At last, some good news

It’s been a while coming, but it seems like the recovery might actually be here at last.

This morning IATA halved its 2010 loss outlook. “For a change today we have some good news to present,” said IATA director general Giovanni Bisignani. “We are cutting our 2010 loss forecast in half, from $5.6 billion to $2.8 billion.”

rainbow_aerial by Cessna 206 on Flickr.jpg

Picture credit: rainbow_aerial by Cessna 206 

 

He describes the news as “very, very positive” for both the industry and the economy, adding: “We can see from the numbers that the industry situation is improving. Passengers are returning to flying.”

 

It seems like the turnaround has taken even IATA by surprise. “The increase is much better than expected,” says Bisignani.

 

The good news is that things are on the up; revenues could be back to 2008 levels by 2011. The bad news is we’ve lost three years growth.

 

Another boost is that IATA seems to be commending the industry for a momentary victory in the never ending demand/capacity battle. “This is probably the first time during a big crisis when capacity has been handled in the right way,” says Bisignani.

 

Another plus: after last year’s 14% drop in yield, passenger yields are now expected to grow by 2% and cargo by 3.1%. This compares with a previous forecast for 0% growth. Bisignani says: “Tighter supply and demand conditions have given airlines some pricing power.”

 

So, where’s the catch? The catch is that in the airline industry it’s never all good news. The target for the bad news is Europe and North America‘s short-haul business cabins.

 

Bisignani said short-haul premium yields in Europe have fallen by 10% and in North America by 13%, prompting concerns about permanent change. Bisignani says: “We have certain concerns because this could not just be cyclical, but an indicator of structural change.”

 

The future of short-haul business traffic is the subject of a feature which will run in the May edition of Airline Business. Get involved and share your views here.

 

And, with a reminder that the recovery is very much regionalised, Bisignani tempers the party spirit with a quick reminder: “This is not the time to have a big party. The situation is still in the red.”

 

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