Airlines must focus on efficiency, says IATA chief


THE airline industry in 2007 will be marked by lower oil prices and slower revenue growth, forcing operating efficiencies, according to Giovanni Bisignani, IATA's director general and CEO

"The focus for 2007 is efficiency. Slower traffic growth rates and a less buoyant global economy will impact revenue growth. Industry-wide we expect revenue growth to slow from 8.0 per cent in 2006 to 4.5 per cent in 2007," he said in a statement.
"While lower oil prices are a welcome relief, they remain around $60 per barrel – more than double the price in 2000. Bottom line improvement depends on achieving further efficiencies across the board. Airlines have reduced non-fuel unit costs by an average of 3.5 per cent over the last five years. It is time for our industry partners across the value chain – including airports and air navigation service providers – to deliver similar results," he said.
IATA full-year traffic results for 2006 showed slower but more profitable growth. Global passenger growth slowed from the 7.6 per cent recorded in 2005 to 5.9 per cent in 2006.  While the cargo growth rate increased from 3.2 per cent in 2005 to 4.6 per cent in 2006, it remains below the historical growth trend of 5.6 per cent. Average passenger load factors in 2006 rose to a record high of 76 per cent, up from 75.1 per cent.
"The lesson for 2006 is that pursuing profitable growth pays off. While passenger growth slowed, the bottom line improved. The industry showed an estimated operating profit of $10.2 billion for 2006 while net losses were reduced to a projected US$500 million. Cost reduction, improved efficiencies and careful capacity management have positioned the industry to achieve a projected net profit of $2.5 billion in 2007," he said.
The Middle East was the fastest growing region for both passenger and cargo recording full-year growth of 15.4 per cent and 16.1 per cent respectively.