IATA: Airlines to lose US$5.2 billion in 2008
MONTREAL – The International Air Transport Association (IATA) has forecast that the global airline industry will lose of US$5.2 billion in 2008 based on an average crude oil price of US$113 per barrel (US$140 for jet fuel).
“The situation remains bleak. The toxic combination of high oil prices and falling demand continues to poison the industry’s profitability,†said Giovanni Bisignani, IATA’s director general and CEO.


“While there has been some relief in the oil price in recent months, the year-to-date average is US$113 per barrel.
“That’s US$40 per barrel more than the US$73 per barrel average for 2007, pushing the industry fuel bill up by US$50 billion to an expected US$186 billion this year,” said Bisignani.
Fuel is expected to rise to 36% of operating costs, up from 13% in 2002.


IATA also announced industry traffic data for July which showed a continued slowing of demand.
July year-on-year passenger demand growth fell to 1.9% – the lowest in five years. Capacity increased by double that – 3.8% – indicating that service cuts are not keeping pace with the fall in demand.
This pushed the load factor for the month to 79.9%, a drop of more than 1% compared to July 2007.
The surprise of July was a 0.5% drop in passenger demand by Asia-Pacific carriers partly attributable to a change in Chinese visa requirements but also showing that economic weakness is spreading to previously robust economies.


IATA said the difficult business environment is expected to continue.


“While we expect the bottom line to improve by about US$1 billion next year, the industry will be US$4.1 billon in the red,†said Bisignani.
“This crisis is re-shaping the industry in more severe ways than the demand shocks of SARS or 9-11.
“When fuel goes from 13% of your costs to 40% in seven years with an increased cost implication of US$183 billion, you simply cannot continue to do business in the same way. Fundamental change is needed,†said Bisignani.
“While some regions will show small profits, the negative impact of the industry crisis is universal,†said Bisignani.
North American carriers are expected to post losses of US$5billion in 2008 making them the hardest hit by this industry crisis.
Asia Pacific is expected to see profits shrink from US$900 million in 2007 to US$300 million this year.
Ian Jarrett
Vegas’s Billion-Dollar Secrets – What They Don’t Want Tourists to Know
Visit Florida’s New CEO Bryan Griffin Shares His Vision for State Tourism with Graham
Chicago’s Tourism Renaissance: Graham Interviews Kristin Reynolds of Choose Chicago
Graham Talks with Cassandra McCauley of MMGY NextFactor About the Latest Industry Research
Destination International’s Andreas Weissenborn: Research, Advocacy, and Destination Impact
Graham and Don Welsh Discuss the Success of Destinations International’s Annual Conference
Graham and CEO Andre Kiwitz on Ventura Travel’s UK Move and Recruitment for the Role
Brett Laiken and Graham Discuss Florida’s Tourism Momentum and Global Appeal
Graham and Elliot Ferguson on Positioning DC as a Cultural and Inclusive Global Destination
Graham Talks to Fraser Last About His England-to-Ireland Trek for Mental Health Awareness
Kathy Nelson Tells Graham About the Honour of Hosting the World Cup and Kansas City’s Future
Graham McKenzie on Sir Richie Richardson’s Dual Passion for Golf and His Homeland, Antigua
ADS PRO 
Phocuswright reveals the world's largest travel markets in volume in 2025
Higher departure tax and visa cost, e-arrival card: Japan unleashes the fiscal weapon against tourists
Cyclone in Sri Lanka had limited effect on tourism in contrary to media reports
Singapore to forbid entry to undesirable travelers with new no-boarding directive
Euromonitor International unveils world’s top 100 city destinations for 2025