IATA's new leader is taking the fight for cost control from within the airlines themselves to outside forces such as labour, infrastructure and government regulation.

IATA director general Giovanni Bisignani led the association's 59th Annual General Meeting (AGM) in a plea to these forces to embrace change as much as the carriers themselves have. More than 400,000 jobs have been shed as the industry reinvented itself in a drive for greater efficiency.

"Crisis is the only way to describe the state of our industry today," he said. Characterising the airline industry as "a boxer who gets hit harder after every knockdown", he said IATA members lost $3.8 billion on their international services in 2002, bringing losses to over $14 billion in two years, he said.

Including domestic losses the figure rises to $25 billion over 2001 and 2002. The US industry now has $100 billion of debt but a market capitalisation of just $4 billion.

One positive sign emerged as US Transportation Secretary Norman Mineta told the meeting that he had just asked Congress to raise the limit on non-US investment in a US carrier to 49% from its current 25% cap, and Delta Air Lines chief executive Leo Mullin, this year's AGM president, said that the recent passage by Congress of a law to reimburse carriers $2.3 billion for security costs incurred since February 2002 was a good precedent.

But, Bisignani complains that "governments are still moving slowly". With new security regulations costing airlines $5 billion last year, he called on governments to pay for such measures. Bisignani also criticised high airport and air traffic service provider margins.

Explaining IATA's emboldened rhetoric, he said: "The time for diplomacy is over - now it is time to shout in a polite way for a new balanced approach."

At best, he says, the world industry will return to growth rates of 4% over the next five years, with passenger numbers rising from 1.5 billion today to 3 billion over the next 10 years.


Source: Airline Business