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usdcaguy
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Impact Of Euro Crisis On Air Travel

Fri Dec 02, 2011 11:40 am

There has been much discussion about the Euro in the news recently and impending recession within the Eurozone next year. What impact might this have on Transatlantic traffic, if the effects have not been felt already? My impression is that many unprofitable routes have already been cut and that we should not expect much more, but if the crisis escalates and dampens demand for air travel, which flights would be the first to go?
 
anstar
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RE: Impact Of Euro Crisis On Air Travel

Fri Dec 02, 2011 11:45 am

Demand has already softened... Im sure I read a post a few weeks ago about DL cutting alot of transatlantic capacity.
 
gkirk
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RE: Impact Of Euro Crisis On Air Travel

Fri Dec 02, 2011 11:57 am

UK APD is going up next April, so fewer people will be visiting the UK I'd imagine
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anstar
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RE: Impact Of Euro Crisis On Air Travel

Fri Dec 02, 2011 12:02 pm

APD rises are atrocious.... It will end up killing more jobs in the UK.
 
gkirk
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RE: Impact Of Euro Crisis On Air Travel

Fri Dec 02, 2011 12:10 pm

Quoting anstar (Reply 3):
APD rises are atrocious.... It will end up killing more jobs in the UK.

Indeed, and puts into jeopardy several regional routes.
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airbazar
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RE: Impact Of Euro Crisis On Air Travel

Fri Dec 02, 2011 1:12 pm

Quoting usdcaguy (Thread starter):
There has been much discussion about the Euro in the news recently and impending recession within the Eurozone next year. What impact might this have on Transatlantic traffic, if the effects have not been felt already?

Although the state of the Italian and Spanish economies are worrysome, I think this so called Euro crisis is being blown way out of proportion based on what is happening to 2 mostly insignificant economies: Greece and Portugal. Despite the so called global economic crisis air traffic continues to grow. North Atlantic air travel will see near double digit growth for 2011 and I don't expect a significant drop for 2012, despite what everyone is saying. Besides, the US economy is clearly in full recovery mode (here too it's being blown way out of proportion by the right wing media), and it will offset whatever weaker demand we see from the other side of the Atlantic. All those people who have been putting off that trip to Europe because the Euro was too high, may finally decide to go now that the Euro is losing value against the Dollar.
 
s5daw
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RE: Impact Of Euro Crisis On Air Travel

Fri Dec 02, 2011 1:37 pm

Quoting airbazar (Reply 5):
Although the state of the Italian and Spanish economies are worrysome, I think this so called Euro crisis is being blown way out of proportion based on what is happening to 2 mostly insignificant economies: Greece and Portugal.

This. Yes, It's bad. However, much of the panic is just caused by media throwing everything out of proportion AND non-Euro countries who have a lot of their own problems. UK and US have much more dept as % of GDP, for example.
 
LJ
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RE: Impact Of Euro Crisis On Air Travel

Sat Dec 03, 2011 5:54 pm

Quoting airbazar (Reply 5):

Although the state of the Italian and Spanish economies are worrysome, I think this so called Euro crisis is being blown way out of proportion based on what is happening to 2 mostly insignificant economies: Greece and Portugal.

Apparently you don't work in the financial services industry.... The crisis hits every European country and it will cut back (air) travel. Liquidity is again an issue, which means that companies will find it harder to (re)finance their business (or at much higher cost). Consumers are spending less (though this will probably doesn't have much affect air travel as many people still ahven't increased their travel habits after the cut backs in 2009 and 2010). Needless to say those shopping trips to New York (already reduced compared to 2008) will be cut back even further if the EUR continues to decline against the USD.

Moreover, cargo traffice between Europe and Far East Asia (and most notably China) is also down considerably this year and nobody expects an improvement in 2012.
 
kl911
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RE: Impact Of Euro Crisis On Air Travel

Sat Dec 03, 2011 6:41 pm

I think its a bit of a hype, my wages are still the same, and no way they can suddenly change that. No one I know is earning any less then before the so called crisis. That said, I am smart enough to rent a place instead of owning.
 
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DeltaMD90
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RE: Impact Of Euro Crisis On Air Travel

Sat Dec 03, 2011 6:42 pm

And how does it fare for Airbus? Didn't they just change the currency they deal in from USD to Euro recently?
Ironically I have never flown a Delta MD-90 :)
 
GCT64
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RE: Impact Of Euro Crisis On Air Travel

Sat Dec 03, 2011 7:13 pm

Quoting kl911 (Reply 8):
No one I know is earning any less then before the so called crisis.

That fact is largely true across the UK as well, however in many instances people are not earning any amount higher than they earnt previously either (a string of 0% pay "rises"). With the UK's annual inflation running at 3%-5% (depending on which figure you believe), their real earnings and disposable income is definitely falling. I fail to see how this cannot have an effect on holiday expenditure and the market agrees (Thomas Cook's share price is down almost 90% over the last year).

What is going to happen to UK companies business travel is less easy to determine and I can see arguments for it decreasing, staying the same or increasing!  

[Edited 2011-12-03 11:15:02]
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s5daw
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RE: Impact Of Euro Crisis On Air Travel

Sat Dec 03, 2011 7:47 pm

Quoting kl911 (Reply 8):
I think its a bit of a hype, my wages are still the same, and no way they can suddenly change that. No one I know is earning any less then before the so called crisis.

Maybe nominally. But haven't you guys just raised VAT to insane (and illegal under EU laws) 27%?

Quoting kl911 (Reply 8):
That said, I am smart enough to rent a place instead of owning.

For some reason, housing prices in many EE countries are far beyond anything you'd want to own if you have a grain of salt.
 
airbazar
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RE: Impact Of Euro Crisis On Air Travel

Sun Dec 04, 2011 1:43 pm

Quoting LJ (Reply 7):
Apparently you don't work in the financial services industry....

I actually do. Without telling you the name of my firm, I work for one of the largest financial firms in the World, but I am a technology guy  
Quoting LJ (Reply 7):
Needless to say those shopping trips to New York (already reduced compared to 2008) will be cut back even further if the EUR continues to decline against the USD.

And by contrast trips from the US to Europe will increase as the US economy recovers. Here too the "bad" economy is being blown out of proportion because it's the only weapon the opposition has to defeat the incumbent president. All indicators point to the US economy being in a full recovery, albeit a slow one.

Quoting LJ (Reply 7):

Moreover, cargo traffice between Europe and Far East Asia (and most notably China) is also down considerably this year and nobody expects an improvement in 2012.

That has more to do with China's economy slowing down than the European credit "crisis". China's economy slowed down because of the economic crisis in the US. However as the US economy recovers and the Euro goes down it should stimulate exports to China once again since China's currency is heavily dollar dependent.
 
mikey72
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RE: Impact Of Euro Crisis On Air Travel

Sun Dec 04, 2011 2:02 pm

Quoting airbazar (Reply 12):
And by contrast trips from the US to Europe will increase as the US economy recovers

I don't know about that. For example...total price of the top 10 most wanted gifts at Christmas work out at a whopping 50% less expensive your side of the pond.

Unbelievable isn't it. Deffo a good excuse to justify the cost of a little jollie to Manhattan.
Flying is like sex - I've never had all I wanted but occasionally I've had all I can stand.
 
LOWS
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RE: Impact Of Euro Crisis On Air Travel

Sun Dec 04, 2011 2:10 pm

Without wanting to blow things out of proportion, I spoke with a colleague at my University who has friends at the European Central Bank in Frankfurt and at the European Commission in Brussels.

There is still a very large and real risk of the system collapsing within the next few weeks.

Don't count anything out. Our political "leaders" have "fixed" this three or four times now. If the system goes, the effect will be bad all across the world, the US included. Naturally, the airlines will suffer greatly.
 
windy95
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RE: Impact Of Euro Crisis On Air Travel

Sun Dec 04, 2011 3:04 pm

Quoting anstar (Reply 3):
APD rises are atrocious.... It will end up killing more jobs in the UK.
Quoting s5daw (Reply 11):
Maybe nominally. But haven't you guys just raised VAT to insane (and illegal under EU laws) 27%?

Toss in the carbon trading scam kicking in at the beginning of the new year and I will not be traveling to Europe anymore. South America and Asia are becoming a more attractive choice for many Americans. With taxes in the $400 to $500 dollar range now for Europe it has made ticket prices rise to the level of much longer Pacific and South American flights. Even being able to fly standby the costs and taxes in Europe have turned many friends of mine away. That has to be having an effect on travel industry jobs in Europe.
 
PanHAM
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RE: Impact Of Euro Crisis On Air Travel

Sun Dec 04, 2011 3:53 pm

Quoting DeltaMD90 (Reply 9):
And how does it fare for Airbus? Didn't they just change the currency they deal in from USD to Euro recently?

Great, they get more €€€ for the US$$$ they collect.

As long as I am in business there have been the ups and downs with the currency, now it is $$ against €e, before it was $$ against DM and vv. . That is an ever lasting matter since the currencies are free floating.

I don't see a € crisis when the US$ is printed like there was no tomorrow. Germanby is trying to keep other € members from switchoing on the currency press. We have fared well 60 years with stability and we want to keep it that way.

Quoting s5daw (Reply 6):
This. Yes, It's bad. However, much of the panic is just caused by media throwing everything out of proportion AND non-Euro countries who have a lot of their own problems. UK and US have much more debt as % of GDP, for example.

Exactly. Much of it is a media hype
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styles9002
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RE: Impact Of Euro Crisis On Air Travel

Sun Dec 04, 2011 4:08 pm

Quoting airbazar (Reply 12):
All indicators point to the US economy being in a full recovery, albeit a slow one.

This is most certainly not the case that 'all indicators points to the US economy being in a full recovery' and represents (in my opinion) an overly optimistic view of the US economy. For instance, the recent Bureau of Labor Statistics unemployment data (if you choose to believe the numbers) clearly paints a conflicted view of the US economy. The US economy is not adding nearly enough jobs each month and the official unemployment rate only reduced because so many workers gave up actively looking for work (so called discouraged workers), hardly a sign of a 'full recovery'.

Beyond the fact that that its data is probably contrived and most likely does not represent true unemployment, Furthermore, 3rd Quarter GDP was recently revised downward from 2.5% to 2.0% and this is probably an optimistic assessment as well. Additionally, new claims for unemployment benefits rose over 402,000 again last week, which is a troubling trend as well.

Some people do well even in the worst of times and your experience may be that case. However, you must be one of the lucky ones. Nevertheless, the facts clearly contradict your statement that 'all indicators point to the US economy being in a full recovery, albeit a slow one'.

[Edited 2011-12-04 08:10:21]
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luckyone
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RE: Impact Of Euro Crisis On Air Travel

Sun Dec 04, 2011 4:18 pm

Quoting kl911 (Reply 8):
I think its a bit of a hype, my wages are still the same, and no way they can suddenly change that. No one I know is earning any less then before the so called crisis. That said, I am smart enough to rent a place instead of owning.

But you do not live in a Eurozone country. While certainly Hungary will feel fallout from any problems the EU is having, since it is a member of the EU, the fact that to date you have not adopted the Euro will mean your government can be more flexible than the governments of Greece or Portugal when it comes to managing financial meltdown.
 
airbazar
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RE: Impact Of Euro Crisis On Air Travel

Sun Dec 04, 2011 5:03 pm

Quoting Reply 17):
This is most certainly not the case that 'all indicators points to the US economy being in a full recovery' and represents (in my opinion) an overly optimistic view of the US economy. For instance, the recent Bureau of Labor Statistics unemployment data (if you choose to believe the numbers) clearly paints a conflicted view of the US economy. The US economy is not adding nearly enough jobs each month and the official unemployment rate only reduced because so many workers gave up actively looking for work (so called discouraged workers), hardly a sign of a 'full recovery'.

But it's been consitently adding more jobs than losing jobs, and that's called a recovery. But you're using a very wide brush. It all depends on where you live and what your skills are. The national unemployment rate for people with a college degree is at below 4% in the US. In some states like MA where I live, companies can't find qualified people to fill open positions. There's virtually no unemployment here in this state for people with a college degree. Yes it sucks if you're someone without skills or a college education but that's nothing new and those people are at the bottom of the recovery barrel and they would not be traveling to Europe even if they had a job anyway. So no, I don't expect TATL air travel to be significantly affected in 2012.
 
GIANCAVIA
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RE: Impact Of Euro Crisis On Air Travel

Sun Dec 04, 2011 5:07 pm

Quoting anstar (Reply 3):
APD rises are atrocious.... It will end up killing more jobs in the UK.

Its not something I understand, Clearly jobs are needed.. the economy needs to grow. Why the hell stifle it? It makes zero sense. Its all well and good hippies wanting to save the environment but when ints not done globaly the only one who will suffer is the UK.. People with no jobs and businesses going broke will cause more misery then a lovely tree is going to fix.

Time they woke up and realised this..
 
LJ
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RE: Impact Of Euro Crisis On Air Travel

Sun Dec 04, 2011 9:14 pm

Quoting airbazar (Reply 12):

That has more to do with China's economy slowing down than the European credit "crisis". China's economy slowed down because of the economic crisis in the US. However as the US economy recovers and the Euro goes down it should stimulate exports to China once again since China's currency is heavily dollar dependent.

Then explain why the Chinese think differently? Chinese manufacturers complain about the fact they don't the orders they expected. For next year they fear even worse. Note that cargo traffic between Europe and Asia is much more import than export out of Europe (though Mercedes Benz and BMW still send their cars to China).

Quoting LOWS (Reply 14):
Without wanting to blow things out of proportion, I spoke with a colleague at my University who has friends at the European Central Bank in Frankfurt and at the European Commission in Brussels.

There is still a very large and real risk of the system collapsing within the next few weeks.

Ask the same question to Treasury traders working for European financial institutions and they'll agree. US money market firms already stopped USD financing European banks.

Quoting airbazar (Reply 12):

I actually do. Without telling you the name of my firm, I work for one of the largest financial firms in the World, but I am a technology guy

That's why I work in Finance, one of the few places from where you can oversee everything (no offense intended to our colleagues in risk management)  
 
airbazar
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RE: Impact Of Euro Crisis On Air Travel

Sun Dec 04, 2011 9:33 pm

Quoting LJ (Reply 21):
Then explain why the Chinese think differently? Chinese manufacturers complain about the fact they don't the orders they expected. For next year they fear even worse. Note that cargo traffic between Europe and Asia is much more import than export out of Europe (though Mercedes Benz and BMW still send their cars to China).

Chinese manufacturers don't have enough orders because the US economy is their biggest customer and the US economy has been in the dumps   They also have not yet penetrated strong economies like Brazil and Chile, but they are getting there. I think the US recovery combined with greater penetration into emerging strong economies will keep the Chinese economy doing well.
We also need to keep all of this in perspective. This slowdown in the Chinese economy translates in a 9% GDP growth vs. 9.5% last year. That is hardly a crisis. Most countries would kill to have and economic growth that is half of that.   
 
LJ
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RE: Impact Of Euro Crisis On Air Travel

Mon Dec 05, 2011 11:09 am

Quoting airbazar (Reply 22):

Chinese manufacturers don't have enough orders because the US economy is their biggest customer and the US economy has been in the dumps

This still doesn't explain the drop in cargo from Asia to Europe (and the same for shipping). Consumer spending in Europe is going downhill and this will reflect in the airline business (travel is still regarded an item on which is not the most important). Though the situation is still not as bad as last year and 2009.

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