Offering a candid view of the airline business, British Airways Director of Strategy and Business Units Robert Boyle took the stage during a panel discussion and declared that it is "one of the world's worst in its ability to make money", but "one of the funnest - that's why we're all still here".
Speaking at the ICAO-World Bank Global Aviation Strategy Summit being held at Routes, Boyle does say he's encouraged by a rebound in traffic and a return of the industry to its second year in the black this decade.
But he warns the height of the recovery is over, and a period of slower growth has started.
"The challenge is reading the tea leaves to see where the industry will go," he says. One concern is how some governments are coping with the fiscal turmoil that has ravaged their budgets. "Governments are in desperate need of money," says Boyle. "They seem to like aviation as a source of tax revenue."
Despite a return to profitability in 2010, Boyle cautions airline finances remain shaky. Balance sheets of global airlines "are not in great shape by any stretch of the imagination", he says. Finance markets continue to thaw slowly, but, "Terms are no where near as easy for airlines to afford as they used to be."
Boyle trumpets consolidation as the remedy for a large portion of the industry's financial ailments, and believes current trends of forging pseudo mergers through alliances and full fledged consolidation will continue.
Pointing to the deepening alliance relationships now that carriers in all three of the major global alliances now have anti-trust immunity and are forming joint ventures, Boyle says the challenge now is, "How will consolidation play out? We saw with Japan Airlines how competitive and disruptive those decisions will be."
Earlier this year Japan Airlines opted to remain with the oneworld alliance after being heavily courted by SkyTeam anchor member Delta Air Lines.
Ideally, oneworld "would love it" if Brazil's TAM eventually joined the grouping, says Boyle. But for the time being, TAM and its merger partner LAN group of Chile plan to remain in their respective Oneworld and Star alliances until they complete the transaction, and have said an alliance decision is unlikely before 2012.
Meanwhile, American Airlines, British Airways and American remain on track to launch their transatlantic joint venture by year-end.
Source: Flight Daily News
