IATA appreciates growth of global aviation sector
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IATA appreciates growth of global aviation sector

The International Air Transport Association says the projected total profit of $5 bn was "peanuts" as compared to its size.

india Updated: Jun 05, 2007 13:22 IST

Appreciating the growth in the global aviation sector and its return to profitability, the International Air Transport Association has said the projected total profit of $5 billion for the entire industry was "peanuts" as compared to its size but asked airlines to sustain this profitable growth.

Noting that India and China were leading Asia-Pacific region to become the single largest market in the world, IATA Director General and CEO Giovanni Bisignani said "we expect airlines to make $5 billion profit this year" but the airlines were a $470 billion industry.

"A profit of $5 billion is peanuts. We need $40 billion just to cover the cost of capital. The industry is moving in the right direction, but with $200 billion of debt, the financial hole is deep. The challenge for us is to turn peanuts into sustainable profits," Bisignani said in his inaugural address at the IATA Annual General Meeting in Vancouver.

Observing that the industry had changed tremendously in five years, he said labour productivity was up 56 per cent, the distribution costs down 13 per cent. Non-fuel unit costs dropped 15 per cent and load factors were at record highs of 76 per cent in 2006.

"Airlines needed an oil price of less than $20 a barrel in 2002 to break even. Today we are profitable at $70 per barrel," Bisignani, who was unanimously re-elected as the IATA chief, said.

He also outlined six priorities for the industry - safety, security, simplifying business, infrastructure, liberalisation and environment.

Elaborating safety aspects, Bisignani said "in a decade we cut the accident rate in half. 2006 was our safest year ever, with one accident for every 1.5 million flights" from the earlier rate of one accident every two million flights.

IATA's Operational Safety Audit 'a condition of IATA membership', in which Indian airlines and airports participated, was crucial in bringing about changes to make air travel even safer.

On security issues, the IATA chief said though "we are much more secure (since the 9/11 terror strike), but the system is a $5.6 billion uncoordinated mess." Doing a lot of plain speaking, he said, "the governments have forgotten that our success on safety is based on global standards and cooperation. We need to take the same approach with security. It is government's responsibility to provide security that is also convenient."

Referring to the various other initiatives taken by the IATA including aiming at making airline ticketing paper-less he asked airlines to introduce e-ticketing. At the conference, a resolution was unanimously adopted to extend the deadline for achieving 100 per cent e-ticketing from December this year to next March.

All Indian carriers have promised to fully implement e-ticketing by the deadline. Describing environment as the industry's toughest challenge, Bisignani said "our track record has limited airlines' carbon footprint to 2 per cent of the global total. By 2050 the UN estimates say it will grow to three per cent.

"In today's political reality that is not acceptable for any industry. We must aim high. Air transport must become an industry that does not pollute. We will not achieve this overnight, but potential building blocks for a carbon-free future are here", he said and appealed to fuel suppliers and aircraft manufacturers to help achieve this end.

First Published: Jun 05, 2007 13:19 IST