Airlines could lose US$11b

By Karamjit Kaur, Aviation Correspondent
Mr Bisignani who announced the latest figures in a media teleconference said: 'The optimism in the global economy has seen passenger and freight volumes rise, but that is the only bright spot. -- PHOTO: REUTERS
FROM parking planes to axing flights and staff, airlines have done it all, and yet are in worse shape today than before.

The International Air Transport Association (Iata) has warned that industry losses for the year could hit US$11 billion.

This is US$2 billion more than the last forecast in June.

Revealing its latest estimates on Tuesday, the Geneva-based body which represents 230 carriers, said the main villains are rising fuel prices and 'exceptionally weak yields.'

The current situation is even more bleak than the aftermath of the Sept 11, 2001 terrorist attacks in the United States which led to demand for air travel nosediving, said Iata chief executive officer and director-general Giovanni Bisignani.

Combined estimated losses for 2008 and 2009 are US27.8 billion, compared to US$24.3 billion that the industry lost in 2001 and 2002.

Mr Bisignani who announced the latest figures in a media teleconference said: 'The optimism in the global economy has seen passenger and freight volumes rise, but that is the only bright spot.

'Rising costs and falling yields have squeezed airline cash flows.....The situation is critical.'

Global passenger traffic is expected to shrink 4 per cent and cargo by 14 per cent, compared with 2008.

Yields for the passenger side of the business could drop 12 per cent year-on-year, while total revenues are set to fall by 15 per cent to US$455 billion.

The crisis has hit top-tier carriers like Singapore Airlines especially hard.

With travellers downgrading from premium to economy class, and businesses cutting costs, such airlines that depend on first and business class traffic for about 40 per cent of their total revenues, are having a tough time.

Cut-throat competition is also forcing many to drop fares to lure travellers.

Posted in: Science - Technology,World News