Half IATA respondents predict further declines in 2009

A SURVEY by the International Air Transport Association (IATA) to examine its members outlook for the whole of 2009 shows that half of respondents expect a further decline in profit over the coming year, while a quarter of them expect growth.

The outlook for 2009 is slightly worse than that reported in an October survey. Carriers operating in Asia are the most negativeabout the outlook for this year, while airlines operating in the Middle East are predicting improvement in profitability.

The world's biggest airline, Delta, is forecasting the industry will decline by 10 per cent in 2009 as the global economic slowdown reduces demand for air travel.

IATA said the global economic crisis is affecting airlines, while the full effect of the rapid decline in fuel prices from the unprecedented highs experienced last year has yet to benefit many airlines owing to their hedging activity.

It said that regardless of jet fuel prices ending 2008 at about a third of the July high last year of more than US$180 per barrel, many airlines are committed to fuel supply contracts that quote prices above the present lower spot price for aviation fuel.

As a result 62.5 per cent of respondents to the IATA survey still reported higher input costs for the closing months of last year, the report said, although this was down significantly from the 81 per cent in the last (October) survey.

The IATA survey was cited as saying that worldwide air cargo demand is continuing its rapid slide on the back of a slowdown in manufacturing output and trade flows.

The survey found that 70 per cent of airlines expect further falls in air freight demand this year.

As for passenger growth: Expectations for growth in traffic volumes continued to fall sharply. Recession-led demand weakness drove the volume declines experienced by half the respondents to the end of 2008, while only a quarter expect passenger demand growth in 2009,said the report, according to the IATA findings.

IATA identified jobs creation in late 2008 but further job growth was anticipated to be set to stabilise or fall slightly as further recession impacts are felt this year.

Source: American Shipper