Back on topic
This will be a very difficult time, not just Winter 08-09, but also throughout 2009 both in the UK and wider.
Even the economic illiterates in the Government know that we are in for a fairly serious recession, and there is talk of it being worse than that in the early 90s. If you are under 30 you will not have clear memories of economic conditions in the early 90s, if under 40 you won't remember the early 80s, which was worse. You need to be pushing 50 to remember the oil shock/banking crisis of the early 70s.
At present, we are facing a massive increase in fuel costs, even allowing for the recent reduction in oil prices. There will be a serious recession in the UK caused by the credit crunch, which will take a massive amount of liquidity out of the economy. Because the Banks have written off billions in bad debts, they are and will continue to soak up investment capital in rights issues to repair their balance sheets. This will lead to job losses. That means the newly unemployed will have less to spend, and will cost Government more in welfare payments. House prices are falling and will continue to do so, increasing repossessions and creating a feeling of unease and caution amongst homeowners. Removals are down 60-70%, and a lot of DIY is done following a house move. Additionally, the prices of basic foods have risen dramatically over the past few months - a worldwide phenomenon that won't go away.
So, less credit, less cash in the economy, less money in people's pockets, and the lack of a feeling of prosperity will impact on spending patterns. What will suffer most - discretionary spending, like meals out, that new car, the second holiday, weekend breaks, etc. The last two have a direct impact on the aviation industry by reducing demand.
It's not just private individuals that will 'hurt'. Companies will tighten their corporate belts too, reducing headcount, cancelling conferences, encouraging videoconferencing rather than face-to-face meetings, restricting unnecessary travel, etc. And that too will affect demand for air travel. Some companies may insist on employees travelling with budget airlines rather than legacy carriers, or on travelling Economy not Business class.
Airlines are in for a rough time, all of them. Only the ones with robust business models, good management, and cash in the bank will survive relatively unscathed.
I predict a trickle of bankruptcies throughout the next 18-24 months, some predictable, some surprising. I name no names deliberately. But I would encourage all airline employees to devote their efforts to assisting the managers of their company to ensure their business survives.