Friday, January 29, 2010

More Travel Turbulence Ahead?

The United States economy grew by a healthy 5.7 percent in the fourth quarter of 2009, according to the first estimate by the U.S. Commerce Department. Well, we'll see. The Commerce Department twice lowered healthy-sounding reports of growth for the previous quarter, after more data came in. Will the same thing happen again?

Me, I am not yet convinced that we are seeing those much-touted green shoots of recovery. Virtually no one I talk to - not the operator of our local laundry, not the contractor who is doing work on our house, not the owner of a private school, not most people I know or companies I follow in the travel business - thinks we are emerging quickly from the worldwide economic free-fall that started in earnest in 2008.

The latest scary metric comes from the Geneva-based International Air Transport Association,whose member airlines carry 93 percent of the world's air travelers. The year 2009 saw the greatest decline in civil aviation since 1946, according to IATA statistics released this week. Students of history will recall that 1946 was the first year after the end of World War II.

Oh, the petrodollar-fueled Middle East aviation sector still grew (up 11.2 percent) in 2009, as did Latin American traffic (up 7.1 percent). But the much-larger markets of Asia-Pacific, Europe and North America fell - down 5.6 percent, 5.0 percent and 5.6 percent, respectively. Worldwide, passenger demand was down 3.5 percent, though there was some growth in December over the extremely weak month of December 2008.

"In terms of demand, 2009 goes into the history books as the worst year the industry has ever seen,'' says Giovanni Bisignani, the former Al Italia chief who heads IATA as its director general and CEO. "We have permanently lost 2.5 years of growth in passenger markets and 3.5 years of growth in the freight business.''

"Yields have started to improve with tighter supply-demand conditions in recent months, but they remained 5-10 percent down on 2008 levels,'' Bisignani said. "Airlines will lose an expected $5.6 billion USD in 2010.''

So, is the glass half-empty or half-full? I'd like to think it's half-full, but with the exception of unique travel companes such as Southwest Airlines - which, incredibly, declared its 134th consecutive quarterly dividend this past quarter - the major stakeholders in the travel biz such as airlines, hotels, tour operators and cruise lines continue to grapple with turbulent times. Fasten your seatbelts - there's a long way to go.

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