Americans Look to Personal Loans as Airlines Lose Big
The post-recession numbers
Americans are still looking to personal loans for funding due to the struggling economy. The latest study showing that the country is still reeling from the recession involves the airline industry. The world’s airline industry stands to lose approximately $9 billion in 2009, which is almost double the projected loss. A spokesperson for the International Air Transport Association, IATA, an organization that represents 230 worldwide airlines, announced that the industry is in a “rapidly deteriorating revenue environment.”
Airline industry is not optimistic
Though many experts still see a bottoming-out of the economy, the IATA says the industry was so severely hit that they will have a difficult time recovering. “Weak consumer confidence, high business inventories and rising oil prices pose headwinds for future recovery,” added the spokesperson.
Overall airline industry revenues are slated to lose $448 billion this year, which is an almost incomprehensible dip of approximately 15% from last year. IATA CEO Giovanni Bisignani stated, “There is no modern precedent for today’s economic meltdown. The ground has shifted. Our industry has been shaken. This is the most difficult situation that the industry has faced.”
Airline jobs not secure
Due to the industry’s situation, the effects are expected to hit employees hard. Passenger traffic for this year is expected to decline by 8%, with cargo demand falling 17%. An additional 100,000 jobs worldwide are threatened due to the state of the airline industry. Bisignani is urging the government to “lift restrictions on routes and cooperation between airlines to bolster the global airline industry.” It is his hope that a global push for the market will ease the struggle.
Consumers may cut back on flights
It’s projected that many consumers will cut back on flights, both worldwide and nation-wide. With the unemployment rates running high, people are cutting vacations and long-distance visits out of their budgets. Michael Cleaver of Omaha, Nebraska stated, “The first thing we cut out of our budget after talks of a recession was our vacations. We just couldn’t afford it…our fallback plan was to use small personal loans to take a much more modest get-a-way.”
Cleaver shares the belief of cutting back on vacations with many Americans. Most are seeing vacations as an unwelcome expense as they struggle with the costs of day-to-day living. Resorts, amusement parks, and hotels are all feeling the economic crunch with revenues so low they are having a difficult time surviving.
Airlines seek stimulus package
The airline industry is asking for a stimulus package of its own. Bisignani said that if the government opened global travel by lifting restrictions it would be a cheap and effective stimulus, and that “liberalizing key routes today would create 24 million jobs and $490 billion in economic activity.” He feels that the airline industry’s revival will come from a change in policies and procedures, and that it needs to rely on the government, rather than increased customer purchases.
Consumers may be slow to return to flying
Many experts claim that consumers are not going to get back into flying easily. Daniel Daye, economist for Smartmoney.com stated, “Flying is something people see as completely discretionary, unless it’s for work or an emergency . . . even airlines that are drastically cutting flight costs are having a hard time finding people to buy.” Most consumers are trying to make it through their daily expenses with personal loans, family help and strategic budgeting. Flying is an added expense that they most likely will continue to deem unnecessary for some time to come.