With oil prices expected to remain high, traffic projected to slow and fares anticipated to be forced downward as carriers attempt to maintain passenger volumes, UBS airline analyst Kevin Crissey said last year likely brought the peak of global airlines' business cycle after years of revenue growth. "Is the cycle over for the airlines?" Crissey asked in a research note, and responded, "The simple answer is yes." Though many carriers continue to attest to strong forward bookings and healthy yields, he said the clock is counting down, due in no small part to an expected decline in corporate travel. "We expect 2008 global traffic growth to slow to 4 percent to 5 percent, and with corporate profitability likely to falter, we also expect corporate travel to slow," Crissey noted. Long-haul business has brought some financial salvation to major carriers in recent years, though he said the industry should brace for a slowdown. He estimated that long-haul premium service generates more than 50 percent of some carriers' total revenue and "has been a key part of the strength of this aviation cycle." He further noted, "To date, the major long-haul airlines have yet to see any discernable slowdown in corporate travel demand and future bookings are strong. However, we believe airlines only have two to three months of reliable forward booking data. Therefore, the sustainability of these trends is questionable."
SAS Selects Prism For Worldwide ContractingSAS Scandinavian Airlines last month signed a global deal with Prism Group to use its contract management system. Prism vice president of Europe, the Middle East and Africa Herman Mensink said SAS had been using the Prism system in the United States for Star Alliance contracts, but was "tagged onto United Airlines' system." Mensink noted that SAS's selection of Prism allows the airline to act as a lead carrier on Star Alliance contracts and points to another move among the alliances toward Prism contracting. Star Alliance, however, has one notable gap in Prism use: US Airways. Mensink noted that Prism is not as common among Star carriers as it is with SkyTeam members, as it serves as the lead system for any SkyTeam contract.
Lufthansa To Build Private Jet Service FleetLufthansa this month is taking delivery of the first of nine private jets that will comprise the wholly owned fleet for its Lufthansa Private Jet service. The carrier launched the service in 2005 using aircraft and services provided by NetJets
(BTNonline, March 21, 2005), but Lufthansa in December said it dissolved that relationship in favor of a similar agreement with DC Aviation. Lufthansa said heightened demand for private jet services, often in conjunction with scheduled long-haul commercial transportation, inspired it to launch its own fleet. That fleet should include nine planes this summer, Lufthansa said, noting it would fly a variety of Cessna and Bombardier aircraft. The carrier also said it would expand the number of private aviation partners beyond DC Aviation to include two or three additional providers.