FlightGlobal.com
Home
Premium
Archive
Video
Images
Forum
Atlas
Blogs
Jobs
Shop
RSS
Email Newsletters
You are in:
Home
Aviation History
1985
1985 - 2996.PDF
AIR TRANSPORT lata displays shellshock symptoms HAMBURG Whatever level of cultural life satisfies your taste, from the finest and highest to the most basic, Hamburg will provide it for you. It is a pity that the International Air Transport Association, which held its 41st AGM there, did not draw more inspiration from big- hearted Hamburg, tradi tionally a town of seafarers, trade, and travel. This three-day AGM proceeded at a rattling pace through the customary com plexities of an agenda which hides problems of intimidat ing international extent behind the bland, preformed words of its motions. And that is just the impression that this meeting gave: of a mass of delegates intimidated by the problems they face, passive in the face of forecast defeat; shellshocked. Working sessions of the meeting kept ending early because motions put by the various committees were just being voted through with practically no discussion from the floor, no challenges, and hardly any amendments. Heinz Ruhnau, Iata's current president and Lufthansa's chairman, undoubtedly ran the meeting with skill, but it was certainly not his piloting skill alone that was flying the meeting so speedily past its waypoints. It is strange that this AGM should have had such an air of resignation about it consider ing that the annual report being presented, the 1984 re port, declared that lata air lines as a group had made their first net profit since 1978 on their international sched uled services. Was the resig nation in fact the relaxation of one who has reached his goal? Almost certainly not. To put things in context, the airlines were expecting a better result for 1984 than the one they got. They expected a net profit of $1,000 million and achieved half of that. In mid-1984, predictions for 1985 results were in the region of $1,200 million net profit; now the airlines are told that as a group they might break even. For 1986, current predictions are losses of up to $500 million, when the airlines had believed they could achieve profits of $1,500 million (for key figures see Flight last week, page 5). In the past year nine new airline members have joined lata, bringing the membership total to a record 139. Since lata obviously cannot provide instant success, why are car riers flocking to join the fold? In the annual report presented at the 1984 AGM in Montreal, lata hinted at an answer: it complained of efforts "by some adminis trations not just to export their national philosophies but to attempt extraterritorial application of regulations designed for a unified domes tic environment"; lata had said then that the effect of this would be, paradoxically, to drive airlines to seek the stability afforded by tariff co ordination. Perhaps the Asso ciation is being proven right. lata gives the appearance of being a haven, because its work is concerned with stability of all kinds in the international field; since the international air transport business is becoming more competitive and competition has a de-stabilising effect, lata works unashamedly to control the pace at which this increased competition is allowed to arrive, and in what form. Giinter Eser, Iata's new director-general presiding at his first annual general meet ing, gives reasons for poor results and shows that competition is growing insidiously despite attempts to control it: there was in 1984, he says, a 5-5 per cent decrease in the average yield level compared with the previous year, despite the Lufthansa was a courteous and efficient host. Next year's AGM, at Montreaux, November 3-4, will not be hosted JJLJL 41"Annual General Meeting Hamburg '85 emphasis on yield improve ment in the lata strategic plan. The decline was largely due to passenger growth being strongest at the cheapest fares, and freight yield dropped despite high demand reflected by 14 per cent growth. Last year traffic growth was more than 10 per cent, well above the capacity increase, and unit costs were kept well down. But airlines had found that it was at the price- sensitive end of the market where the additional pas sengers were to be found, and had reacted to that. This year traffic growth has slackened—it is about 6 per cent; but capacity growth now is going ahead of traffic by nearly 1 per cent. Yield is expected to be about the same for 1985 as it was in 1984. Eser warns the airlines against an instinctive form of competitiveness: "As far as capacity is concerned, members seem to accept that there are limits to the total market growth in any given year. But they assume indi vidually that they will be able to get an increased share of the traffic and plan their capacity accordingly. The sum of these individual assumptions often exceeds the actual growth in traffic". The director-general says that airlines can improve their lot only by three means; control of capacity, costs, and yields. He actually voiced his opinion that lata airlines have doen all they can on costs. Perhaps he was accepting that they have done all that they intend to do. So, Eser says, in order to achieve the 10 per cent return on revenue earned which lata says is necessary to invest in its future, the airlines must take charge of capacity and yield. The 1984 return on revenue earned was 2 per cent, just a fifth of the needed profit. On the regulatory front Eser warned of the danger that increasing regionalism within lata might threaten FLIGHT INTERNATIONAL, 9 November 1985
Sign up to
Flight Digital Magazine
Flight Print Magazine
Airline Business Magazine
E-newsletters
RSS
Events
