The International Air Transport Association (IATA) has warned that airlines worldwide are likely to lose over $6.1 billion in 2008 because of the exorbitant prices of aviation turbine fuel as well as geo-political instability, with Asia – particularly China and India – also now starting to feel the pinch of the international slump.

Giovanni Bisignani Director General and CEO, IATA

Giovanni Bisignani Director General and CEO, IATA

The International Air Transport Association is an international industry trade group of airlines, headquartered in Montreal, Quebec, Canada, where the International Civil Aviation Organisation is also headquartered. The main objective of IATA – which represents, leads and serves the airline industry in general – is to help airline companies to achieve lawful competition and uniformity in prices. At present, IATA represents about 230 airlines, comprising 94% of scheduled international air traffic.

Analysts of the aviation industry have already warned of a sharp slowdown in the aviation sector in view of the shaky global economy, set off by severe disruption in global financial markets and record-high oil prices.

Giovanni Bisignani, director-general and CEO of the International Air Transport Association, was quoted by the media as telling the Australian National Aviation Press Club: “We are bracing for more situations of airlines collapsing amid higher fuel prices and lower revenue. We are in a perfect storm of uncontrollable fuel costs and falling demand. Airlines could lose as much as US $6.1 billion in 2008. Already, some 25 airlines in our financial systems have gone bust – greater than immediately following 9/11 – and we are bracing for more.”

Despite some relief in the oil price, Bisignani added,“we are a fragile industry that is in a crisis” and the current instability in Russia and the Middle East could drive prices back up to the $147-a-barrel high seen earlier in 2008.

The website www.aero-news.net reports that Bisignani is not happy with efforts being made by governments to improve airline security. “As every traveler knows, the system remains an uncoordinated mess because governments are not thinking or acting globally,”he lamented.

The IATA chief insisted that governmental restrictions on foreign ownership of airlines are hurting the industry, arguing that “the need for airlines to survive outweighs nationalistic thinking. “Who cares who owns an airline so long as it is safe and provides efficient service? It’s time to move from the world of flags and politics to brands and business.”

Bisignani stressed the need for “the unraveling of rules that govern international airline ownership,” just days after British Airways, American Airlines and Iberia announced plans for a trans-Atlantic alliance. He added: “The bilateral system must change because it prevents airlines from acting like normal businesses. Airlines cannot serve markets until governments negotiate access. And, we cannot merge or consolidate across borders because of foreign ownership restrictions.”