A sharp slowdown in business travel, the best moneymaker for major airlines, will cut into U.S. carriers' profits this year, and the picture doesn't look much better for 2010.
According to the Federal Aviation Administration, overall domestic air passenger traffic will fall nearly 9% this year, while international bookings are expected to decline by 2.4%. The FAA expects to see travel growth return in 2010. But business travel may take longer to recover.
Business travel, which accounts for most first-class and business-class ticket sales, has suffered from deeper cutbacks than leisure travel, as companies face a global recession. Even when trips aren't canceled, employees increasingly are moving to economy class seats.
Airline consultant Michael Boyd estimates that trans-Atlantic passenger revenue, mainly driven by business travel, is down 15 already this year compared with 2008. He said he thinks airlines will need to keep shrinking capacity this year and into 2010, as passenger demand remains weak and costs, especially for fuel, keep rising. "Growth is not in the picture," he said.
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Source - CNN
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