Airline Woes Amplified

Mar 24 2009 Airline Woes Amplified BY admin TAGS Airlines

 

wingsdollarsThe economy is really starting to do a number on the airlines.

 

"The International Air Transport Association had estimated in December the industry would lose $2.5 billion in 2009." Now world "airlines are set to lose $4.7 billion this year as a result of the global recession that has shrunk passenger and cargo demand." That's the essence of a story today by Reuters.

 

The news doesn't get any better. OAG reports, "Global airline schedules for the first quarter 2009 have dropped by 6.7%, or 491,000 fewer flights. This is the first time we have seen a downturn in Q1 figures since 2002, when the industry was absorbing the double impact of 9/11 terrorist attacks on the U.S. and an economic meltdown from the burst of the dot.com bubble. Capacity for this quarter also has fallen by 4.4%, representing a reduction of 38.6 million seats."

 

For those of you wondering what OAG is, it's essentially a company that gathers and reports on aviation related data and intelligence. We use OAG to provide the flight arrvial/departure data on the airport web site.

 

If all this bad news seems contrary to what you may have been reading in the business press, that's because the business press has been missing the boat on airline health since about the 4th quarter of last year. Just the other day I was reading a business story that babbled on-and-on about how the airlines were awash in money since the price of oil has dropped. Excuse me? The airlines weren't doing well back when oil was $50 a barrel. And that just happens to be what it is selling for right now. The typical airline business model doesn't deal well with oil that high! But I digress...

 

Is there a silver lining to all this? You bet, if you're a customer!  The airlines are responding to poor advance bookings by offering mega sale prices. Check out this overview from CNN/Money: Fly the dirt-cheap skies...

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