IATA ups ’09 forecast with $4.7B industry loss

Estimated losses for the global air industry are expected to nearly double from December’s forecast for 2009 as air carriers grapple with the worst crisis in over 60 years, with the International Air Transport Association (IATA) saying a significant recovery in 2010 would “require more optimism than realism”. The IATA has announced a revised outlook […]


Giovanni Bisignani IATA International Air Transport Association loss recession


Estimated losses for the global air industry are expected to nearly double from December’s forecast for 2009 as air carriers grapple with the worst crisis in over 60 years, with the International Air Transport Association (IATA) saying a significant recovery in 2010 would “require more optimism than realism”. The IATA has announced a revised outlook for the global air transport industry with losses of US$4.7 billion in 2009, significantly worse than its December forecast of US$2.5 billion in losses for the year, reflecting the rapid deterioration of the global economic condition. “The prospects for airlines are dependant on economic recovery. There is little to indicate an early end to the downturn. It will be a grim 2009. And while prospects may improve towards the end of the year, expecting a significant recovery in 2010 would require more optimism than realism,” said IATA’s director general and CEO Giovanni Bisignani. Industry revenues are expected to fall by 12 per cent to US$467 billion, significantly worse than the aftermath of the events of 11 September 2001 which saw industry revenues fall by nearly 7 per cent. Carriers in the Asia Pacific region continue to be hardest hit by the current economic turmoil and are expected to post losses of US$1.7 billion – up from the previous loss forecast of US$1.1 billion. China has been successful in stimulating demand in domestic markets with pricing adjustments but international demand to and from China is expected to contract by between 5-10 per cent over the year. India, whose market for international air services tripled in size between 2000 and 2008, is expected to see capacity increase by 0.7 per cent in 2009, while demand drops between 2-3 per cent. Overall, the region is expected to see a 6.8 per cent fall in demand but only a 4 per cent drop in capacity, according to IATA. The Middle East will be the only region with demand growth in 2009 (+1.2 per cent), but this will be overshadowed by the impact of a 3.8 per cent increase in capacity leading to a loss of US$900 million (a slight deterioration from the US$800 million loss recorded in 2008). “The state of the airline industry today is grim,” said Bisignani. “Demand has deteriorated much more rapidly with the economic slowdown than could have been anticipated even a few months ago.”