IATA’s director general and chief executive officer, Giovanni Bisignani, said losses for the global air transport industry this year will likely add up to $4.7 billion; an estimate “significantly worse” than the previous forecast of $2.5 billion. However, the huge losses are expected to be ‘no factor’ for a majority of carriers based in North America.
Due to high fuel prices of summer 2008 and weakening demand, the North American sector of aviation has been relatively proactive in cutting capacity. Airlines outside of the region haven’t been as active and have found themselves unprepared. The North American region is expected to churn up a small profit of around $100 million collectively. Everywhere else, it’s a loss.
The leading region for losses is Asia-Pacific, with an estimate of $1.7 billion for this year. Europe is expected to see a $1 billion loss.
Decreases in demand and capacity have stayed still, “a 7.5 percent fall in demand is expected to be matched by a 7.5 percent cut in capacity,” the association said. “Despite the worsening economic conditions, this is relatively unchanged from earlier forecasts.” Many airlines in North America have already cut non/low-profitable routes, and avoided stockpiling fuel while prices were high. They are expected to benefit from that.
The estimates may fall. The economy has had a much greater drop than previously predicted, but hopefully it is bottoming out. We’ll have to see how accurate this estimate is as the year progresses. An alarming new problem is the rising price of oil. I’m curious to see how the NYMEX price of Crude Oil continues these forthcoming months.
