Virgin Atlantic chief sees years of turbulence for airline industry.

Steve Ridgway, Virgin Atlantic’s chief executive officer, has predicted that the commercial airline industry will likely go through three excruciating years of turbulence, due to record-high fuel prices and weakening passenger demand, as a result of the lingering economic recession. In an interview earlier this week, Ridgway noted that the industry its facing is toughest challenge since the September 11, 2001 terrorist attacks, which led to a dramatic decline in passenger traffic figures. The Virgin Atlantic chief also predicted that the next few years will lead to a string of bankruptcies, as high jet fuel prices break the bank in the case of many carriers, while in other cases, airlines will attempt to weather the storm by merging with former rivals. Ridgway’s prognosis seems to be based on fact. Silverjet and Eos both announced the closure of their business earlier this year, while several smaller US carriers, such as Aloha, have also gone under in the past two months. Additionally, the largest American airlines have all mulled mergers, and a fusion between Delta Air Lines and Northwest is now quite likely to go ahead as planned.

Some of the next carriers that may have little choice but to consolidate might include Spain’s Iberia-which already raised British Airways’ interests in the past year, as well as British Midland (BMI) and Alitalia. Lufthansa is clearly interested in buying a majority stake in BMI, while the Italian government now appears to be more willing to sell its carrier to foreign interests, in order to save it from insolvency.

Yet Virgin has its own challenges to deal with, as it is certainly not being spared from high oil prices. While the cost of oil surpassed $135 per barrel last month-thus breaking all previous records-Richard Branson, Virgin’s founder, has predicted a $200 per barrel price tag before the end of the year.

www.virgin-atlantic.com