IATA Chief Warns Against Too Much Faith In Region

Arguably, the 2008 Singapore Air Show now underway near Changi Airport represents the pinnacle of importance in the aviation industry -- as now more than ever, aerospace manufacturers and industry leaders look to the Asia-Pacific region to keep the past few years' record growth from waning.

In his speech Monday at the start of the show, Giovanni Bisignani, chief of the International Air Transport Association (IATA), cautioned attendees from placing too much hope on Asia to combat what look to be tough times ahead for the industry, and airlines in particular.

"Tough times will continue... Airlines may be out of intensive care but the industry is still sick," Bisignani warned, reports Agence-France Presse. He noted the global aviation industry's return to profitability for 2007 came at the narrowest of margins -- only $5.6 billion, less than two percent of $490 billion in revenue.

"Airlines are in $190 billion of debt. Oil is pushing $100 per barrel accounting for 30 percent of operating costs or a total bill of $149 billion," Bisignani said. "The revenue cycle peaked in 2006 and the negative impact of the credit crunch is still being calculated."

In particular, Bisignani noted, the global market is still coming to terms with the turmoil stemming from defaults on US subpar home loans. That has created a ripple effect through other sectors, as well... and will be a strong contributor to what IATA sees as an overall loss of $40 billion throughout the global aviation industry.

Not all of the IATA chief's message was doom-and-gloom, however. Bisignani notes Asia's aviation industry will likely fare better, on the strength of booming times in China and India.

Asia is "home to some of the industry's strongest carriers and best and newest airport infrastructure," he added, but also warned of "some very big challenges" ahead.

"Just look at Dubai. With nearly 35 million passengers, it now handles nearly as much traffic as Changi," Bisignani told attendees, warning of increased competition from Middle Eastern markets. "In total, the Middle East is spending 38 billion US dollars on infrastructure. So the competitive challenge will be broad and it will not only be competition for market share and infrastructure."

FMI: www.singaporeairshow.com.sg/, www.iata.org