Airline industry losses mounting, governments need to help-IATA
TOKYO (XFNews) - The global airline industry said its losses are set
to reach as much as 6 bln usd this year as high fuel prices and soaring costs
in North America outpace growth in Asia and Europe, the International Air
Transport Association (IATA) said.
At the start of a two-day meeting here, IATA called on governments to pursue business-friendly policies and lashed out at a French-German proposal to tax air tickets to aid the developing world.
"Losses between 2001 and 2004 exceeded 36 bln usd. And we will lose another 6 bln usd this year," IATA director general Giovanni Bisignani told the meeting attended by 265 companies.
IATA, which represents 95 pct of the world's air carriers, had previously estimated losses for 2005 at 5.5 bln usd.
"Parts of the industry are profitable. But the margins are not acceptable for a 400 bln usd industry. Urgent action and change are needed," Bisignani said.
He called the price of fuel "the fifth horseman of the apocalypse," saying the industry's expected fuel bill this year was 83 bln usd.
Non-fuel costs were forecast to drop by 4.5 pct this year, said Bisignani, who lamented that the aviation industry had in the past been "too weak with labor".
The success story of the industry has been in Asia, where airlines posted 2.6 bln usd in profit last year.
"Strong growth fuelled by China and low labor costs are the competitive advantage" in Asia, Bisignani said.
He said India, which has seen a fare-cutting war aimed at boosting air traffic, "may be the next great market for the industry".
European airlines also posted profit of 1.4 bln usd last year with better passenger flows and industry consolidation.
But IATA said the biggest obstacle to the aviation industry's growth was North America, whose airlines posted total losses of 9 bln usd in 2004.
He said North America's labor costs and airport taxes were too high and that low-cost carrier competition was eating into overall profits.
Governments "see us as profit centers, not as a catalyst for economic growth. In the United States, taxes on a 200 usd ticket average 26 pct. This is a 15 bln usd ripoff," Bisignani said.
He was heavily critical of a proposal backed by French President Jacques Chirac and German Chancellor Gerhard Schroeder to tax airline fuel and tickets to fund the fight against health epidemics in Africa.
Chirac, on a visit in March to Japan, called for the tax to be implemented by the end of 2005 and said it would help save more than 3 mln lives a year.
But the IATA chief called the idea a political gimmick.
"Development is a serious issue that needs a serious solution. But taxing airline travelers is about the dumbest way possible to achieve it," Bisignani said.
He praised Japan for moving in a more business-friendly direction with Tokyo's Narita airport due to lower landing fees later this week as requested by IATA.
"It seems that Narita has understood our message. A substantial decrease in landing fees later this week could be the start of a new relationship," he said.
IATA has persistently lobbied the Japanese government and Narita authorities to slash by some 20 pct the airport's landing fees which are now pegged at 2,400 yen per ton of plane weight.
One airline company employee, who declined to be named said the reduction would be between 15 and 20 pct, effective from October, but the airport itself has not yet detailed the size of the cut in landing fees.