The airlines are in trouble, and not just because of the seemingly numerous plane crashes that have taken place in 2009 so far. Instead, it’s yet another result of the economic crisis. What else.

Back last summer, we heard a lot about their woes. With oil being as high as it was, jet fuel became more and more expensive, therefore cutting into profits big time. We heard about British Airways, which lost 90% in its first-quarter profits for that year. And it was hardly alone. Every other major and minor airline around the world was finding it more and more difficult to make anything out of their sales. Admittedly, it’s a difficult industry to work in even during the best of times, and more than a few airlines have gone bankrupt more than once in their day. But last year was particularly bad as fewer people were traveling due first to higher airfare and then the overall economy woes.

Then all of a sudden, things started getting better. Oil tanked and jet fuel fell as well, leaving airlines able to charge more reasonable prices and therefore attract a more diverse group of travelers. Average people could fly again not because they had to, but because they wanted to.

Or so the theory went…

But consumers cut back a heck of a lot more than they actually needed to, leaving airlines in a bind yet again. And this year, the industry is expected to lose some $4.7 billion. International Air Transport Association CEO Giovanni Bisignani, put it this way:

“The state of the airline industry today is grim. Demand has deteriorated much more rapidly with the economic slowdown than could have been anticipated even a few months ago.”

He went on to report his expectations for the next several months, such as revenue falling by $62 billion or 12%, to $467 billion. Just to put that into perspective, after 9/11, industry revenue only fell 7% from 2000 to 2002.

You might have noticed amazing airfare deals being hailed everywhere. Fly to London one way for $279. Fly to Rome one way for $304. The prices might be nice for consumers to look at, but what they signify is flat-out desperation on the part of airlines that are in a worse bind now than back last year when they had to cope with astronomical fuel prices.

Tuesday, March 24, 2009 - by Jeannette Di Louie, Assistant Editor, Mt. Vernon Research