Airliners were being parked at a rate of 200 aircraft a month around the world in September and October, and the
International Air Transport Association predicts "the toughest revenue environment in 50 years" and "the worst-ever revenue outlook for the next two years". The fall in revenues, says the association, will offset the benefits from the drop in fuel prices.
Speaking at IATA's annual global media briefing today in Geneva, IATA's director general Giovanni Bisignani said that the one positive anomaly in the otherwise gloomy global environment was that US carriers will report a $300 million profit in 2008, even though that is only 1% of revenue.
This, he points out, is unique in the global marketplace. It has happened because US airlines were unable to hedge against the high fuel prices due to their lack of creditworthiness, so they cut capacity "pre-emptively" and are now benefiting from that and from their ability to benefit immediately from the low oil spot prices.
Meanwhile, European carriers' fuel-price hedging has locked them in to high costs that had been worsened by the dollar's improved strength, so regional losses are expected to top €1 billion ($1.28 billion), and European capacity is predicted to shrink 1% in 2009.
Global markets are predicted to fall 3% in revenue passenger kilometres in 2009, generating losses of $2.5 billion, says IATA's chief economist Brian Pearce.
Worldwide industry post-tax losses for calendar year 2008 are expected to amount to $5 billion, mainly caused by high fuel prices. The steepest fall in revenue, at 7-8%, is taking place in premium fare passenger travel, whereas economy revenues are down about 3%, says Pearce.
IATA predicts the bottoming out of passenger markets in 2010, with recovery in 2011. Freight has contracted 1.5% in 2008, and it is expected to decline 5% by volume in 2009.
Capacity worldwide is adjusting, and Pearce says even the capacity growth in the Middle Eastern carriers is slowing in response to weaker traffic.