MercoPress. South Atlantic News Agency

IATA: air transport sector a “disaster”; airlines set to loose 9 billion USD

Director General Giovanni Bisignani said IATA would work as consultants to help with Aerolineas Argentinas recovery

”The global situation of the air transport sector is a disaster” said Giovanni Bisignani, IATA’s Director General and CEO in a speech to JURCA, the association of airlines operating in Argentina.

“With industry revenues forecast to fall by 15%, the situation is far more severe than after September 11/2001 when the shock to industry revenues was a 7% fall. Total industry revenues are expected to fall from 528 billion US dollars last year to 448 billion in 2009. The industry has never faced a bigger financial challenge” said Bisignani during his recent visit to Buenos Aires.

IATA estimates that airlines lost 10.4 billion USD in 2008 and will lose a further 9 billion in 2009. Global passenger demand was down 7.2% in June, compared to the same month in 2008. In the same month, the number of premium travellers fell 21.3% compared to previous year levels.

Both of these represent slight improvements on May figures which were -9.3% for passenger demand and -23.6% for premium travellers. Deep discounting to stimulate demand has amplified the impact of revenues which are falling by as much as 30% in international markets.

Bisignani noted that June cargo figures were down 16.5%, relatively stable with the -17.4% recorded in May and a slight improvement on the performance for December 2008 to March 2009 when cargo demand hovered below -20%.

“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.

Bisignani also noted that Latinamerican carriers are outperforming the market with passenger demand down by 4.7% and cargo by 14.2%. 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.

“Argentina faces these challenges while the economy is still paying for the debt crisis of 2001. Over 8% of Argentina’s economy and 1.7 million Argentine jobs depend on air transport. I am pleased to see that the government has made a competitive air transport sector an important pillar of national economic policy” said Bisignani.

In 2008, IATA worked with local authorities to improve the competitiveness of Argentina’s airports with a 30% discount on airline charges. ANAC, the regulator has also been changed to a civilian organization.

“These are major steps in the right direction and create opportunities to further improve the competitiveness of Argentina’s aviation sector. Working together is the key to success in further enhancing Argentina’s competitiveness in air transport,” said Bisignani.

Following the decision to stabilize air services by re-nationalizing Aerolineas Argentinas, IATA agreed to work as a consultant with the Government of Argentina. “We will help in efforts to put Aerolineas Argentinas back on its feet by re-building competitiveness so that it can compete in an open market,” said Bisignani.