Focus On Global Air Travel Crisis

More than 500 leaders from the airline industry worldwide are meeting in Kuala Lumpur Monday and Tuesday for the annual meeting of the International Air Transport Association, with an eye towards keeping their industry going during a global recession.

The organization called for a major resizing and reshaping of the entire air transport value structure, as airlines battle the ongoing global economic crisis. Airlines are expected to post losses of $9 billion this year with an unprecedented 15% revenue drop that will see industry revenues shrink by $80 billion to $448 billion, according to the IATA website.

Giovanni Bisignani, IATA’s Director General and CEO, said in his "State of the Industry" address "I am a realist and I don’t see facts to support optimism. The industry is in survival mode. Whether this crisis is long or short, the world is changing. Travel budgets have been slashed and consumers will need to reduce their debt. It will not be business as usual in the post-crisis world. Governments, partners and airlines must use this crisis as an opportunity to build a stronger industry. That means resizing and reshaping."

Bisignani also urged a resizing and reshaping of the relationship between airlines and governments. “Our relationship with governments must move from punitive micro-regulation to joint problem solving,” said Bisignani who cited four areas for enhanced cooperation. They include making aviation greener and addressing emissions issues, better security, improving efficiency by reducing delays, and saving jobs and stimulating the economy.

Bisignani also called for government intervention to prevent volatile fuel prices from crippling the industry. The industry fuel bill is forecast to fall by $59 billion to $106 billion in 2009, which will account for 23% of operating costs.

“The risk that we have seen in recent weeks is that even the slightest glimmer of economic hope sends oil prices higher. Greedy speculation must not hold the global economy hostage. Failure to act by governments would be irresponsible,” he said.

FMI: www.iata.org