Airlines to continue losing billions

George Hobica, September 17, 2009
Fares from Washington DC:

    According to this article in the Wall St. Journal, citing figures from the International Air Transport Association (IATA), the global airline industry will lose a collective $11 billion, $2 billion more than previously thought. That's better than the $16.8 billion the industry lost last year.

    Some other grim news:

    • Premium passenger traffic will fall 20% this year compared to last.
    • The industry must undergo further consolidation (i.e., mergers) both in the US and abroad.
    • 50 airlines world-wide have gone under during this recession; more to come (20 airlines are being monitored by IATA for "financial problems")
    • For the rest of 2009, US carriers will lose $2.6 billion
    • Ancillary fees, such as baggage charges, now account for more than 10% of airline revenue.

    Imagine where the industry would be without those new fees. No doubt we would have seen some more bankruptcies. We expect at least one more airline merger in the US as airlines continue to shrink and become more viable candidates for various combinations.