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More pain in the aviation industry

flyer tuck | 26.02.2009 08:47 | Analysis | Climate Chaos | Energy Crisis | South Coast | World

Anti aviation campaigners may find they are increasingly pushing at an open door over the coming year and more as the recession bites hard into passenger numbers and aviation industry profits. The fall against of the pound against the euro and the dollar have made increasing numbers stay at home where the pound in their pocket still feels like it is worth something. Even with fuel prices under half what they were last summer and ticket prices cut to encourage custom, there are simply far less people seeing a quick overseas break as a viable option right now.

Airport operator BAA posted an 18% drop in profits yesterday, a reported a drop in adjusted profits at the operating level down to £582 million from £713m.

Passenger numbers released with the profits figures also suffered a hit, with the number of passengers passing through the firm's seven airports falling 2.8 per cent overall. Edinburgh has been the most resilient with just a 0.5 per cent. Glasgow was one of the worst performing, falling 6.8 per cent, hit by last year's collapse of low budget airlines Zoom and XL Leisure. Gatwick was similarly affected by the failure of the carriers such as Sterling airlines which went bankrupt last year. In total 30 airlines went bankrupt during 2008. Ryanair was not immune either, it cut flight and destinations and has now culled staff and eliminated its check-in desks at Stansted.

BAA chief executive Colin Matthews warned of another "challenging" year ahead. He said: "BAA performed strongly in 2008, although its performance was affected by a drop in passengers, which reflects the general economic situation." It also said airport charges per passenger were likely to be about 10 per cent higher at its London airports under price increases to reflect investment.

While brits may be cutting back on flying, the week pound makes the UK an attractive place to shop for anyone still with money to spend from elsewhere in the world so things aren't all bad for the industry but long term it depends on how deep and wide this recession will be. If its just a short glitch as those in power would like us to think, then the airline industry might see some recovery until energy prices knock it out of the sky for good but this recession is likely to drag on for much longer only to merge into the big depression of peak everything.

All in all it seems a strange time for the government to be betting the bank on airport expansion and it seems perhaps BAA is starting to come to it's senses too. It announced last week that the proposed second runway at Stansted wouldn't be operational until 2017 because of falling demand. BAA has previously said it would not sell Stansted, but reports at the weekend suggested it might now be prepared to put it on the market.

Today BAA were trying to use the industries poor economic performance to influence demands from the Competition Commission which is looking at breaking BAAs monopoly hold on UK airports. BAA say that this is would be a really bad time to be forced to sell airports such as Edinburgh, Gatwick and Stanstead.

A spokesman for the Competition Commission refused to comment on the issue until their report is published in two months time, but it is understood that the body will take timing considerations into account, although is unlikely to postpone forcing a sale indefinitely. Besides, it looks like BAA parent company Ferrovial needs the cash - anyone want to buy an airport?

flyer tuck


Display the following 4 comments

  1. Addition - falling passengers — aaaaaaaaahhhhh
  2. The Problem of Riches — Keep Em On The Ground!
  3. hmmm — tony
  4. Travel industry is having a lot of redundancies at the moment — anonymous travel worker