Tarry, C. (2008) Hang on tight. From IATA – Aviation Industry Research and Analysis (CTAIRA), January 2008.
http://www.iata.org/NR/rdonlyres/55B253D6-694A-45D0-9FD3-5B519005458B/0/Tarry_Europe_Outlook.pdf. Accessed March 09, 2010 

For European airlines, 2008 will pose significant challenges from a combination of an economic slowdown and significant increases in capacity as the no-frills airlines take delivery of more new aircraft.

There is a certain inevitability about airlines responding to a weaker economic environment and surplus capacity by reducing fares. It will be a bumpy financial ride. The steps that could be taken in response are reasonably clear, but the outcomes remain unpredictable.

See also:

Airneth file 'Crisis in the airline industry'