Air transportation industry to remain barely profitable in 2009
Air transportation industry to remain barely
profitable in 2009
Canada's airline industry will decline by nearly 86 per cent in 2009, according to the Conference Board's Canadian Industrial Outlook.
February 25, 2009 By Carey Fredericks
Feb. 25, 2009, Ottawa – With demand for personal and business
travel in retreat, profits in Canada's airline industry will decline by nearly
86 per cent in 2009, according to the Conference Board's Canadian Industrial
Outlook: Canada's Air Transportation Industry – Winter 2009.
"The factors shaping the outlook for air transportation industry have
been turned upside down as a result of the rapid deterioration in economic
conditions," said Michael Burt, Associate Director, Industrial Outlook. "High
oil prices, which recently accounted for as much as 40 percent of the
industry's operating costs, have fallen by more than half since their peak
last summer. But demand for domestic air travel, which was the mainstay of the
industry, is now plummeting."
Domestic passenger counts have been declining in tandem with falling
consumer and business confidence. In addition, the steady decline of U.S.
residents traveling to Canada accelerated at the end of 2008. Even the number
of visitors flying to Canada from countries other than the U.S. began to dip
at the end of the year. The only segment of the industry that continues to
grow is Canadian outbound travel to non-U.S. destinations.
Canada's airlines are expected to eke out a small profit of only $106 million in 2009, their lowest level since 2004. Profits are forecast to
improve considerably in 2010, as the Vancouver Olympic Games and expected
economic recovery provide a boost to demand.