Is The Airline Industry Set To Stall?
The International Air Transport Association (IATA), which is the voice box for the airline industry, has again downgraded forecasts for the industry for 2008. They are now expecting the industry as a whole to post losses of $2.3 billion although they forecast that this could rise to $6 billion if the price of oil stays at or around the $135 level. If the figures were released by anyone else they may have been ignored or discounted, but the fact that the industry is itself making the markets aware of the situation ensures the views are taken seriously.
Over the last few weeks we have seen a number of the US and UK airlines announce increased surcharges, discontinue a number of free services and generally look to save costs where ever they can. The situation seems to be much worse than the last recession in the late 190s which saw many of the big players in the industry struggle.
Back then the situation was based upon a fall in demand but this time there is the double whammy of falling demand and the rising oil price. This has squeezed both the income and the cost ends of the sector and many are now starting to feel the pain.
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