The avaiation landscape will look very different this time next year. Many airlines will cut routes that are marginal this is already happening in the low cost sector Gdansk has already lost easyjet and baby, many many more routes will follow this winter.
Think about this: with oil at $1300 a tonne a 5 tonne burn down to the med on a 737 works out at $6500 one way if you only manage to sell a 100 seats (not a bad winter load before the current squeeze) that equates to $65 a seat one way about £35 just in fuel!! another £10-£20 in tax and charges and your up to £50 before Nav, landing fee's, then there is the small matter of crew costs, aircraft cost never mind a margin!! so expect charges well over a hundred quid to break even, sure if you can fill it the number look better, but that didn't happen in the good times (in winter) so i don't see that happening going forward.
Who will come out the other side? well BA, Easy,Ryanair, Flybe after that its anyone guess, it might be the roll in the dice that makes SMB think i don't need this hassel, Luffty could well own 49% of Virgin by then, they made not a lot last year.
Sooner or later the hedge positions on fuel will expire and the cold wind of $1300 will bite.
World demand will slow, as for China, well most of its demand is driven flogging stuff to the west and if you can't afford to fuel your car in this country you wont be spending loads on imported toys, so in time the price will fall, the Dollar will recover (hopefully)