Thanks Colegate ...
I'm not at all optimistic about 2008; I hope I am wrong ...
I think we'll see a significant slowdown … economically, which will inevitably affect aviation; this will mainly be in the EU and US. Growth will continue in major Asian economies, led by India and China; travel/trade to these will grow; t/a traffic will level or fall off, notwithstanding Open Skies - (from an Irish perspective, another major danger for EI.) Airlines, like AY, LH, KL/AF, with good Asian links, will do well; those without, not so good - again, in Irish context, EI suffers here. EK will continue to grow, as will QR/EY, despite pressure from EU airlines like LH, to spike this. Unlikely to have much effect.
From an Irish perspective, particularly worried about EI. Don't see FR taking over, nor being allowed to. FR will be a big winner and will be in a position to "turn the screws" on what they perceive to be weaker carriers … among them EI, Sky Europe, Vueling.
US market will be particularly interesting to watch; one merger will lead to another. If I had to choose two names to disappear, it would be NW and US, into DL and possibly UA? Don't see UA/DL being particularly well matched. Noticed today, however, that UA's CEO, Tilton, has again gone on record about desirability of mergers, so something stirring.
Problem with upcoming slowdown is that oil price has a lot to do with it; as long as oil remains at or above $100 - and I see that being the case for the foreseeable future - then this could be a long recession, even depression.
Political issues: expect the US, even with new administration, to fight tooth and nail over inclusion of aviation in emissions trading. That could get very bitter; could also affect next round of EU/US bilateral talks.
Nastier still, M/E situation … effect of any action against Iran, which would close Straits of Hormuz … $100 a barrel may yet look like a bargain. Would see this is being more likely next year (although certainly - and hopefully - not inevitable), particularly as Iran moves towards nuclear weapons; Israel will want to act, but held back by cooler heads in US; Cheney and "hawks" will want them to go ahead. Don't hold out much hope for ME peace, since Hamaz/Hezbollah not involved; Iran will "activate" them if attacked by Israel, possibly drawing Syria in as well.
On positive side; slowdown will - if advantage taken of it by airports - allow infrastructure to catch up and be ready for next upturn.