Job prospects in aerospace over the next few years are likely to be as unstable as the global economy, with airline growth fluctuating according to geography and type
Industry and economic experts gave mixed reports on the future state of the market at the Flight International Recruitment Forum at the Paris air show, which means a variable outlook for jobs over the coming years.
Economist Bryan Finn, director of Business Economics, said the world economy would start to slow down in 2005-6 to around 3.5% growth – “a lowish level, but not disastrous” – and would recover to around 4.5% by 2008.
Finn highlighted the decline of the US economy relative to the rest of the world over the past few years. “The US economy is much more susceptible to shocks,” he said. “Since 2000, it has been underperforming relative to the world economy. The USA is usually considered to be the locomotive behind the world economy, but recently this has not been the case.”
Recent data shows a sharp contrast between the old economies of continental Europe and the new, fast-growing economies of China – which is growing at a rate of 9-10% a year – India, Pakistan and, to a degree, Russia.
Airline Business editor Kevin O’Toole addressed the forum on the challenges faced by the airline industry in the overall global climate. He said that although traffic recovery is now at 2000 levels, it is not evenly distributed by region or type. US traffic growth in 2004 was 10%, Europe 9% and Asia Pacific 18.6%, although that increase is the evidence of a post-SARS recovery and is likely to subside.
Growth also markedly differs by type of carrier, with low-cost and regional carriers both showing more than 20% growth.
The rise of the low-cost carriers (LCC) can be illustrated by the fact that the low-cost market represents 25% of intra-Europe and US domestic capacity this summer, while Ryanair and EasyJet are now not far away from having as big a market share as mainstream Lufthansa.
There is a note of caution, however. “We would expect yields to follow traffic into recovery,” said O’Toole, “but they haven’t. They have suffered a 20% decline since 9/11. This has been driven in the USA and Europe by pressure from the LCCs, who haven’t allowed yields to recover.”
Cost pressures are a key problem, especially rising fuel prices. Non-fuel costs, however, are down by around 2.5-3% a year.
O’Toole believes airlines have to focus on cost reduction. Tactics available to them include dealing with labour concessions. “The USA is in need of radical reform in this area,” said O’Toole. “Labour deals struck by United and Delta during the boom have been real problems for them, for example.
“We are now seeing US majors looking to resolve pensions issues and this is going to become real for pilots and engineers in the USA. The pattern of giving concessions now and getting it back in five years time is not going to work, because there isn’t going to be a ‘five years time’ for some of these airlines. There will have to be some hard discussions.”
- flight.workingweek@rbi.co.uk
Source: Flight International
