Thu, Aug 21, 2008
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
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
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