Airlines to lose over $5.2 bn: IATA

Global airline industry is expected to lose more than an estimated $5.2 billion this year as international passenger traffic has substantially declined despite a fall in oil prices by half.

Airlines in the Asia-Pacific region, including India and China, experienced a sharp fall of 6.8 per cent in September compared with the same month last year.
 
The latest figures were released by the International Air Transport Association at the Freedom Summit in Istanbul, which concluded on Sunday, with the global airline body asking governments to take urgent steps to help the industry and do away with archaic rules.

"The deterioration in traffic is alarmingly fast-paced and widespread. We have not seen such a decline in passenger traffic since SARS in 2003," said IATA chief Giovanni Bisignani at the summit.

"Even the good news that the oil price has fallen to half its July peak is not enough to offset the impact of the drop in demand.

"At this rate, losses may be even deeper than our than our forecast of $5.2 billion," he said, adding that airlines in all major regions reported shrinking of passenger traffic.

On the cargo front, the Asia-Pacific region's carriers reported a 10.6 per cent decline, the 'most alarming drop' experienced by the largest players in the market, the IATA said in its latest report.

Up to August, the drop in international passenger traffic was isolated to Asia-Pacific carriers. "The economies of the region's two major growth markets-- China and India -- slowed

and Japan saw industrial production drop five per cent, the IATA figures showed.

The cargo market saw the 'worst decline since the technology bubble burst in 2001', the report said.

Pointing out that the crisis facing the industry was deepening, the IATA director general and CEO said 'but unlike other companies, they are denied some basic commercial freedom-- access to markets and to global capital-- that could help them manage their business in this difficult time.'

He said a 'web of 3,500 bilateral air service agreements' governing the international air transport 'denies market access until specifically agreed. And the ownership clauses that are contained in these agreements preclude merger across borders.'

In this context, Bisignani pointed towards the banking industry and said it was accessing global capital and carrying out mergers.

On the other hand, 'airlines are not asking for handouts (bailout packages). But today's crisis highlights the need for airlines to be able to run their businesses like normal global businesses,' he argued at the Freedom Summit which is being attended by government representatives of 15 countries, including India.

At the summit, IATA circulated a paper for these governments to examine solutions within the bilateral system that could be quickly implemented to expand opportunities for airlines to access markets and global capital.

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