The International Air Transport Association (IATA) has revised its airline financial forecast for 2009 to a global loss of $9 billion, almost double its March estimate of $4.7 billion, due to a rapidly deteriorating operating environment.
"There is no modern precedent for today's economic meltdown. The ground has shifted. Our industry has been shaken. This is the most difficult situation that the industry has faced," says Giovanni Bisignani, IATA's director-general and CEO in an address at the association's annual general meeting in Kuala Lumpur.
"After September 11, revenues fell by 7%. It took three years to recover lost ground, even on the back of a strong economy. This time we face a 15% drop -a loss of revenues of $80 billion - in the middle of a global recession. Our future depends on a drastic reshaping by partners, governments and industry. We cannot bear the cost of government micro-regulation, crazy taxation and partners abusing their monopoly power."
North American carriers could report a loss of $1 billion, although this is significantly better than the $5.1 billion loss they posted in 2008. Losses among European airlines could reach $1.8 billion as premium travel falls, Middle East carriers could lose $1.5 billion despite strong traffic growth, while Latin American and African airlines could lose $900 million and $500 million respectively.
The biggest impact will be in the Asia-Pacific, where airlines are expected to post the largest losses at $3.3 billion. This is marginally better than in 2008, when they lost $3.9 billion. "Japan, the region's largest market, is in deep recession. The growth markets of China and India are delivering major losses as export-driven demand slows," says the IATA.
Under its revised estimates, revenues could fall to $448 billion in 2009, down an unprecedented 15% from $528 billion in 2008. Air cargo demand is expected to decline by 17%, with airlines are forecast to carry 33.3 million tonnes of freight in 2009. Passenger demand could contract by 8% to 2.06 billion. RPKs are projected to fall by 7% and cargo yields 11%.
Fuel costs, which account of 23% of airlines' operating costs, will remain an issue even though they are expected to decline by $59 billion to $106 billion in 2009. "The risk that we have seen in recent weeks is that even the slightest glimmer of economic hope sends oil prices higher. Greedy speculation must not hold the global economy hostage. Failure to act by governments would be irresponsible," says Bisignani.
Liberalisation is even more important now, he adds, saying that airlines cannot manage "in these unprecedented times with one hand tied behind our back". "Airlines need the same commercial freedoms that every other industry takes for granted - access to global markets and capital," says Bisignani. He also urged governments to avoid protectionist policies, calling them the "enemy of global prosperity".
- Sir Richard Branson guest edited Flightglobal.com on June 8th. He chose this story because
Sir Richard Branson: I’ve chosen this as lead story this morning because it’s worrying how the global bill of airline losses has almost doubled since the start of the year. Much as I love Giovanni Bisignani, he does seem to be the purveyor of doom and gloom. He’s a good barometer of when recovery comes|