Bisignani: Airlines in Survival Mode

 - September 30, 2008, 9:48 AM

International Air Transport Association (IATA) director general and CEO Giovanni Bisignani characterized the actions needed to address the depressed state of the world’s airline business as “a matter of survival” during a press conference in Hanoi today.

Bisignani’s alarm calls came as August’s international passenger growth slowed to 1.3 percent, following a “disappointing” growth of 1.9 percent in July. August passenger load factors fell to 79.2 percent, a figure that represents a sharp decline from the 81 percent recorded during the same period last year, as capacity growth outpaced demand. Meanwhile, international freight traffic saw its third consecutive month of contraction, with a 2.7-percent decline following drops of 1.9 percent in July and 0.8 percent in June.

Passenger traffic grew at a rate of 5.4 percent during the first half of the year.

“The contrast between the first half of the year and the last two months is stark,” said Bisignani. “The slowdown has been so sudden that airlines can’t adjust capacity quickly enough. While the drop in the oil price is a welcome relief on the cost side, fuel remains 30 percent higher than a year ago. And with traffic growth continuing to decline, the industry is still heading for a $5.2 billion loss this year.

“The industry crisis is deepening and no region is immune,” he added. “Urgent measures are needed. From taxation to charges and operational efficiencies, all areas impacting the business must be examined for ways to reduce costs and drive efficiencies. It’s a matter of survival.”