Airlines to lose 9 billion dollars in global crisis (Roundup)

Jun 8, 2009, 10:52 GMT

   Kuala Lumpur - The world's airlines are expected to lose 9 billion dollars this year due to the deepening crisis in global air travel, a major industry group said Monday.

   Airline chiefs gathering in Malaysia on Monday were told that the revised figures, which are a major jump from the 4.7 billion dollars forecasted in March, signalled that a recovery in the industry was a long way off.

   'Today's situation is unprecedented, the most difficult ever,' IATA director-general Giovanni Bisignani told more than 500 aviation industry leaders at the two-day International Air Transport Association (IATA) annual meeting in the capital, Kuala Lumpur.

   In April, international air travel dropped 3.1 per cent for passengers and 21.7 per cent for cargo, compared to last year, IATA said. Its report warned that figures for May are likely to be much worse.

   In addition to the drop in demand for passenger and freight travel, the aviation industry is also faced with rising prices of jet fuel, which reached a six-month high of 75 dollars a barrel last week.

   The challenges facing the industry will lead to an estimated 80-billion-dollar revenue loss for the year, a big hike from the 10.4 billion loss of revenue in 2008.

   'Never before has the prospect of an industry-wide paralysis been so real,' said Malaysian Prime Minister Najib Razak during his opening remarks.

   'Never before has the need for new thinking and new approaches in the aviation business been so immediate and desperate,' he said.

   Bisignani urged governments to remove restrictive and protectionist policies and called for cooperation between airlines in order to manage the crisis.

   'Liberalizing key routes today would create 24 million jobs and 490 billion dollars in economic activity,' he said.

   Despite a more positive outlook from policymakers and economists about a global economic recovery, aviation industry analysts have warned that while the worse may be over for airlines, a recovery is unlikely within the next six months.

   'Optimists see growth by the end of the year, but pessimists view this as a mirage,' said Bisignani.

   'I am a realist. I don't see facts to support optimism.'

   However, the meeting in Kuala Lumpur was not all gloom and doom as the world's airlines also committed to achieve carbon-neutral growth by 2020, Bisignani announced in his speech Monday.

   'Demand will continue to increase, but any expansion of our carbon footprint will be compensated,' he said.

   However, he said there needed to be cooperation from other industries as well as governments in order for the move to be successful.

   'Air navigation service providers must make it possible to fly even more effectively. Fuel companies must supply eco-friendly fuels and governments must give us access to credits in global carbon markets,' he said.

   The aviation body chief said the industry would cut emissions by 7 per cent this year, 5 per cent because of reduced capacity as a result of the economic crisis and 2 per cent as a result of a strategy to reduce emissions.