Airlines in US and worldwide facing crisis
In the US, Americans are beginning to shun air travel. Worldwide, there is a crisis as airlines that planned to make hefty profits this year are now looking at billions in deficits.
“The industry is in crisis, perhaps the biggest crisis we have ever faced,” said International Air Transport Association secretary general Giovanni Bisignani at the start of its general meeting in Istanbul.
Americans are beginning to shun air travel because of higher fares, security hassles and chronic schedule and service disruptions, according to a survey commissioned by the Travel Industry Association (TIA).
Mr Bisignani said its member airlines faced losses of $US2.3 billion this year due to soaring fuel costs, dramatically reversing a forecast of profits nearly twice that figure.
Just a few weeks ago, the organization forecast profits of $4.5 billion (2.9 billion euros) for the industry. But as oil prices soared above $135 a barrel, operating costs have rocketed — forcing a radical revision.
After sustaining losses of around $40 billion after the September 11 attacks in the United States in 2001, the airline industry has recovered in recent years, posting healthy profits of 5.6 billion dollars last year.
“Our industry is like Sisyphus: after a long uphill journey a giant boulder of bad news is driving us back down,” Mr Bisignani said.
The US survey found travelers avoided 41 million trips over the past few months instead of dealing with the various hassles of flying.
“Many travelers believe their time is not respected and it is leading them to avoid a significant number of trips,” says Allan Rivlin, a partner at Peter D. Hart Research Associates, one of the polling firms that helped with the survey.
TIA reported that those avoided trips cost the US economy $26.5 billion over the past 12 months, including lost sales for airlines and travel-related businesses as well as lost tax revenue.
The IATA represents around 240 air carriers accounting for 94 percent of world air travel.
The crisis prediction came amid other airline losses.
Last week, the reduced-fare business-class airline Silverjet suspended operations and entered administration, leaving it on the brink of collapse.
“Twenty-four airlines went bust in the last six months,” Mr Bisignani said.
“I’m not saying the low-cost model will disappear, but in Europe lots of low-cost (carriers) will disappear,” predicted Jean-Cyril Spinetta of Air France-KLM, according to press reports.
David
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