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The Canadian Press - ONLINE EDITION
Recession grounds passengers, cuts into airline profits
OTTAWA - The Conference Board says the recession will ground profits in Canada's airline industry this year.
The Ottawa-based think tank says lower demand for personal and business air travel will cut profits by almost 86 per cent, although the industry will remain profitable.
The Conference Board estimates Canada's airlines will eke out a profit of $106 million this year, the lowest level since 2004.
The report notes that the industry's economic prospects have been turned upside down from the outlook a year ago.
Then airlines were benefiting from strong demand for domestic air travel, while being held back by high fuel costs that accounted for as much as 40 per cent of operating costs.
But while this year will see oil prices bottoming out, the recession is curtailing flying intentions for both individuals and businesses. As well, there's been a steady decline in U.S. residents flying to Canada, as well as passengers from other foreign countries.
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