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Bisignani: Airlines are facing an "emergency situation"

Jun 04, 2009

KUALA LUMPUR, Malaysia — The International Air Transport Association called for more liberalization to bolster the global airline industry, which is expected to lose more than $4.7 billion this year because of falling cargo and passenger traffic.

IATA Director-General Giovanni Bisignani said airlines are facing an "emergency situation" and should be given greater commercial freedom to serve global markets and consolidate.

He said 50 major airlines reported US$3.3 billion in net losses in the first quarter of 2009 alone.

IATA, which represents 230 airline companies worldwide, expects full-year losses to be "substantially worse" than the $4.7 billion it forecast in March, he said. It will unveil its new forecast at its annual meeting here on Monday.

"We face a demand shock... you will see more dark red. We have probably touched the bottom but we have not yet seen an improvement," he told reporters.

Bisignani said the United States and Europe should revise their open skies treaty to make it more liberal, removing restrictions such as foreign ownership caps on domestic carriers.

"It's time for the governments to wake up. We do not ask for bailouts but all we ask is give us the same opportunity that other businesses have," he said

Bisiginani said he supported a bid by American Airlines and British Airways to cooperate on trans-Atlantic flights — currently under review for fear of breaking antitrust laws.

American Airlines is seeking immunity from U.S. antitrust laws so it can cooperate with BA, Iberia Airlines, Finnair and Royal Jordanian on trans-Atlantic flights. American and BA say this will let them compete fairly against two other groups of airlines that are already allowed working together on prices, schedules and other details.

But critics, led by Virgin Atlantic Airways head Richard Branson, say American and BA are already too dominant and immunity will lead to higher fares on U.S-U.K. routes. American's own pilots' union also feared it will shift flying assignments to lower-cost foreign carriers with more open-skies agreements.

Bisignani said Asian carriers, which account for 44 percent of the world cargo market, will be the worst hit in the economic crisis.

Global passenger demand fell 7.5 percent for the January-April period, with Asian carriers leading the fall with an 11.2 percent drop. Cargo demand fell 22 percent worldwide and was down nearly 25 percent in Asia.

Global premium air traffic — the most lucrative business for airlines — was down 19 percent in March but plunged 29 percent in Asia, he said. Crude oil prices, though sharply lower from last year, are also climbing steadily above $60 a barrel and this is "bad news," he said.

"In the next few years, it will be difficult to imagine a recovery in profitability" in the global industry, he added

More than 500 industry leaders will gather in Kuala Lumpur from Monday for IATA's annual meeting and a world air transport conference to discuss plans to speed up recovery for the sector.

Speakers include the chief executives Peter Hartman of KLM, Tony Tyler of Cathay Pacific Airways, David Barger of JetBlue Airways and Naresh Goyal of India's Jet Airways.

Bisignani: Airlines are facing an "emergency situation"
Giovanni Bisignani / Image via

Source: AP

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