Into the Stormy Skies: Economic Slowdown causing turbulence for US Aviation Industry

Some call it the ripple effect, while others call it the domino effect, but whatever term you may use; the changes taking place in the US economy are slowly yet steadily affecting all other businesses, not excluding the airline industry. Like any other industry, the airline industry also keeps changing depending on the market condition of today.

Undeniably, the current state of the market plays a big role in the demand and supply of the aviation industry. With the rapidly rising prices in oil, the cost of flight tickets have also been on the rise, leading to a steady decline in the demand for air travel. By the end of 2009, US airlines are expected to run through losses of approximately $9 billion and over. Yes, the US aviation industry is definitely going through a rough patch, as a result of which passenger growth has slowed down to a trickle and fuel costs have risen sky high.

The US aviation industry has been steadily losing money all of this year due to high fuel costs, as the cost of oil was around $113 per barrel in the first six months of this year as compared to a lowly $73 per barrel of last year. At the start of the year, forecasts for the entire year were bleak, but now that we are nearing the end of 2008, it seems that these forecasts have proven to be correct. With a deteriorating world economy that has managed to bring down fuel prices, there has been a drastic slowdown in the air travel industry.

But some experts say that the worst is yet to come, and that the US airlines industry will probably have to face 2 more years of challenges before it can rise again. This however, sadly, is the time it may take for the global economy to improve.

However, I have no doubt as to the resurgence of the US aviation industry. The industry has dealt with slumps in the past and has overcome these obstacles and will do so again this time. As for the charter industry, it has been as badly affected as the rest of the airlines industry, but charter flight services all over the country like Flight Management International (FMGM) are bouncing back with some of the best rates in the charter industry at this time.

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posted by marketkafka @ 9:39 PM,


At February 24, 2010 at 7:03 AM, Blogger subalin said...

Now the economic crises is been stabled and people started chartering Private Jet, as business people love traveling to save their time and money.


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