Fifth year of losses forecast for airlines
The global aviation industry must undergo major reforms as high oil prices look set to plunge airlines into a fifth straight year of multibillion-dollar losses, experts say.
The pressure to lower costs and raise efficiency has never been greater as fares and yields tumble amid the rising oil prices and mounting competition, the industry experts said on Thursday, the opening day of the Asian Airports World 2005 conference in Singapore.
The International Air Transport Association (Iata), which groups 275 airlines representing 94% of global air traffic, presented figures showing its members could collectively lose $5.5 billion this year, mostly because of escalating fuel expenses.
The Iata’s projection of losses is based on Brent oil prices averaging $43 a barrel, nearly $9 less than its current price.
Total losses in the airline industry reached $4.8 billion in 2004 as the fuel bill rose from $44 billion a year earlier to $63 billion, according to the Iata.
“We need to become a low-cost industry, and to do that this industry – all of it – has to change and change fast,” Iata Regional Vice-President Andrew Drysdale said.
Drysdale added that air travel was no longer restricted to the rich and privileged as liberalisation and increased competition brought down air fares, putting pressure on yields.