IATA: AIRLINES HEAD FOR US$9 BLN GLOBAL LOSS

KUALA LUMPUR, June 9 (Bernama) -- The aviation industry is expected to lose
US$9 billion (US$1=RM3.48) this year and revenue to fall by 15 percent, or US$80
billion.

International Air Transport Association (Iata) director general/chief
executive officer, Giovanni Bisignani, said the latest forecast was nearly
doubled the association's March estimate of US$4.7 billion, reflecting a rapidly
deteriorating revenue environment.

Iata has also revised its loss estimate for 2008 to US$10.4 billion from the
previous estimate of US$8.5 billion.

Bisignani said the revenue fall was also expected in the face of global
recession, compared with only a seven percent decline in the aftermath of Sept
11.

"US$80 billion is the total revenue that will disappear with falling demand,
collapsing yields, broken consumer confidence and pandemic fears. The landscape
is harsh. Airlines will lose US$9 billion this year," he said in his state of
the air transport industry address at the 65th Iata annual general meeting here
Monday.

He said an optimist would see growth by year-end but the pessimist would
view this as a mirage.

"I am a realist. I don't see facts to support optimism," he said.

Bisignani said the industry was in a survival mode and the world was
changing whether or not the crisis was long or short.

"Even if the industry looks beyond the crisis, it must recognise that it
will not be business as usual.

"Change is critical. We must use this crisis as an opportunity for
governments, partners and airlines to build a stronger industry," he said.

He said although the fall in revenue was expected to be steep and tightening
the belts was obvious, having the same product in different sizes was not the
answer.

"Shippers and travellers will expect greater value at reduced prices. This
entire value chain must be involved in re-sizing and reshaping this industry,"
he said.

At the same time, he said, airlines too expected the same from suppliers and
manufacturers, as they too must reshaped their products to reduce their costs
and that of the airlines.

"We cannot accept that those in the West charge around US$4 per transaction
when China TravelSky does the same job for 50 cent. This must change," he said.

Bisignani said airlines paid 11 percent of their revenues to monopoly
suppliers.

"The bill that airlines paid to 'happy monopoly suppliers' grew by US$1.5
billion last year and another US$1.5 billion for the first half of 2009.

"Some are sharing the burden of charge. Malaysia Airports reduced charges by
50 percent for two years and Singapore reduced charges by 25 percent," he said.

He said there was a need for progressive liberalisation from governments as
a cheap and effective stimulus for the industry duering this trying times.

"Liberalising key routes today would create 24 million jobs and US$490
billion in economic activity," he said.

Bisignani said the logical nest step was for the US and Europe to expand
'open skies' to 'open aviation'.

"An agreement would strengthen their industries and send a strong signal of
change beyond their borders," he said.

He said the industry could help the governments protect jobs and stimulate
the economy.

"We can help but we need basic commercial freedoms to run our businesses.
Banks are getting capital not just from bailouts but also from international
markets.

"We don't want bailouts. All we want is access to global capital, but old
rules stand in the way of a healthier industry. If we cannot pay the bills,
saving the flag on the tail will not save jobs," he said.

He noted that a prolonged recession could lead to a cash crisis and this
would put at risk 32 million jobs and the lifeblood of the global economy.
-- BERNAMA