COMMENT: Is the outlook getting better for the airlines?

There is a strong argument that the financial strength of the globe is personified by the performance of the airlines around the world.  Here in Europe the economic downturn has been serious, reflected by the awful performances of British Airways, Iberia and SAS, amongst others – in alphabetical order rather than actual results.

We can look at these results statistically three ways.  By what the airlines actually tell us in their reports; by analysing IATA’s (International Air Transport Association) overall results – and the figures don’t include many of the low cost/budget carriers; and by the numbers offered in the OAG (Official Airline Guide) database of seats available, these including virtually all airlines, the budget carriers actually participating in this non-revenue affiliation.  OAG is one club they require to be members of.  (Also see below)

OAG has published this month’s seat statistics which indicate, as things stand, that airlines worldwide will operate 4% more flights in March 2010 as compared to March 2009.  The total number of scheduled flights listed for March 2010 is 2,464,311 with an overall seat offering of 303,075,355, an increase of 5% compared to March 2009. 

As a comparison in March 2001 the airlines showed 250m seats, the growth around 20% in a decade.

We will follow seats only rather than flights, the two running more or less in parallel.

The Middle East continues to be the most robust sector and North America the most worrying.  Whilst the numbers are relatively small for what is essentially the Gulf region – 6.4m seats within the area (+17%) and 10.6m (11%) to and from – the decline 2% decline for North America must give concern both for the economies in general and the aircraft manufacturers themselves, particularly Boeing, and to some extent Bombardier.

For Europe the outlook looks better with seats offered, up by 4% to and from, and 2% within, at least a rise and positive.

All these figures represent serious guesswork within the airlines regarding what capacity is required, and frequency, bearing in mind their aircraft fleets and utilisation.

Asia, and particularly India and China, are always cited for growth but they still have some way to go in terms of numbers.  The area is vast and the populations enormous.  Here culture is different from the US, where families for generations have moved around the continent and are well versed in using the aeroplane for their regular get togethers.

Whilst traffic in Central Asia has doubled in ten years, the vast area only represents 7.6m passengers for the whole of March.

Go back again to March 2001 and 94m seats were on offer for Canada and the United States domestically.  This time around it is just 76.4m.  The decline has been steady over the period.  Has the reason for the drop been that people are using more road transport or the railways, or have they stopped travelling?  Is it because the actual bottom line cost of air travel has risen?  Or is the US economy so bad that potential travellers are just staying at home? 

The one good bit of news is that in spite of the strength of the Dollar the airline people still believe that people need to travel to and from the USA and are increasing capacity for the month by 1%.

2010 is beginning to look like a very cautious year for the airlines, with the flab of past regimes still in many cases to be cast off.  Prudence may be the way forward but those that succeed will still need innovation and originality.  The competition is intense.  Carriers should not sit back on past glories. 

Malcolm Ginsberg

Editor in Chief

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