The global airline industry is taking a beating these days -- it could lose as much as $6.1 billion this year -- and with airlines folding or going bankrupt at a rate of about one a week, it's begging everyone short of the skycaps to help it survive.The situation is so dire the International Air Traffic Association issued a resolution on Monday at its annual meeting calling on the world's governments, airports and airline employees "to take immediate action to help the industry survive the growing financial crisis." Reading it, you can almost feel the panic enveloping an industry that turned a $5.6 billion profit last year.
"The airline industry is sending a clear message to governments, partners and labor," association CEO Giovanni Bisignani said. The association represents 230 airlines operating 94 percent of all international and cargo flights. "We are in crisis."
...Twenty-four airlines have gone under or gone bankrupt in the past six months. Aloha Airlines is gone. Slick all-business carrier Sliverjet just folded. Frontier is in bankruptcy. The rest of them are slashing and burning flights in a mad dash to save money as fewer people take to the air. American just canceled 10 percent of its schedule. Things are so bad that big financial analysts are urging investors to dump airline stocks as fast as they can - the Amex Airline Index fell 3.8 percent on Monday alone. It's no wonder IATA is looking for help -- and insisting it's not a bailout.
"We're not asking for money or for funding," says association spokesman Steve Lott. "All we're asking for is a level playing field where we get treated like everyone else."
No money or funding, just a "level playing field where we get treated like everyone else." OK, I'll bite... So does this mean US carriers will support opening the domestic US air travel market to foreign competition? Because right now, our market is closed and very tightly controlled. To compete in the US, carriers like Virgin are forced to create an entirely new company, rather than simply expanding into the domestic market through partnerships and route expansions. Its stupid, wasteful, inefficient, and unnecessarily protectionist.
Amazingly, the answer is a qualified yes:
The declaration also urges relaxation of cross-ownership rules, an issue primarily in the United States, where foreign carriers are not allowed to own more than 25 percent of a U.S. airline. Boyd doesn't think this would make much of a difference, saying, "Finding new people to pour their money down the drain isn't going to fix anything."
But of course the IATA has no say here. The Congress does. And I have a hard time imagining that members from Chicago and Dallas would be willing to open the door to foreign competition for American and United.
And what might be the motivation behind all this? The EU's new carbon trading scheme, of course:
The industry wants governments to "refrain from imposing multiple and additional punitive taxes and other measures that will only deepen the crisis." Lott says that point applies to myriad taxes and surcharges and the world's governments levy on the industry, but it appears squarely aimed at the EU and its plan to include airlines in its mandatory carbon trading scheme starting in 2012.
The airlines want to be exempted from the system, but doing so would be ridiculously short sighted. The older carriers may not like it, but to survive they are going to have to adapt, and if they don't, Richard Branson is going to eat their lunch. If I were them, I'd be more worried about him than about the EU.
Subscribe to this blog's feed
