http://www.theprovince.com/business/story.html?id=1996031
summary:
This article is about the world airlines are starting to loss over US$10-million dollars. The global economic storm really threatens airline industries, for instance, IATA (International Air Transport Association) stated that revenue might slump about 15% in 2009. Further more, IATA director general and chief executive Giovanni Bisignani said the revenue can not return to the level which before the global economic storm. Most of the airlines are losing about US$5-millions every year after the storm. Also, the oil prices have risen up and they expect passenger traffic to fall. Lastly, Mr. Bisignani announced that the bottom line of the crisis with total loss of about US$27-billions, it damage more than the damage of 9/11.
Connection (redo):
The connection between the article and accounting is airline’s income. Their revenue had drop a lot compare with the days before the recession. Most airlines are losing millions every year after the economic storm; also the oil price has risen up. There are no way that airline can still made any large net profit, and some even bankrupt. From all those sources, it can prove the net income will transform to net lost in the airline industries. Furthermore, while the oil price goes up the price for airplane tickets may rise up too, even though everyone is experiencing the economic recession. Therefore, there will be no more people taking the airplane for short distance trip; people may get trains, ships, or coach instead. If the airlines remain the same price, the quality and service of the airplane may reduce. For instance, there will be fewer air hostess serve customers, or customer may need to pay for their meals in airplane or even pay for the luggage that people bring. Do people willing to pay an separate airplane ticket and pay all of their meals and luggage? Will people still want to get on an airplane that lack of quality services?
reflection:
It reflects that the global economic storm really pulls our standard of life down. Many people do not have extra money to go travel or buy a flight ticket. And the worst is that the gasoline and oil’s price has rise up a lot. This makes the airline industries harder to do. They can not make big difference for flight ticket but they actually can not make any money in this time, and they even need to money to continue for their business. It proves that most people’s revenue did drop, and it will not be rise up in short term.
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I really agree on your article. The global economic depression makes people lose their job and their income. They no longer have that much money to go travelling. Also, since the price of gasoline stays so high, the flight tickets are expensive too. People can’t afford to buy tickets. That’s why the airlines are starting to loss in profit. This situation will last for a long period until the economy recovers and people get more jobs.
ReplyDeleteThroughout this economic depression there have been advertisments from airline companies to upsell their tickets. They have reduce their price to a substantial amount that interests many customers to continue their flights. However this does not mean that the airline companies are making profit. With the increase of fuel and additional costs, airline companies simply cannot afford to raise their air fares because it might reduce customer flow. I believe, like Colman had stated above, that this situation will continue to happen until the economy recovers. The problem is, will there be a recovery date? If so, when?
ReplyDelete-Kate Wong
Thanks for sharing. I agree on your idea that "If one of the airline industry close down it impact the stock market the share holders will loss lots of money. " If the shareholder starting to lose a lot of money, they will invest less, it will cause the economy cycle to run slower or even reach equilibrium and this might also leads to economy depression.
ReplyDeleteXinni Qiu