The state of the industry globally has recently been described as woeful with decline in global passenger forecast carryings next 12 months likely to be in the 5% territory and cargo volume decline at 13%.
Premium cabin passenger revenue and cargo revenues are the big losers over the last 6 months and forecast to continue at least in the short term. A cumulative industry $4 billion forecast loss for 2009 on top of a $8 billion loss for 2008.
New aircraft deliveries from the major manufacturers will fall from a recent high of 1100 units annually to below 800 over the next 2 years.
Regionally the airline picture varies with Far Eastern markets taking the biggest hit , but with Europe less so. The U.S is matching volume decline with capacity reduction and thus profit performance treading water and the Middle East market showing small revenue improvements.
It is rare to see an annual 10% return on investment for this industry and the cumulative profits banked over several years are easily lost in a 12 month period. The old joke that the only way to make a small fortune in this industry is to start with a large one becomes embarrassingly accurate!
How much less pain could have been felt if the fuel buyers had not hedged at the ridiculously high 2008 prices . Sometimes the airline industry is too clever for its own good!
As in life though , problems for some will be an opportunity for others .
There is no doubt that no one involved in the industry is escaping pain. The strategists would far rather focus on continued measured expansion than being moved away from their comfort zones to delivering survival strategy. Some will fail in that delivery.
However, some have business models more adaptable and less exposed in the changing market. Some are showing an extra eagerness to appeal to the customer, manoeuvring to capture new volumes, eying the availability of aircraft delivery positions deferred by others, identifying new opportunities.
Who will see opportunity and pick up the new aircraft delivery slots deferred by others? Who will take those opportunities and emerge from the downturn relatively stronger and sharper? Who will suffer the business cardiac arrest that although not killing them now, will leave them so weakened they limp along and finally keel over just when the green shoots of recovery are seen ?
Who are the names in your minds eye?
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