Major Airlines Unhappy and Contradicting
Monday, July 21, 2008: The airline industry seems to still be in crisis as major carriers including Emirates and British Airways expressed dissatisfaction at their current economic state.
Emirates President, Tim Clark said the current crisis was worse than the pitfalls of September 11 2001 and SARS (Severe Acute Respiratory Syndrome), where currently “many airlines have grounded aircraft or gone bankrupt and an estimated 100, 000 jobs will be cut”, according to Financial Times.
Geoff Dixon, Qantas CEO agreed saying “the facts are that oil prices staying at over USD140 plus a barrel has changed forever the way we do business”.
It was even projected by British Airways’ Chairman, Martin Broughton that it would be “a considerable achievement for British Airways to break even this year” given the current operating conditions.
Although, the industry appears to be far from crisis, with the Farnborough Airshow seeing many airlines ordering new aircraft from Airbus and Boeing totalling to be over USD 50 billion.
It was noted by Tom Enders, Airbus CEO that there was a contradiction at Farnborough, between the fact that there were crises in “certain regions” yet some “bullish, strong airlines” were investing into new aircraft.”
This contradiction is a sign, according to Enders, that “not all is doom and gloom and that the airline industry is not going down the drain that we have to differentiate regionally”.
The largest orders came from the Middle East and Asia, positioning them to dominate the global aviation market in the long term, according to CAPA. It seems that fleet ages compared to airline business models are a key barometer for success.
Airlines will newer fleets will be likely to succeed in the coming years, with predictions that the gap will widen between the strength in Asia and the Middle East and the weakness in North America and Europe.