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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


Hide the following 4 comments

Addition - falling passengers

26.02.2009 09:14

Some 4.2 million fewer passengers flew from the UK's biggest airports last year, dragging BAA's profits down by nearly a fifth. Heathrow held up best, with passenger numbers declining only 1.4 per cent overall (it deals mostly with long haul flights which actually went up a little). But total passenger numbers across BAA's seven UK airports dropped by 2.8 per cent, and the three London airports – Heathrow, Gatwick and Stansted – combined saw a 2.6 per cent drop - a drop of 3.4 million travelers. The figures actually look a lot worse if you look at the later part of the year rather than including the first half. November last year saw falls of upto 9% for some airports compared to the previous year.


The Problem of Riches

26.02.2009 10:48

Most aviation emissions are for business travel rather than holidays or so I've heard; does anyone have a reference for this?

Keep Em On The Ground!


26.02.2009 11:03

I think it's a bit dangerous and unthinking to be lording it up about a company going to the dogs just because it is in the aviation industry. I don't mean that as an argument to support business, or aviation - what i mean is that thousands of workers' livelihoods are on the line here. Remember, these companies are going to do whatever it takes to keep them afloat and keep their profit margins and exec bonuses nice and high. if people are flying less, then they will either increase fares, or cut jobs, or (most likely) both. sure, this might mean that a handful fewer aeroplanes fly a day as a result, but is that really the major issue?

we can't stop destructive environmental practices without understanding the root cause: capitalism. and we can't fight capitalism without at least partly engaging it 'at the point of production' as the marxists say. i.e. our interests as workers are intimately connected with our interests as animals within the world's ecosystem.

People involved in Rising Tide, Plane Stupid, and so on would do well to take a leaf out of the IWW's book. back in the 1990s they forged a really productive alliance between Earth First! anti-logging activists and lumber workers in the USA. rather than fighting the lumber workers as enemies, the EF activists and IWW workers recognised that both of their fights were against the same enemy: the lumber bosses. the workers helped EF! by leaking information from company sources to support their anti-logging activities, and the EF! activists supported the lumber workers in their fight for better working lives. it was a potent and powerful alliance that put the shits up the bosses and made real gains.

this is the sort of model environmentalists who are serious about changing the world should be putting into practice. stunts and celebrating what will inevitably mean job losses and pay cuts will only get you so far.


Travel industry is having a lot of redundancies at the moment

27.02.2009 21:56

I work in a travel-related job and I can tell you that there are a lot of redundancies happening at the moment, business is getting very bad, due to the recession. There are also wage freezes and loss of "perks" such as cheap holidays for workers, so morale is fairly low.

I'm also supportive of the environmental campaigners who are trying to cut down carbon emissions from flying, and I don't mind if that ultimately causes the loss of my job. I can always get another job, but I can't get another unpolluted planet to live on.

Is it hypocrisy for me to have this job? Possibly, but it's just a crappy job to pay the bills, and most of them have some bad effects. I never fly on planes myself, unlike some environmentalists that are often jetting off to places.

I also know that the bosses will kick you out in a flash if it suits them. Everyone who works in the travel industry knows this, it is a very low-margin and cut-throat competition industry. So there is very little company loyalty from the staff, and fairly high turnover. There are also a lot of shady practices where different companies in the industry rip each other off by doing things such as deliberately over-charging and hoping the other companies won't notice the discrepancies on the invoices.

I think a big issue is the fact that aviation fuel for international flights is zero-taxed, by international law.
This was a convention arranged by the aviation industry to exempt themselves from fuel tax everywhere in the world - the idea being that if people traveled more, wars, racism and xenophobia would be reduced, but I'm sure self-interest and greed played a part.

So I am indirectly fuel taxed for taking a bus into town, but a rich person jetting off to the Bahamas pays no fuel tax!

anonymous travel worker