ERA predicts 2008 will see 35 more airline bankruptcies
Tuesday, October 14, 2008: With the aviation industry already seeing some 35 airlines gone belly-up this year, the European Regional Airlines (ERA) association sees this figure doubling by year’s end.
Speaking to Reuters about airline bankruptcies, Mike Ambrose, ERA Director General, says “We are now up to around 35 this year. I see at least that number over the winter.”
“[With] 9/11 there was a terrorist attack that created a loss of confidence in safety. This is far more pernicious – it is a loss of confidence in investment.”
Earlier the ERA had just announced that its members saw the slowest passenger growth in the first half of the year since 2001. Additionally yields are dropping as fuel prices reached phenomenal levels in the reporting period.
ERA estimates that fuel costs alone for the 2nd quarter of 2008 have risen by 41% compared to the same quarter last year, and that fuel costs now represent 13% of total costs of ERA members.
Due to this, the ERA recently criticised the European Commission’s decision to implement 100% of its carbon permits onto the aviation industry by 2020 would place additional burdens to an already struggling industry.
“Air transport’s problems are now vastly overshadowed by the larger economic crisis,” said Mr Ambrose in a media statement.
“States, regulators and politicians need to recognise that we are not far off from a situation in which investment in air transport development will cease because the cost of uncontrolled additional regulations will have changed the balance from ‘prudent investment’ to ‘lottery’.
“Our challenge now is to make governments accept that aviation is an essential tool for helping to rebuild European economies,” he continues.
For the year, IATA expects the global aviation industry to lose US$5.2 billion, and even weaker passenger growth in 2009 to lead to a US$4.1 billion loss.