Simplify business, urges IATA chief
SIMPLIFYING the air transport business is the key for a profitable industry, said Giovanni Bisignani, director general and CEO of the IATA, speaking at the Singapore aerospace show recently.
Airlines have lost $42 billion since 2001 and are expected to lose another $4 billion in 2006, he said. While Asian passenger traffic is expected to grow at 6.5 per cent and cargo at 8.5 per cent each year until 2009, he said growth is not profitability. He said some Asian carriers were among the industry’s most profitable, yet were operating at margins of two per cent, far from the seven or eight per cent needed to cover capital costs. “Turning growth into profitability will be the challenge,” said Bisignani, who said low-cost competition and overcapacity are major threats to the industry. He described bird flu as a wild card.
Bisignani identified four key areas critical for Asia to take full advantage of its tremendous potential: safety, simplifying the business, value for money and commercial freedom. By 2007, he said, the IATA Operational Safety Audit will be a condition of IATA membership. In terms of simplifying the business, 100 per cent e-ticketing by end 2007 tops the agenda.