One Predicts Flying Will Suffer From Slump; Another Expects
Profits On Cuts
If 2008
was an ugly year for airlines, 2009 could be even worse. Or, maybe
not.
Florida-based airline consultant Stuart Klaskin tells the Rocky
Mountain News, "If we'd talked in late August, I would've said the
industry likely would have been marginally profitable next year and
that demand would decline a bit in the fourth quarter but then stay
constant. But, factoring in the negative pressure from the last 30
days, I think the industry could lose up to $3 billion next year
and that demand will decline an additional 3 percent to 5
percent."
Klaskin's opinion isn't shared universally, and some analysts
still believe the industry will be in the black next year...
especially if steeply-declining oil prices continue to cooperate.
Others believe businesses will reign in spending, hitting the
airlines in one of their most profitable market segments.
Observers differ on exactly how much air travel could fall, and
some think the industry might actually post a profit next year if
oil prices continue their steep slide, or even hold where they
are.
One airline analyst who's still bullish on the 2009 outlook is
Jamie Baker of J.P. Morgan Chase. Baker tells the Dallas Morning
News that workforce and capacity cuts, combined with lower fuel
prices and revenues from all the new fees spell a very good 2009
for the industry.
In a research note last week, Baker said he sees a profit next
year for every jet airline he follows, even if demand is weak.
"Simply put, we are having a tough time modeling losses."
Frontier Airlines spokesman Steve Snyder says the economy is
absolutely a concern. "Common sense tells you that as economic
conditions continue to worsen and people lose faith in the economy,
people are less likely to spend discretionary income. And when that
happens it does impact our bookings."
Aviation consultant Mike Boyd says the recent economic
deterioration has forced his firm to revise downward its
enplanement forecast, now predicting airplane boardings at airports
nationwide will drop 8.4 percent through 2010.
Travelocity, where many price-conscious leisure fliers book
their tickets, says its recent survey found 66 percent of
respondents will decide whether to fly over the holidays based in
part on the economy. About 78 percent still expect to fly.
Terry Trippler, who runs the travel Web site Terrytrippler.com,
sees a difference between media reports on the economy and the
actual effect on airline customers. "...The economy is not
immediately impacting everyone," he said. "I know very few people
directly impacted in the past two weeks."
At its weekly fix on Friday, crude oil closed at $77.70 a
barrel. That's lower than at any time in the past year, and down
about 45 percent from the high in July. Jet fuel prices have
followed, falling from well over $4 a gallon in early July to under
$2.75 in recent days.
Using Air Transport Association numbers, that decline could save
the industry more than $23 billion a year.
The major US carriers will start issuing quarterly results this
week. American Airlines parent AMR Corp. reports on Wednesday,
followed by Southwest on Thursday.