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The economy is continuing to run roughshod with balance sheets this quarter: The Airlines Reporting Corp. has announced passenger ticket sales fell 20 percent in June 2009 from where they were a year ago, with United Airlines taking it on the chin the most (and could explain why the sudden move to cut agencies from [...]
Written by Travel News on July 21st, 2009 with
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The economy is continuing to run roughshod with balance sheets this quarter: The Airlines Reporting Corp. has announced passenger ticket sales fell 20 percent in June 2009 from where they were a year ago, with United Airlines taking it on the chin the most (and could explain why the sudden move to cut agencies from its merchant credit card). All in all, total air sales are off nearly 25 percent since January of this year.
And this is after jet fuel costs fell from $3.23 in May 2008 to $1.73 a gallon in May 2009.
Meanwhile, Smith Travel Research has said it was wrong in its original prediction — hotel room daily rates will drop by an average of 9.7 percent in 2009. Starwood Hotels and Resorts plans to cut its rates up to half at nearly 600 properties around the world, which experts say is the a bigger scale than the discounts and promotions that have swept through travelers’ email boxes to date.
Money woes
The really bad news for the industry? The revenue from those rooms will drop 17 percent. Occupancy will also take a nose dive to 55.4 percent. And thanks to AIG’s famous resort meeting after receiving bail-out monies from taxpayers, “no amount of discounting or good deals or giveaways or promotions is going to incentivize corporate people to travel,” analyst Robert LaFleur has been quoted as saying in the trade press.
Yet financial analysts don’t think these signs will lead to bankruptcy filings yet, as least for the airlines, which seem most vulnerable. Load factors (how full a plane is) are saving the day in this category, as executives simply draw a fat, red pencil through more flights on their schedule. God willing and the oil prices don’t rise, things should keep the status quo over the next few weeks.
“”The traffic demand, even though the fares are low, seems high enough so they’ll have enough cash flow to keep going on through the summer. That could change drastically in the wintertime,” Robert Herbst at AirlineFinancials.com told the Christian Science Monitor. It’s a whole new flight pattern once we hit a season when folks typically fly less anyhow.
Photography: yomanimus
Written by Travel News on July 21st, 2009 with
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