Oh … Airlines are Okay

Last week I had a post here citing the downbeat factoid that airlines have been a crummy investment, what with having lost money cumulatively through their history. Well, my timing was contrarianly auspicious as The Economist weighs in this week with a piece saying that investor negativity is misplaced, and the industry is poised for a “massive boom”:

In fact, the airline industry is poised for an almost unprecedented boom, as a new generation of planes is combining with better business models and huge volume growth in new markets.

…But there is more to it than savage cost-cutting; traffic volumes are growing. International traffic has risen by 8.3% so far this year, compared with 2004. In America, total traffic is up by 5.4%; in Europe the rise is 6%. In Asia, IATA is forecasting continuing annual growth of 6.8% through to 2009: China and some east European countries will go on growing by around 10%.

But perhaps the most conclusive indication of brightening skies is the boom in aircraft orders that is stretching Boeing and Airbus production plants to the limit.

Related posts:

  1. Airlines Are a Bad Idea
  2. Page views, RSS Traffic, & the NY Times
  3. “We Realize You Have a Choice of Bankrupt Airlines …”
  4. Paul Krugman & the “so-called boom”
  5. Nick Denton Makes (a) Fortune

Comments

  1. Kara says:

    Hm… I’m still thinking “I’ll believe it when I see it”.
    Besides, given the airline events of approximately 4 years ago, how useful is it to look at a single year increase? Does that actually take into account the decreases accumulated up until last year based on fear, cost of fuel increases, increased cost (and annoyances) of changes in security?
    The forecast numbers are more interesting, but I’m certainly curious as to what they’re based on – hopefully not just the single-year increase. I don’t have a sub to The Economist so I may never know :)
    Aircraft orders alone could be based on increased seating capacity (reducing number of total flights required per person) and improved fuel efficiency. That would be one hell of a driver these days – and I thought most planes were leased, so it may not actually indicate an increase in the total number of person-miles per year…
    [in bleaker thoughts, if it is true, good news for all the virii waiting to be pandemics!]