IATA (International Air Transport Organisation) director general Giovanni Bisignani was in a bullish mood when he addressed the delegates to the industry gathering in Tokyo last week. He spoke of growth but at the same time was very quick to emphasise that high oil prices were destroying the profitability of the airline business. ”The crisis continues,” he said. ”Our fuel bill this year will be US$83bn. Equal to the GNP of New Zealand. This is US$39bn more than 2003. Last year alone, the industry lost US$4.8bn. However he highlighted regional differences. North American carriers lost US$9bn. Efficiency gains cannot make up for structural problems. Labour costs remain high. And low cost competition at major hubs drove yields down. European airlines posted profits of US$1.4bn. Yields were better. And consolidation helped capacity management. Asian carriers posted US$2.6bn profit. Strong growth fuelled by China and low labour costs are the competitive advantage. And India may be the next great market for the industry. Middle Eastern operators made US$100m. Strong traffic growth led to profitability. But the economics of matching capacity to demand is the challenge. In Latin America things were near break-even. The situation is changing fast. Some of the region's airlines are making money, but the majority are technically bankrupt. And misguided airport privatisation makes matters worse. Finally African airlines lost over US$150m. The region has major safety problems. And governments are not investing in infrastructure”.
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