MID-AIR MUD-WRESTLING
When I forecast last year in the title of this review that we had a difficult year ahead, we hadn't even heard of SARS. At that stage, in the early months of 2003, we were seeing encouraging growth in demand, despite the preliminaries to the war in Iraq. Last year again showed, however, the nature of the new challenges facing the airline industry.
The recovery of demand that began after 2001 - the crisis year for commercial aviation - came to a halt in the summer of 2002. Over-capacity was not removed from the air transport market to the extent required by changes in demand. On the contrary, new companies, eager to take advantage of redundant aircraft and personnel, appeared on the market. At the end of 2002, over-capacity led to intensifying competition and downward pressure on prices.
Falling average prices at the beginning of 2003 were followed by fears of war in Iraq, the war itself and the SARS epidemic, all of which contributed to a collapse in demand for air travel. We adjusted our capacity accordingly in line with contracting demand. Sensible alternative uses for freed capacity were sought and the decision to open the Miami route, for example, was made in precisely those circumstances. |