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IATA braces for repeat of 1970's fuel crisis
Monday, 23 June 2008

IATA has issued a bleak prediction that the airline industry will not make a profit until 2010 and warned that airlines are facing a "cost shock" similar to the 1970s oil crisis if prices do not start to decline.

This comes after IATA revised its profit forecast for the year to a loss of between US$2.3-billion and US$6.1-billion after oil hit over US$130 a barrel, where it has remained for several weeks.

IATA said US airlines will be hardest hit by the soaring fuel prices and it is expected more American airlines will collapse in the coming months.

Good economic growth in other regions such as Asia, the Middle East and Latin America is expected to offset some of the negative effects of high fuel prices, but IATA warned that the key business travel sector has already weakened in some of these markets and airlines may not remain semi-insulated against the fuel crisis for much longer.

There is, however, some light at the end of the tunnel in the form of Vice President of the European Commission and Commissioner for Transport Antonio Tajani's recent promise to deliver a Single European Sky (SES).

IATA Director General, Giovanni Bisignani, said making SES a reality would help stave off the fuel crisis, as it would create more efficient air traffic management that IATA estimates could shave US$5.5-billion off airlines fuel bills, as well as reduce administration costs.

He added that an efficient air traffic management system would also reduce carbon dioxide emissions by as much as 12 million tons, which would in turn produce cost benefits for airlines.

IATA spokesman for South Africa, Linden Birns, pointed out that the creation of a SES would also benefit African carriers that serve European destinations.

By : TIR
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