Cost reduction critical - IATA


SYDNEY (Centre for Asia Pacific Aviation) - The International Air Transport Association (IATA) reports worldwide passenger traffic growth of 8.5% with "considerably weakened" cargo traffic growth of 2.2% in Jul-05. The result takes the year-to-date growth rates to 8.8% for passenger and 3.5% for freight traffic.

IATA attributed high load factors to "careful capacity management", which partially mitigated the soaring price of oil. But the extraordinary high price of fuel means that cost reduction has "gone beyond urgent", according to Director General and CEO, Giovanni Bisignani.

In May-05, IATA forecast industry losses of USD6 billion based on the assumption of an average oil price of USD47/barrel. But the recent surge in oil prices has taken the year-to-date average to USD53 and IATA will announce a new industry loss forecast in mid-Sep-05. Every dollar added to the price of oil adds USD1 billion to airline industry costs.

IATA: "Fuel - the Fifth Horseman of the Apocalypse - is the biggest factor forcing the structural change and efficiency our industry desperately needs. With oil approaching the USD70 per barrel (Brent) range, every drop of unneeded fuel burn and every cent of unnecessary expense is simply not tolerable", Giovanni Bisignani, IATA's Director General and CEO.

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