People who love to travel will have a harder time in 2009. In an epoch when the world needs a sense of global community as never before, the global airline industry is headed for a dramatic downturn in 2009 as the recession deepens and widens into many countries outside the US and Europe.
The airlines are already flying more than 60 million fewer seats since August 2008 and this figure is set to increase if managements do not find workable remedies. Soon people wanting to travel may not find a seat even if they are willing to pay.
Cash flow problems will become acute as business and tourism travel budgets are cutback more severely in coming months. Some airlines may have to go into liquidation rather than legal bankruptcy because they are already being crushed by debt acquired for restructuring during the last half decade.
Low-cost and short-haul airlines may find it easier to get through the crisis but the damage to the opening of hearts and minds around the world will be harder to fix. We are heading towards rising tensions among religions and civilizations with challenges arising from many sides for the American and European ways of doing things. Against this backdrop, we need more travel not less.
Only international travel that allows people to interact with one another in their native contexts can help to reduce the fear of “the other”. The Internet, TV and other forms of communication are helpful in supporting a feeling of “global village” but they cannot replace face-to-face contacts through travel.
In this context, the growing weakness of airlines is a cause of concern. The extent of the weakness is puzzling because fuel costs stand at less than half the levels of eight months ago and people’s desire to travel is more than ever. But major airlines seem to be so badly managed that they no longer offer sufficient value for money to entice customers who are increasingly seeing travel as unaffordable rather than necessity or a pleasure.
Airline fleets have grown by nearly 1,700 aircraft since 2005 and the global commercial fleet was estimated at 19,000 planes in 2008. Falling passenger demand caused routes to be axed at 275 airports around the world in late 2008. There is huge overcapacity as airlines now pay the price of taking large risks when credit was easy to obtain for expansion.
The worst hit are airlines in the US and Asia. Some experts predict that the largest eight airlines will lose over $5.3 billion, making this industry the next in line for government bailout. Of course, any bailout will be undeserved but will be politically attractive to save jobs. It may also be worth considering to help bring the world’s diverse people together more easily through travel.