IATA Forecasts US$9 Billion Global Aviation Industry Losses
The International Air Transport Association (IATA) has forecast the global aviation industry will face US$9 billion losses this year.
Its director-general and ceo Giovanni Bisignani said airlines are flying into severe headwinds of red ink never before experienced by the industry in history.
Asia-Pacific region accounts for more than a third or US$3.3 billion of the forecast losses.
Addressing IATA's 65th Annual General Meeting and World Transport Summit in Kuala Lumpur on Monday,Bisiignani stressed that IATA had doubled its forecast losses from its orginal loss forecast of US$4.7 billion in March to US$9 billion for the global aviation industry because of the worsening global economic crisis.
"This is the most difficult situation the industry has faced," he said.
"It took us three years to recover lost ground due to the Sept. 11 incident that resulted in seven percent decline in revenues even on the back of a strong economy.
"The current crisis is worse and will take more than three years to recover," he added.
According to Bisignani, the unprecedented decline due to weak demand will see large dips in air cargo of 11 percent plunge and passenger yields of seven percent fall.
Global airlines' revenues is forecast to drop 15 percent from US$528 billion last year to US$448 billion this year representing US$80 billion revenue loss.
In the first quarter 2009, 50 airlines reported losses totalling US$3.3 billion amid the global slump.
In April,cargo demand fell 21.7 percent compared to the same period a year ago.Passenger demand declined 3.1 percent.
IATA chief economist Brian D.Pearce revealed that air freight volume plunged 24 percent in international markets and 20 percent overall in the first quarter.
The total freight handled by airlines accounted for 37 percent of global freight value.
The chilling fiigures are on top of revised 2008 loss of US$10.4 billion from US8.5 billion.
IATA,which represents 230 airlines,proposes drastic measures to cut costs,streamline and improve systems and form new strategic alliances.
Bisignani cited the mergers of KLM and Air France,Lufthansa and Swissair,Delta and Northwest Airlines as examples of new competitive entities formed to survive the global economic turmoil.
To help airlines,IATA will show the way to cut costs via US$1.5 billion target reduction in charges,fees and taxes, about US$2 billion in fuel savings and billing and settlement plan(BSP) and cargo account settlement system to improve financial control and cash flow.
It has enabled the industry to save about US$4 billion last year with better products,e-ticketing and common use self-service kiosks.
"Now, we are targetting a further US$10 billion annual savings by improving baggage,travel processes and shipping,"stressed Bisignani.
On measures to reduce climate change,Bisignani said IATA was committed to achieve carbon-neutral growth by 2020 via average fuel efficiency of 1.5 per cent a year.
He pointed out that airlines's emission represented two percent of global carbon dioxide emission.
This aviation industry emission will be further reduced by seven percent because of slower air travel and effective measures to curb carbon emissions this year.
Under its four-pillar strategy - investing in new technology,improving operational efficiency,building and using efficient infrastructure asnd using effective economicmeasures -IATA hopes to bring down the carbon emissions.
On biofuels, IATA has set a target of 10 percent alternative fuels usage by 2107.
"Nobody tthought it possible but four airlines (Virgin Atlantic,Air New Zealand,Continental Airlines and Japan Airlines) have tested biofuels,making certification a reality by 2011," noted Bisignani.
IATA aviation environment director Paul Steele stressed that biofuels could reduce emissions by 80 percent.
"It is difficult to quantify (the savings) in terms of dollars and cents," he said.
"Well, if biomass is produced using economies of scale, the price might come down, which,will translate into saviings," Steele added.
The high-powered IATA gathering was attended by more than 500 global aviation industry leaders who discussed the aviation industry outlook,air services liberalisation, new technology,safety,security and business prospects and opportunities.
Bisignani presented IATA's Eagle Award 2009 for Best Airport to Malaysia Airports Holdings Bhd(MAHB) managing director Tan Sri Bashir Ahmad Majid as special recognition of Malaysia Airport's outstanding performance in customer satisfaction,cost-efficiency and continuous improvements.
Malaysia's Prime Minister Datuk Seri Najib Razak, in his keynote address officiating the IATA AGM, told the meeting Malaysia is committed to the ASEAN roadmap to liberalise air services in the ASEAN region by 2015.
The ASEAN roadmap aims to create the ASEAN Single Aviation Market within the 10 countries in the region.
All airlines based in ASEAN countries will fly without restrictions of any kind in an "Open Skies"market like that in the European Union.