Predicts Airlines Will Lose $5.5 Billion In '05

IATA Director General Giovanni Bisignani issued a grim forecast as he opened the 54th annual conference of the Pacific Asia Travel Association Monday, predicting the global airline slump would continue -- costing operators approximately $5.5 billion in 2005 alone.

"High oil price is challenging all carriers. In 2005, if average oil price is $43 per barrel, the fuel bill of the aviation industry will reach 76 billion dollars," said Bisignani.

That, he said, makes this the most difficult time the industry has ever faced.

On top of the rising fuel prices, Bisignani said, passengers have come to expect travel to be far less expensive than it's been in the past. While more people are traveling more often -- 1.8 billion trips worldwide last year -- airline profits have dropped ten percent in the last five years.

And Bisignani was speaking to some of the world's strongest airlines. The cost of the post-9/11 slump, he said, has risen to $36 billion.

The IATA chief seemed to suggest circling the wagons at this point. He told the PATA conference in Macao that airlines, together with partners like travel agencies, airports and hotels, have to stick together. If one aspect of the chain suffers, he said, the entire chain can be broken.

Bisignani also warned governments to reconsider the taxes imposed on air travel and do what they can to preserve competition.

FMI: www.pata.org, www.iata.org