How about the whole story?

Implications: IATA rightly assigns much of its members' travails to the oil spike. How quickly we forget. Before the oil spike we had a situation where many airlines were struggling - especially in the US - with rising labor demands. The truth is that the industry had a brief moment of profitability. There were exceptions of course; some airlines can't help themselves for making money. These would be the ones that charge a fair price AND deliver on customer expectations. Ther are precious few unfortunately.

Analysis: Global airlines are set to post losses of $5.2bn this year and $4.1bn in 2009 as high oil prices take a toll on the industry, IATA said on Wednesday. "The difficult business environment is expected to continue," IATA DG Giovanni Bisignani said. "The situation remains bleak." IATA's latest forecasts are based on an average crude oil price of $113/barrel in 2008 and $110/barrel in 2009. This is a huge turnaround - in 2007 the global airline industry made profits of ~$5.6bn.

The reason the news looks so dire is because despite a softening oil price, the major economies are all slowing rapidly. So while lower fuel prices are of welcomed, passenger traffic is off. Indeed, Bisignani pointed out that air cargo declined 1.9% over July 2007 in a second straight monthly decline. And in the Asia-Pacific region, which comprises more than half of the world air cargo market, freight traffic dropped 6.5% year-on-year in the month.

Of course the perfect scenario is at play here. But Bisignani also thinks that the airline industry could break even in 2009 if oil prices declined to an average of $95/barrel. What happens if oil hits that price sooner or goes even lower? IATA it should be remembered is out to defend airlines first. Its scenarios therefore paint the picture th industry wants to present. While IATA therefore defends its members this report ignores the fact that the industry's customers are increasingly treated awfully. It ignores the fact that industry employees are once again suffering through layoff threats and reduced income. Its too bad the IATA report does not dwell on how many of its members suffer more from poor management than high oil prices.