revenue environment in 50 years,” IATA’s director general, Giovanni Bisignani, said.
Passenger traffic is forecast to dip three per cent this year, while cargo was predicted to be five per cent lower and revenue six per cent lower, according to the Geneva based body.
Bisignani made special note of the continuing contraction of air cargo traffic that started in June 2008. “Air cargo comprises 35 per cent of value of goods traded internationally. The 7.9 per cent decline in October is a clear indication that the worst is yet to come – for airlines and the slowing global economy,” said Bisignani.
Middle Eastern airlines will see losses double to $200 million. The challenge for the region will be to match capacity to demand as fleets expand and traffic slows – particularly for long haul connections, says IATA.
African airlines will see losses of US$300 million continue. The region’s carriers face strong competition and defending market share will be the main challenge, it stated.
Asia Pacific carriers will see losses more than double from the $500 million in 2008 to $1.1 billion this year. With 45 per cent of the global cargo market, the region’s carriers will be disproportionately impacted by the expected 5 per cent drop in global cargo markets next year.
Chinese growth will slow as a result of the drop off in exports. India’s carriers, which are already struggling with high taxes and insufficient infrastructure, can expect a drop in demand following on from the tragic terror incidents in November.
European member airlines are expected to post losses of $1 billion this year, 10 times higher than in 2008. North American airlines were expected to be the only region making a profit in 2009, but only some $300 million, less than one per cent of revenue.
