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Outlook for major airlines deteriorates

Half of the world’s major airlines will experience a slump in profits in 2009 due to falling demand, according to the latest survey from the International Air Transport Association. The report represents a dramatic loss in optimism since its previous survey, released three months ago, when 75% of carriers anticipated a rise in consumer demand in 2009.
IATA’s quarterly Airline Confidence Index - compiled from a survey of the 230 airlines - predicts that demand for flights will continue to drop off, with only a quarter of carriers anticipating a growth in demand.

“Economic recession is quoted by many respondents as being a key driver of this change in the demand pattern,” said an IATA spokesman.

“Almost half the respondents now expect to see lower passenger volumes in the next 12 months with less than a quarter expecting an increase,” he added.

Around 80 per cent of carriers said that their profitability had fallen in the last three months of 2008, with 38.9% suffering a drop in revenues.

IATA also said that many airlines are yet to benefit from the fall in oil prices, from a high of over US$140 dollars a barrel last summer to under US$50 this month, due to their hedging policies working against them.