By Ogova Ondego
Published October 17, 2008
Higher cost of fuel, dropping demand among passengers and the deepening global economic crisis are set to deny the global airline industry an estimated US$5.2 billion in 2008.
With the number of passengers dropping and each barrel of fuel selling at US$40 more than in 2007, experts partly blame airlines for their inability to adjust quickly to the falling passenger demand. What is worse, tourism-review.com reports, “There is no reason to be optimistic for the outlook in 2009 either.”
Airlines in Africa, for instance, are expected to lose US$700 million in 2008 due to the soaring coasts of fuel and the world economic crisis.
According to tourism-review.com, the hardest hit airlines are those of North America that expected to lose US$5 billion. European profits are expected to tumble to US$300 million in 2008 from US$2.1 billion in 2007. Middle Eastern profits will drop by US$100 million to US$200 million. Latin American airlines shall lose US$300 million.
According to eturbonews.com, 2007 is a ‘year of hell’ for airlines that could be worse than the downturn after the attacks of 9/11.
The publication quotes Mike Ambrose, the director-general of the European Regional Airlines (ERA), as having said that he expected the number of carriers around the world declaring bankruptcy to double to at least 70 in 2008.
The worsening economic environment coupled with a normal reduction in passenger numbers over winter is expected to lead to even greater losses in the aviation sector.
The International Air Transport Association, IATA, has estimated that global airline loses will be $5.2 billion this year and $4.9 billion in 2009 due to the economic slowdown and high price of oil. This compares with a combined profit of $5.6 billion in 2007.