Monday, 9 January 2012

Airlines generally in for a bumpy ride in 2012

There are a lot of dire predictions for the airline industry in 2012. Everything from survey that says only 43% of Americans plan to take a flight in 2012, through to negative predictions on profitability of airlines  on the Indian subcontinent.

The best summary I have come across is a little more optimistic:
  • Airlines are now unafraid to cut - they review flights and routes regularly and are unafraid to cut unprofitable ones
  • Chapter 11 - will facilitate cuts at American Airlines - to bring it back into profitability
  • Prices are likely to go up - perhaps because of oil prices, but there will be a fine balance in setting price to keep those middle seats filled, while window and aisle seats go to full-fare or frequent flyers
  • if the current airlines are too successful - new players with stars in their eyes and money in their wallets will believe, despite the odds that they have the true profitmaking formula
  • Europe down, Asia up - with the Euro crisis, European airlines are likely to feel the pinch. With China, India and other parts of Asia doing well - its low cost structure and repuatation for excellent service could see the further rise of the Asian airline
  • Decline in freight - this is troubline IATA (International Air Transport Association), as traditionally a decline in freight indicates a fall in overall activity
For a good overview - see

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