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Airlines projected losses something to watch closely — Curt Yeomans

Curt Yeomans covers government for the Clayton News Daily. He can be reached at via e-mail at cyeomans@news-daily.com.

Curt Yeomans covers government for the Clayton News Daily. He can be reached at via e-mail at cyeomans@news-daily.com.

It appears that 2012 may not be one of the airline industry’s better years, according to an Associated Press report that came out this week.

The AP reported that the worldwide aviation industry could likely see profits drop to $3.5 billion next year.

The report goes on to say that dip could go off a proverbial cliff, however, and turn into an $8.3 billion loss, if the financial crisis going on in various parts of Europe turns into a “catastrophe” during the next 12 months.

Initially, my gut reaction is to say, “Well, this isn’t too surprising since they made air travel too expensive, with fewer, and fewer amenities offered for the prices we pay.”

That would be simplifying the situation too much, however. There are multiple layers to this problem. I do believe the higher price, versus fewer amenities issue is possibly a factor, but so too is the economy on several levels. For one, jet fuel costs more than it did a few years ago.

That has a tentacle effect, which includes higher shipping costs for companies and individuals, and higher ticket prices, as companies try to make up the difference (which does not help the argument that they already charge us too much, with not enough bang for our buck).

Also, with economies struggling in Europe, people have less money over there, and they cannot afford to travel as much.

The biggest losses in the industry are expected to happen in Europe (since a good chunk of the continent uses a common currency), followed by North America, and the Asian-Pacific region.

We’ve already been going through our own money problems in America, so people on this side of the “pond” are not helping out any.

In short, less money in our wallets means we have to cut back on spending. That, in turn, cuts into profits for the air lines, forcing them to raise prices.

Higher prices for air travel and air cargo means we cut back even more on our travel spending, which starts the whole process all over again.

You see, it is all cyclical.

But, despite all of that, the question of what exactly decreased profits will mean for people who want the best deals possible on air travel remains unanswered for now.

We’ll just have to watch it closely. I cannot imagine it will be particularly positive news for us, as the airlines will have to find ways to raise the bottom line, so they can stay in business.

My gut instinct is to wonder if this will translate into even higher ticket prices, but all of that remains to be seen.

I guess all eyes will be on Europe, and its economic crisis.

Curt Yeomans covers government for the Clayton News Daily. He can be reached at (770) 478-5753, ext. 247, or via e-mail at cyeomans@news-daily.com.