2009 – the worst year for airlines

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Categories : Travel news

Last year has been officially described as the worst year for the international airline industry as demand for seats plummeted.

Giovanni Bisignani of the International Air Transport Association (Iata) said this week: "In terms of demand, 2009 goes into the history books as the worst year the industry has ever seen."

Passenger traffic dropped 3.5% from 2008, while freight traffic fell 10.1%. However, figures for December showed a rise in traffic of 1.6% on a year ago.

In spite of the improvement at the end of 2009, Iata said 2010 would be a tough year for airlines everywhere. "The industry starts 2010 with some enormous challenges," Bisignani said.

"The worst is behind us, but it's not time to celebrate. Adjusting to 2.5 to 3.5 years of lost growth means that airlines face another tough year, focused on matching capacity carefully to demand and controlling costs."

African airlines suffered the most in 2009, with passenger demand down 6.8%. Asia-Pacific and North American carriers saw demand fall by 5.8%, while European airlines suffered a 5% fall in demand.

Middle Eastern carriers saw passenger demand climb 11.3%, while Latin American airlines experienced a 0.3% rise.

Iata has estimated that airlines collectively lost $11bn last year, and stand to lose a further $5.6bn this year.

Analysts say that price cuts designed to attract customers will continue to eat into airline profits.

"Continued fare wars between airlines mean that yields and profitability will be low. Airlines are struggling to fill their aircraft and discounted ticketing has done little to alleviate the pressures on their costs," says an independent airline analyst Saj Ahmad.

"Capacity has come out of the global airline system, but until a few airlines perhaps exit the industry through bankruptcy or mergers, there is still a very long road until we see serious stability, let alone growth."

While price wars may be a global feature, there is growing concern about the cost of flights related to the 2010 FIFA World Cup in South Africa. Demand for overseas travel to South Africa is nowhere near as strong as was widely anticipated.

It appears that high fares are a severe deterrent at a time when consumers all over the world are focused on fears of a continuing recession and job losses.

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