by Doug Desjardins
Airlines hoping for air travel to rebound for the 2009 holiday season will have to wait until next year or maybe even longer. 
The lingering recession and ongoing job losses have prompted consumers to travel less this year and the trend is expected to continue through Thanksgiving and Christmas. The International Air Transport Association (IATA) said in September that airline losses globally totaled $6 billion during the first half of 2009 and are expected to continue on that pace the rest of the year. Just a few months ago, the IATA predicted that losses among airlines would slow to $3 billion during the last six months of the year but has bumped that figure to $5 billion after a slow summer travel season. The total loss industry-wide is expected to exceed $11 billion for the year.
Those losses have forced airlines to cut prices and those cuts should accelerate as major airlines struggle to fill seats in November and December. The IATA expects the average price for airfare to fall 12% in 2009 and that number could go even higher if price cuts are as deep as expected in November and December. “Even with better volumes, we don’t see industry revenues returning to 2008 levels until 2012 or 2013 at the earliest,” said IATA director Giovanni Bisignani. He said total revenues this year will fall 15% and that overall business is worse than it was in the aftermath of the terrorist attacks of Sept. 11, 2001 when air travel plummeted for several months. First class tickets have taken the biggest hit with a 20% decline the first six months of the year.
Airlines based in North America are expected to post a collective loss of $2.6 billion for the year after returning to profit in 2008. Carriers in Europe are expected to post the biggest loss with $3.8 billion followed closely by Asia-Pacific-based airlines with $3.6 billion.
With those dismal numbers in mind, travel analysts expect airline ticket prices to be significantly lower during the holidays compared to 2008 as competition among carriers heats up Microsoft’s new Bing Travel network is forecasting a 17% decline in the price of an average ticket. “Airlines have cut capacity to the point that we will see pretty full planes but, at least for now, fares will be depressed,” said Joel Grus of Bing Travel in a written statement. He added that the decline could be reversed by “early signs of a rebounding economy pushing fares back up.”
AAA Travel Services is forecasting a similar drop in prices in the 15% to 20% range. The travel group expects fares to remain low the rest of the year as out-of-work consumers postpone trips and vacations.
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