"Airports thrive as 'airlines strangled'"

Tuesday, June 8, 2004

Airports thrive as 'airlines strangled'
By Geoffrey Thomas
Australia - The Melbourne Herald and Weekly Times


PROVIDERS of support services for the airline industry - such as
airports and air traffic control - are making solid profits while the
airlines are sinking in a sea of red ink, according to the International
Air Transport Association.

IATA director general and chief executive Giovanni Bisignani told
delegates at IATA's 60th AGM yesterday that the world's major airports,
air traffic control, reservations providers and aircraft manufacturers
made combined profits of $US76.50 billion ($109 billion) last year while
the airlines reported combined losses of $4.5 billion. 

Mr Bisignani claimed the industry was being strangled by
over-regulation, soaring fuel prices and government charges. To
highlight the problems, IATA was taking the European Union to court over
what Mr Bisignani claimed were misguided regulations concerning
compensation over flight cancellations and delays. 

"They want to make airlines responsible for snow," Mr Bisignani said. 

But the greatest danger for the industry was fuel, he said. "Airlines
will post $US3 billion of losses this year if jet fuel prices stay at an
average price of $US36 a barrel," he said. 

For Qantas, the additional cost was expected to be about $350 million
this year even with extensive hedging to reduce the effect of soaring
crude prices. Late last week, the price for light sweet crude was
hovering around the $US38 mark - 30 per cent higher than last year. 

Mr Bisignani slammed governments over the huge cost of security, which
was passed on to airlines and the travelling public. "Last year the
industry paid over $US5 billion for security measures," he said. "States
must defend their citizens in trains, discos, public parks or at home.
Why are citizens who travel by air forced to pay for their own
security?" 

Mr Bisignani said that passenger traffic was only now recovering from
the events of 2001 and the deadly SARS outbreak and that at least two
years of growth had been lost. 

But, on the upside, Mr Bisignani said that Asia-Pacific was dynamic.
"China and India have the potential to reshape the travel industry,
although infrastructure improvements are needed to cope with the
expected demand," he said. 

IATA said overall growth in Asia was also a reminder of the critical
importance of air cargo, which was a lifeline to many airlines. 

In the Asia-Pacific, air cargo was 25.2 per cent above 2001 levels,
while globally it was up 15.5 per cent. Only 5 per cent of the world's
air routes are profitable without air cargo. 

Mr Bisignani said that for the industry to survive it must streamline
its operations and simplify its business structure. 

He cited the issuing of paper tickets as a good example. 

"It costs $US9 to issue a paper ticket and IATA issues 300 million
tickets a year - you don't have to be a rocket scientist to work the
maths," he said. "We need to battle terrorism not paperwork." 

Mr Bisignani, who now hands over the leadership of IATA to Singapore
Airlines CEO Choon Seng Chew, challenged the airlines to become a "low
cost industry". 

But, to achieve this goal, governments must cast aside regulation.
"There is unrealistic competition policy, outdated ownership
restrictions and a bilateral system that is in desperate need of
modernisation." 

Last year, IATA member airlines carried 1.3 billion passengers and 18
million tonnes of cargo. Mr Bisignani said that by 2010 IATA's 275
members would carry an additional 600 million passengers and 7 million
tonnes of cargo.


 Do you have an opinion about this story?
Share it with other readers in our CAA Discussion Forums

http://www.californiaaviation.org/dcfp/dcboard.php


*****************************************