Aviation industry in survival mode: IATA CEO

By Indika Sakalasooriya in Kuala Lumpur

“The aviation industry is currently in its survival mode”. These were the opening remarks by Giovanni Bisignani, DG and the CEO of IATA (International Air Transport Association) in his speech at IATA’s 65th Annual General Meeting held in Kuala Lumpur yesterday.

IATA DG and CEO Giovanni Bisignani

“Optimists see growth by the end of this year but pessimists view this as the mirage and expect an L-shaped recovery. I’m a realist. I don’t see facts to support optimism” Giovanni remarked.
As he pointed out, the aviation industry would lose US$ 9 billion in 2009 vis a vis the last year’s loss of US$ 8 billion owing to increase in falling demand, collapsing yields, broken consumer confidence and pandemic customer fears.
“Whether this crisis is long or short, the world is changing. Even if we try to look beyond the crisis we must recognise that it will not be business as usual. Change is critical. We must use this crisis as an opportunity for governments, partners and airlines to build a stronger industry” he said.
As Giovanni, further pointed out the total industry debt is hovering around US$ 170 billion and the airlines currently are finding it difficult to match the capacity to falling demand of air travel.
“Once again the aircraft ordered in good times are being delivered in recession. About 4,000 aircraft are scheduled for delivery over the next three years, which is of 17 percent of the current air fleet. Finding customers to fill them profitably would be a challenge” he said.
To come out of this turbulent time Giovanni emphasised there is need for the industry to be re-shaped and re-sized, but urged that not only the airlines but also everyone in the industry’s value chain should contribute towards this.
He said that the IATA’s simplifying Business Programme delivered US$ 4 billion in saving last year and offered a better product with e-ticketing and CUSS (Common use Self Service kiosks).
“Now we are targeting a further US$ 10 billion annual savings by improving baggage, travel processes and shipping”
He also urged that while the industry is at its survival mode, its partners cannot expect the same yields.
“Every supplier-monopolist included- must re-shape products and services to reduce their costs and ours. When demand drops they cannot simply divide the same costs among fewer customers” Giovanni said.
He further insisted upon the re-shaping and re-sizing of the relationship between governments and airlines. But he emphasised that the industry does not want bail out like the global automotive industry which is in crisis.
“We don’t want bailouts. All that we ask for is access to global capital. If we cannot pay the bills, saving the flag on the tail will not save our jobs” said Giovanni is asking governments to progressively liberalise the access to market and capital.
Concluding his speech, Giovanni said “Air transport is a responsible industry - in good times and crisis. Today’s situation is unprecedented—the most difficult ever. Governments and partners must understand that we are struggling to survive in a new and harsh reality. We are, however, resilient of great change. Together we must turn challenges into opportunities to be safer, greener and profitable”.