ID :
18039
Thu, 09/04/2008 - 14:05
Auther :
Shortlink :
https://oananews.org//node/18039
The shortlink copeid
AIRLINES NEED GREATER "COMMERCIAL FREEDOM", SAYS IATA CHIEF
KUALA LUMPUR, Sept 4 (Bernama) - The airline industry needs greater "commercial freedom" with an option of having foreign ownership as to gain broader market access, says the International Air Transport Association (IATA).
"We are structurally fragmented. The rules of the game are aging. We are talking about 65 year-old rules," said its director general and chief executive officer, Giovanni Bisignani.
"To cure the structural sickness of the industry, made all the more obvious
by the high price of oil, we need a strong dose of liberalisation," he
said.
To be successful and continue providing jobs to 32 million people and
support US$3.5 trillion in economic activities, airlines must be able to do
business like any other business, he added.
Bisignani said this in a teleconference from Montreal, Canada, Wednesday,
held in conjunction with the release of IATA's latest financial forecast and
traffic results.
IATA in its revised industry financial forecast has said that the global
airline industry could expect to post losses of US$5.2 billion this
year.
The projection was based on an average crude oil price of US$113 per barrel
(US$140 for jet fuel).
"Simply weathering the current storm is not an option. We must take the
opportunity of these extraordinary times to facilitate extraordinary change to
strengthen the industry with normal commercial freedom," he said.
According to him, 26 or 27 airlines have gone bust, more than in the wake
of the Sept 11 tragedy in 2002, where airlines suffered some turbulance
following the terrorist attack.
On a positive note, Bisignani said the U.S-EU talks later this month was
one
opportunity to address ownership restrictions in an important market.
The U.S. currently restricts foreign ownership of domestic
airlines, preventing cross-border mergers.
Bisignani said the global airline industry, which includes 2,000 carriers,
would have to consolidate to be profitable.
He called on regulators, airports and the airlines themselves to work
together to make the industry more efficient.
"The government should not stand in the way of airline consolidation. In
this difficult moment, everything must be done to facilitate those types of
processes."
And IATA, Bisignani said is taking the unusual step of facilitating a
global
dialogue on an Agenda for Freedom next month in Istanbul.
The association's initial outlook for 2009 outlined continued "rough"
conditions for airlines.
"Fasten your seatbelts for at least another two years," said Bisignani
referring to the time it might take for the global economy to recover.
However, he said that the airline industry could break even in 2009 if oil
price declined to an average of US$95 per barrel.
IATA's July year-on-year passenger demand growth fell to 1.9 percent - the
lowest in five years while capacity increased by double that - 3.8 percent -
indicating that service cuts were not keeping pace with the fall in
demand.
Air cargo meanwhile declined 1.9 percent over July 2007 in a second
straight
month.
Asia-Pacific carriers - the largest players in the cargo market - were hit
hard with a 6.5 percent drop in demand.
"The cargo is a bit of a thermometer of the economy ... If cargo goes down,
it means that economies are slowing," Bisignani said.
"We are structurally fragmented. The rules of the game are aging. We are talking about 65 year-old rules," said its director general and chief executive officer, Giovanni Bisignani.
"To cure the structural sickness of the industry, made all the more obvious
by the high price of oil, we need a strong dose of liberalisation," he
said.
To be successful and continue providing jobs to 32 million people and
support US$3.5 trillion in economic activities, airlines must be able to do
business like any other business, he added.
Bisignani said this in a teleconference from Montreal, Canada, Wednesday,
held in conjunction with the release of IATA's latest financial forecast and
traffic results.
IATA in its revised industry financial forecast has said that the global
airline industry could expect to post losses of US$5.2 billion this
year.
The projection was based on an average crude oil price of US$113 per barrel
(US$140 for jet fuel).
"Simply weathering the current storm is not an option. We must take the
opportunity of these extraordinary times to facilitate extraordinary change to
strengthen the industry with normal commercial freedom," he said.
According to him, 26 or 27 airlines have gone bust, more than in the wake
of the Sept 11 tragedy in 2002, where airlines suffered some turbulance
following the terrorist attack.
On a positive note, Bisignani said the U.S-EU talks later this month was
one
opportunity to address ownership restrictions in an important market.
The U.S. currently restricts foreign ownership of domestic
airlines, preventing cross-border mergers.
Bisignani said the global airline industry, which includes 2,000 carriers,
would have to consolidate to be profitable.
He called on regulators, airports and the airlines themselves to work
together to make the industry more efficient.
"The government should not stand in the way of airline consolidation. In
this difficult moment, everything must be done to facilitate those types of
processes."
And IATA, Bisignani said is taking the unusual step of facilitating a
global
dialogue on an Agenda for Freedom next month in Istanbul.
The association's initial outlook for 2009 outlined continued "rough"
conditions for airlines.
"Fasten your seatbelts for at least another two years," said Bisignani
referring to the time it might take for the global economy to recover.
However, he said that the airline industry could break even in 2009 if oil
price declined to an average of US$95 per barrel.
IATA's July year-on-year passenger demand growth fell to 1.9 percent - the
lowest in five years while capacity increased by double that - 3.8 percent -
indicating that service cuts were not keeping pace with the fall in
demand.
Air cargo meanwhile declined 1.9 percent over July 2007 in a second
straight
month.
Asia-Pacific carriers - the largest players in the cargo market - were hit
hard with a 6.5 percent drop in demand.
"The cargo is a bit of a thermometer of the economy ... If cargo goes down,
it means that economies are slowing," Bisignani said.
