djfingerscrossed
To give an opinion on how the airlines and job prospect are affected, maybe a look at how we got to where we are now with the general economy.
The following is not a lesson in economics, just some background to my own observations to show how I arrive at my conclusions.
My background has been in food production, the civil service, and of course aviation. (I'm now back into food production as a farmer and a writer)
We all know about house prices. That's the headline. But its what has caused the sharp downturn, I would call it a recession. Prices were high and the bottom rung of the housing ladder broke early/mid 2007 (some would argue sooner). For many first time buyers, a new home was out of reach. The economy was still doing well, interest rates low. Absence of the first time buyer was starting to have an effect on all prices and started a much welcomed correction in the inflation rate. Still no problem on the surface, but while we felt comfortable with the situation, a huge problem was heading our way. Yup. The American sub-prime. We all knew that in the US things were looking bad, but what we did not know was the extent UK banks were exposed to that market. Even the banks did not know themselves, and some still do not. During the latter part of 2007, when the valuations came in for funds the UK banks had in the states, it was nothing short of disaster. Banks lost money, in vast quantities and stopped lending to each other. Enter Northern Rock. The banks position was untenable. It relied on a much higher percentage of loans to deposits to fund its business. Now we have a real problem, imprudent lending on a huge scale, reliance upon loans from other banks, which were not forthcoming, and finally complete collapse of pubic confidence. The genie is now well and truly out of the bottle, and it will not go back in. So the high prices for homes was not the only cause for the current climate. The market will continue to remain depressed for some time until the finance sector recovers. Further pressure is brought to bear because interest rates have not fallen, they have gone up, lending is much tighter and less money in our pockets.
Fuel price. Its not possible to put a finger on one single element that is keeping the price high. Political instability in some countries, the growing consumption in Asia and the hedge fund managers. There is a world wide surplus, but its not huge, that makes it attractive to the speculator. Buy and the price goes up, because it creates a perceived shortage. Sell it for a profit before the ship docks and your home and dry. That's what is going on at the moment.
Grain. Everything you eat needs grain, and again prices are at all time highs. Why? again the asian markets have increased their demand, but that is not the sole reason for the current price. Last year was not a good crop, that's one reason. Its our friend oil, or the oil companies this time. Farmers are attracted to grow energy crops like they have never been before. The amount of land used for food production has dropped in recent times to a level that is causing major instability and shortages in the markets. I calculate food inflation to be running at least three times that of the figures published by government (from my own experiences and industry sources). Now this is important, the lower the household income, then the percentage spent on food increases, couple that with escalating fuel and housing costs, there is a lot less disposable income after living expenses have been paid. For many families there is no disposable income.
So that leaves the aviation industry in a very tight spot. Much of the traffic is holiday based, and for obvious reasons, the holiday is the first to get the chop. For this year I reckon airlines will be making as much savings on costs as they can, but I cannot see major job losses apart from one, or two companies folding, not a collapse though. For 2009 I see a different picture. All of the key areas above show no signs of recovery for some time yet, inflation is rising. I feel the industry will slide into recession and a real risk of job losses may occur.
So what would I do, if I were to start a flying career. If I were a 20 year old, I'd go for it, youth is on your side to weather the uncertainty, and when times get better, you will be ready for that jet job or a command. If I were mid 30's, play a little safe, get ready to go back to your previous occupation. Over 40? got a good job, hang onto it, fly a cessna, they really are good fun at the end of the day.
I really wish I could have written something brighter, I cant, because to do so would be pure fantasy. Maybe I'm wrong and you guys can come back in 12 months and call spinnaker and ass, I'd like that.