Swissair and airline industry face more turbulence

Swissair, among other airlines, could be heading for further troubles Keystone Archive

Dwindling passenger growth in the worldwide airline business due to economic slowdown is going to make it difficult for airline companies to make a profit this year, according to the Geneva-based International Air Transport Association(IATA).

Pierre Jeanniot, IATA director-general, said that over-capacity and declines in growth numbers “point to a worrisome evaporation of traffic growth”.

The Swissair Group, which is facing a financial crisis after losses in 2000 of SFr2.9 billion ($1.71 billion) is going to be hit by the trend more than most, according to Swiss aviation journalist Sepp Moser.

“Swissair is hurt more than the others because the others have amassed reserves in past, good years. The well-run airlines have made huge profits and they can now use these as reserves, while Swissair is much deeper in the red than the others,” he told swissinfo.

“When you look at Swissair as a business, it hurts everywhere, even in the secondary businesses like airline catering because catering is supplying not only Swissair but also other airlines and these are also reducing their orders,” he added.

There are a number of reasons behind the drop in global passenger traffic growth, among them the fact that when there is an economic slowdown, fewer business people take to the air.

“Business is slowing down. There are fewer business journeys being made and this is what hurts the airlines the most because the business people are the ones that pay more,” Moser said.

“If you as a private person want to see your aunt or your children in the United States, you will visit them anyway but business people adapt their travel activity to the level of business they have. If there is a recession and they have less business, they travel less,” he explained.

In the face of the economic slowdown, airlines will have to take a long hard look at whether they should reduce capacity on their route networks.

Moser, an outspoken critic of Swissair over the years, repeated that he believes only a radical change can help the group out of its present crisis.

“Probably only one option is left – reduce the flying activities, fire a lot of people and reduce the company to a sensible size,” he told swissinfo.

“Generally speaking, Swissair flies too many routes too often and, in particular, it flies too many routes on which it makes too little money,” he added.

IATA on Wednesday said that airline freight traffic was also feeling the effects of the global economic slowdown. Over the first six months of the year, it dropped by three per cent over the previous year.

swissinfo with agencies