• Home
• /
• Business

Airline bankruptcies set to double: ERA

MANCHESTER - Airline bankruptcies around the world are set to double over the winter to at least 70 for the year, the director general of the European Regional Airlines (ERA) industry body said on Thursday.

‘We are now up to around 35 (bankruptcies) this year. I see at least that number over the winter,’ Mike Ambrose told Reuters on the sidelines of the group's annual conference.

He added that the current climate for airlines was ‘far more significant, far more far-reaching’ than the period after the attacks on New York in 2001, describing the current year as a ‘year of hell’.

‘At 9/11 there was a terrorist attack that created a loss of confidence in safety. This is far more pernicious -- it is a loss of confidence in investment,’ he said.

‘There are a major set of problems -- such as governments shoring up banks -- that go way outside aviation and take longer to resolve,’ he added.

Airlines have struggled throughout 2008 amid a cocktail of soaring fuel prices, slowing consumer demand and the impact of the credit crisis on bank liquidity.

More than 30 airlines have collapsed around the world, including business class-only airline Silverjet and travel giant XL in the UK.

REVERSING THE TREND

Ambrose called for a lower regulatory burden for airlines, estimating that a European scheme to make airlines pay more for carbon emissions could add 6 million euros ($8.23 million) a year to the cost of a typical regional airline.

‘Far more than 50 percent of an airline's cost base is out of its control -- with fuel, navigation fees, airport fees, carbon permits and other regulations. We have to try to reverse this trend,’ he said in a speech earlier on Thursday.

The legislation for a European Trading Scheme (ETS) to reduce carbon emissions has already been passed in Brussels, but the details are still being examined by European lawmakers.

Ambrose said in the interview he hoped it would not be finalised by the time European elections get underway next year, allowing him to fight the proposals with a new set of politicians.

ERA said in a statement its member airlines had reported combined passenger growth of 3.7 percent in the months January to June -- the lowest increase since 2001.