Airline industry faces 'hardest times ever'

The airline industry is facing the most difficult period of trading it has ever had to contend with, according to one expert.

Management, engineering and development consultancy Mott MacDonald made the claim, adding that the aviation industry is now reducing in size as a result of rising fuel prices.

The firm's comments follow statistics published by the Civil Aviation Authority (CAA) which revealed that the beginning of this year has been a slow one for British airlines.

Its Aviation Trends report found that in the 12 months leading up to quarter one of 2008 the number of domestic passengers has fallen by two per cent.

Furthermore, flights to and from UK airports in quarter one 2008 were down one per cent (approximately 5,500) in quarter one in 2007.

Laurence Price, director of aviation strategy at Mott MacDonald, said: "I think the industry is doing a major … review, [as] this is probably the fourth major recession I've faced in my career.

"Three of those were due to changes in oil price and although the industry is better placed to withstand that because aircraft and their operations are far more efficient than 30 years ago, by a factor 70 per cent improvement in seat miles per gallon, there is greater competition out there and you are looking at a far greater influence of what I call discretionary travellers."

He added that the decision by Ryanair to pull out of certain markets, such as Dortmund, has raised eyebrows and indicates a major shift in the way the aviation industry is operating.

Furthermore, according to the expert, other airlines have grounded whole fleets of aircraft travelling to the US and there will be 60 million less seats to America in winter of 2009 than in the same season of 2008.

The Sustainable Aviation report by the Airport Operators Association illustrated how important the aviation industry is to the UK's economy.

It claimed that aviation generates £14 billion for the UK's economy and supports 675,000 jobs with £13 billion of exports.

What is more, inward tourism is also a major component of the aviation business and is worth an additional £12 billion per annum to the UK economy, £10 billion of which is derived from visitors arriving by air.

Mr Price concluded: "I think there does seem to be a global recognition that this is one of the most difficult periods the industry has ever faced and that it will require concerted effort of all parties for the industry to come through."