The International Air Transport Association (IATA) has estimated that the airline industry stands to lose $9 billion this year due to plunging passenger numbers, falling fare prices and fuel prices.
The global recession has reduced the amount of business passengers, while profits are undermined by a ticket price war for the remaining passengers.
“There is no modern precedent for today’s economic meltdown. The ground has shifted. Our industry has been shaken. This is the most difficult situation that the industry has faced,” said Giovanni Bisignani, IATA chief executive.
Bisignani said the industry’s future depended on drastic reshaping by governments, through lower taxation and fewer ownership guidelines, and by mergers between airlines.
“Our customers don’t have confidence. They need to reduce debt and that means less cash to spend. Business habits are changing and corporate travel budgets have been slashed. Video conferencing is now a stronger competitor,” he added.
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