In the first semester of this year, a total of 1.083 aeroplanes were left unused on the ground as traffic growth slowed down due to the current financial crisis as well as other important factors. This accounts for 5 percent of the total fleet in the world. 75 percent of these unused aeroplanes are owned by North American airlines, where airlines have been forced to reduce their capacities by 10 percent already.
The director of the Ascend Aviation Consultancy predicts that there will not only be cuts in North American airlines, but European and Asian ones will also see a decrease of 3 percent and 2 percent respectively. We have already started seeing theses effects in the Irish low cost carrier Ryanair whose profits seriously fell in the first semester of this year. However they believe that by next march, they will be able to break even. Other European airlines have not had the same luck as Ryanair, which even though with decreasing profits, can still stay in the market. This is the case of the Danish airline Sterling which was declared bankrupt on 29th of October, 2008 as it did not find any buyer for its 24 aeroplane fleet. Sterling has not been the only airline to cease its flights, around the world, over two dozen airlines have stopped operating this year and there could be more to follow this trend.
The financial crisis has most likely been one of the main factors for the decrease in demand in the aerial sector. Business executives and tourists now fly less due to their personal economic situation or the overall economic situation of the business which they are working in. Businesses that are already under budget constraints might see travelling as an unnecessary expense at the moment. As evidence of this, we can look at Morgan Stanley who announced this week that they would not hold any extravagant Christmas party’s this year in order to cut down on spending. However, there is yet another important reason that has promoted this aerial crisis. The rise of petrol which rose up to $148 USD in July this year has decreased the possibilities for these companies to generate profits. In order to surpass this crisis, airlines are taking serious measures like eliminating flights, cutting down on employees, stop offering extra services like food, extra baggage etc. The question is now for how long will the airlines be able to cut down on costs before sending their customers in a chair less aeroplane?
The director of the Ascend Aviation Consultancy predicts that there will not only be cuts in North American airlines, but European and Asian ones will also see a decrease of 3 percent and 2 percent respectively. We have already started seeing theses effects in the Irish low cost carrier Ryanair whose profits seriously fell in the first semester of this year. However they believe that by next march, they will be able to break even. Other European airlines have not had the same luck as Ryanair, which even though with decreasing profits, can still stay in the market. This is the case of the Danish airline Sterling which was declared bankrupt on 29th of October, 2008 as it did not find any buyer for its 24 aeroplane fleet. Sterling has not been the only airline to cease its flights, around the world, over two dozen airlines have stopped operating this year and there could be more to follow this trend.
The financial crisis has most likely been one of the main factors for the decrease in demand in the aerial sector. Business executives and tourists now fly less due to their personal economic situation or the overall economic situation of the business which they are working in. Businesses that are already under budget constraints might see travelling as an unnecessary expense at the moment. As evidence of this, we can look at Morgan Stanley who announced this week that they would not hold any extravagant Christmas party’s this year in order to cut down on spending. However, there is yet another important reason that has promoted this aerial crisis. The rise of petrol which rose up to $148 USD in July this year has decreased the possibilities for these companies to generate profits. In order to surpass this crisis, airlines are taking serious measures like eliminating flights, cutting down on employees, stop offering extra services like food, extra baggage etc. The question is now for how long will the airlines be able to cut down on costs before sending their customers in a chair less aeroplane?
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