High Fuel Prices Hit Airlines As Passengers Avoid Flying

Though oil prices have taken an encouraging dip in recent weeks, the world's airlines cannot assume that trend will continue. That's the message Giovanni Bisignani, Director General and CEO of the International Air Transport Association, continues to drive home.

Bisignani notes several airlines worldwide have gone out of business this year, as high fuel prices hit airlines hard as passenger counts fall. And he predicts more will stop operations before the global economy stabilizes, victim to a forecast $6.1 billion loss for airlines worldwide this year.

"We are in a perfect storm of uncontrollable fuel costs and falling demand," Bisignani told the Australian National Aviation Press Club, reports Agence-France Presse. "Airlines could lose as much as 6.1 billion US dollars this year. Already some 25 airlines in our financial systems have gone bust -- greater than immediately following 9/11 -- and we are bracing for more.

"Despite some relief in the oil price, we are a fragile industry that is in a crisis," he added, noting current instability in Russia and the Middle East could drive prices back up to the $147 per barrel high seen earlier this year.

Oil prices are "re-shaping the business in a way that demand shocks of SARS (Severe Acute Respiratory Syndrome) or 9/11 did not," he said.

Bisignani -- known for pulling few punches when defending his industry -- also had tough words for government efforts to improve airline security. "As every traveller knows, the system remains an uncoordinated mess because governments are not thinking or acting globally."

He also pointedly noted government restrictions on foreign ownership of airlines are hurting the industry... saying the need for airlines to survive outweighs nationalistic thinking.

"Who cares who owns an airline so long as it is safe and provides efficient service?" Bisignani asked rhetorically. "It's time to move from the world of flags and politics to brands and business."

FMI: www.iata.org, Read The Complete Speech