Need for more confidence in their product
Airlines must do a better job of selling and marketing their business, aviation analyst Peter Dunkin said.
Mr Dunkin a former BA executive and UK country manager for Etihad Airways, said as an industry, airlines "need to have more confidence in their product."
He told a session on "Drivers for Change" at the Institute of Travel Management's (ITM) annual conference in Liverpool today (March 25): "I don't think people pay enough for what is a high risk, high cost industry."
Mr Dunkin said in 60 years the industry had had a 0.3% return and had lost $60bn since 2001.
"Airlines were already in trouble before the credit crunch began to bite. Generally there is too much capacity which is bringing prices down.
"Traditional carriers survive on the back of premium passengers. The top up from economy is marginal.
"But the premium traffic is no longer coming in. There is a need to persuade people to pay more for economy," he said.
He called on traditional airlines to let customers know what they get for their fare. This includes not just the ticket but the other services from meals to a blanket and pillow.
Mr Dunkin said there were also fears that the second stage of the Open Skies agreement between the US and the EU might never be signed.
The EU had given the Americans "our crown jewels" in the first phase by allowing entry into Heathrow.
In return the Europeans wanted the US rules on foreign ownership of American airlines, currently capped at 25%, relaxed and also the right to fly between US cities.
He said the new American government of Barack Obama might be more protectionist than the Bush administration had been.
He said Europe might tear up the agreement if it did not get concessions in phase two. "It will be interesting to see what Europe does,whether the Department for Transport will just walk away," Mr Dunkin said.
In the same session, Robert Milburn, UK hospitality and leisure leader for PricewaterhouseCoopers, said the hotel industry was in a "gloomy" condition.
Mr Milburn said three patterns of behaviour were emerging in the economic downturn: corporates were encouraging their employees not to travel, those who were travelling were being smarter and staying in "hotels lower down the star rating" and buyers were also becoming smarter and putting pressure on hoteliers to reduce their rates.
He said big chains still had clout in negotiations with the corporates. But for unbranded hotels in poor location "things are going to be very hard for them in 2009 and 2010."
He predicted that some would "go to the wall" in the current downturn.
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