Kuala Lumpur, Malaysia (eTN) – The International Air Transport Association (IATA) annual general assembly opened Monday morning in Kuala Lumpur. And one of IATA highlight is always director general and CEO Giovanni Bisignani speech on the state of the industry. It is generally impassionate and witty in the tradition of great Italian movies from the sixties.
Airlines around the world are confronted wtih a crisis of unprecedented depth. Last year, the airline’s industry lost US$10.4 billion instead of a previous estimate of US$ 8.5 billion. According to Bisignani, the airlines would lose in 2009 another US$ 9 billion. This is nearly double the association’s March estimate of a US$4.7 billion loss, reflecting a rapidly deteriorating revenue environment.
“On top of this, an even bigger negative number is on the horizon–US$80 billion. That is the total revenue that will disappear with falling demand, collapsing yields, broken consumer confidence and pandemic fears,” said Bisignani.
The IATA CEO is prompt to point the efforts done by the airline industry. Airlines were confronted to numerous challenges since the beginning of the decade and they already showed their resilience. Among the industry’s achievement are a 20 percent gain in fuel efficiency, a 71 percent increase in labor profitability and a 7-point improvement in load factors. IATA helped airlines to save costs of US$24 billion last year.
However, Bisignani was also prompt to blame once more monopolies in the air industry, mostly airports and air navigation service providers. “The bill we had to pay to happy monopoly suppliers grew by US$1.5 billion last year. And it grew by another 1.5 billion for the first half of 2009 as the industry crisis worsened. Although airports such as Singapore or Kuala Lumpur reduced significantly charges, although the Dutch government recently decided to abolish a new environment tax, some other suppliers did not act to share the current burden with airlines.
IATA has then created a ‘Wall of Shame’ for institutions which contribute to more losses for airlines.” Among them, Bisignani named the British Airports Authority and the UK Civil Aviation Authority for London Heathrow’s 88 percent increase for 2008-2013, Delhi and Mumbai with a 207 percent increase for 2009 or the Eurocontrol States of Denmark, the Netherlands and Poland for proposing charges increases between 27 percent and 32 percent from 2010.
“What can I say? BASTA (enough in Italian)!” added Bisignani. “There is no room for this nonsense in our future. When demand drops, suppliers cannot divide the same costs among fewer customers… Once more, BASTA! ”
IATA strongly urges all governments around the world to treat the airline industry like any other activity, give them the freedom to develop their business without restrictions. It would include the right to have cross-border partnerships with the entry of foreign investors in other airlines and allow the industry to access global financial markets.
“If we cannot pay the bills, saving the flag on the tail will not save jobs. A prolonged recession could lead to a cash’s crisis and put at risk some 32 million jobs,” added Bisignani.
According to Christoph Franz, outgoing CEO of Swiss, the question is to know if the airline industry has the possibility to react quick to changes in economic conditions. “Regulatory authorities around the world are however reacting to slowly, forcing us to wait,” he commented. A more positive note was however delivered earlier by the alliance Oneworld as well as Airbus. Both players estimate that the airline industry has always survived all crises and even emerged stronger. Once more, it is certain that the industry will bounce back. The big question is: When?