By Claire Valdini
Rising fuel costs and slowing global economy could force carriers to downsize, says Tim Clark
The airline industry faces a
“perfect storm” amid rising fuel costs, a slowing global economy and volatile
exchange rates, which could force carriers to downsize, the president of
Emirates Airline has said.
“It’s a perfect storm of
adversity now facing airlines,” Tim Clark told newswire Dow Jones.
“The euro is going south,
the pound is going south, fuel costs are still too high,” he added.
Clark’s comments underline
the global aviation sector’s struggles as high oil prices and sagging demand
due to the European economic crisis take their toll.
Industry trade body
International Air Transport Association has downgraded its forecast for airline
profits in 2012 to US$3bn from US$3.5bn and warned rising oil prices could lead
to losses of US$5.3bn for the sector.
Emirates, which is among the
ten biggest airlines in the world by passenger numbers, reported a 72 percent
drop in net profits last year following a steep rise in fuel costs.
Clark in March said the
Dubai-based carrier would take a US$1.6bn hit from high fuel costs and introduce
fuel surcharges to mitigate the impact.
Australian airline Qantas
earlier in the week issued a profit warning signalling its full year profits for
2012 are likely to be 90 percent lower than 2011. The carrier blamed the
decline in global aviation operating conditions, events in Europe and its
highest ever fuel bill.
Many business "leaders" only knowing how to give reasons when business environment is turning away from them.
Perfect storm cliche is over used, these are simply headwinds, no need to exaggerate for the sake of a headline.
Maybe there is something I don't know but the price of oil is around $105 and has been for an awful long time so what's this about fuel hikes? The price of tickets out of the middle east has rocketed recently yet oil is nowhere near 2008 levels when all the talk was of 200 a barrel. It's more likely that emirates know they can hike their prices now they have a stranglehold on the market. The levels of their and to be fair it's same with Qatar/Etihad business class service is continuing to fall at the same time. The western carriers can never compete against subsidized middle east carriers with cheap labour / loans / fuel.
Get your facts right Lee....Middle East Airlines are not subsidized. This is a "lame allegation" that we have been unable to substantiate in all these years - even with the funding of Lufthansa and other competitors.
Also, you mention "cheap labor" - did you know that the total cost of labor is NOT cheap when you account for the perks. Also, no one has stopped Western carriers from borrowing. The fact that no Bank with half a brain would lend to most Western carriers, is a different story.
I think we need to accept the fact that Western (and US carriers in particular) have for far too long offered passengers bad service. I remember flying in the US (in the front row) when I was handed a peanut sachets on a tray and asked to turn around and "pass it down" to the other passengers. Horrible that was!
Not to mention the air hostesses are usually close to retirement age and I often think that God forbid in case of an emergency we would end up helping them out of the aircraft instead!
These old ladies did a remarkable job on the Hudson River!
Middle East Air Lines are subsidized the world knows it....well at least the Western World. . The continual denial of this only serve to perpetuate western distrust of all things Mid East.