Building a Stronger Air Transport Sector

The International Air Transport Association (IATA) sees the need for greater cooperation to meet unprecedented challenges in the air transport industry.

"The global situation of the air transport sector is a disaster," said Giovanni Bisignani, IATA's director general and CEO in a speech in Argentina. "With industry revenues forecast to fall by 15%, the situation is far more severe than after September 11 when the shock to industry revenues was a seven percent fall. Total industry revenues are expected to fall from US$528 billion last year to US$448 billion in 2009. The industry has never faced a bigger financial challenge," said Bisignani.

IATA estimates that airlines lost US$10.4 billion in 2008 and will lose a further US$9 billion in 2009. Global passenger demand was down 7.2 percent in June, compared to the same month in 2008. In the same month, the number of premium travelers fell 21.3 percent compared to previous year levels. Deep discounting to stimulate demand has amplified the impact of revenues, which are falling by as much as 30% in international markets.

"We may have reached the bottom in terms of demand. But we have yet to see significant signs of recovery. The industry is in survival mode. Conserving cash, reducing costs and managing capacity are critical," said Bisignani.

Latin American carriers are seeing passenger demand down by 4.7 percent. The region is still being impacted by weakened confidence in travel as a result of H1N1 fears and heavy discounting is taking its toll on both revenues and profits for the region's carriers.

"Times have never been tougher for air transport,” he stated.