Wallstreet meltdown, fewer fliers to take the wind from beneath airline’s wings

A softening of demand seems to be on the cards for airlines on account of higher airfares, and the Wallstreet crisis.

According to International Air Transport Association (IATA), an association representing 230 carriers globally, international travel fell in July, especially in the more profitable first and business class. 

IATA's data suggests that the number of passengers traveling on premium tickets dropped by a single per cent in July, after posting  growth in the first half of 2008.

''The financial sector meltdown now risks a much sharper economic downturn," IATA said.

Average jet fuel prices have dropped about 20 per cent from their July peak. Record fuel prices prompted airlines to mothball old, inefficient jets, rationalize capacity, and raise fares and fees, besides rolling back jobs to reduce costs and force up ticket prices. 

By December 2008, capacity in the US domestic airline industry will be lesser by 10 per cent year-over-year.

A week ago, Alaska Airlines was the latest major US carrier to announce flight cuts to the tune of eight per cent during coming months, with the airline's managing director for planning Andrew Harrison predicting a high probability that demand for travel would continue to fall. Earlier, the airline had said it would pull back its fall schedule by around six per cent. 

Delta airlines too reported "some softening of close-in business demand", which are tickets bought by business travelers planning to fly within 30 days.

The Air Transport Association (ATA), which represents US airlines has forecast that the US airline  industry will lose around $8 billion this year, in the same ballpark range of its losses in 2003, though lower than the losses in 2001.