IATA warns: Don’t bite the hand that feeds you

ISTANBUL – The bad news just keeps coming for the world’s airlines as the cost of fuel surges and the red ink starts to drip all over balance sheets.

IATA forecasts a loss of US$2.3 billion for 2008 based on an average oil price of US$106.5 per barrel, but things could get a lot worse.

Losses could reach US$6.1 billion with an oil price at US$135 per barrel for rest of the year, IATA warned.


Director general and CEO, Giovanni Bisignani, compared the airline industry to Sisyphus – a mythical character whose fate was to constantly carry heavy loads uphill.


Over the last 60 years the industry made US$11.5 trillion in revenues, but only US$32 billion in profits. Average margin for the entire industry has been just 0.3%. And the industry is US$190 billion in debt.

“Since 2001, airlines achieved massive change. Fuel efficiency improved 19% and non-fuel unit costs dropped 18%. The skyrocketing price of oil has eaten these gains and left the industry in the red again.

“Oil prices at US$130 a barrel are changing the game for everyone. The situation is grim,” said Bisignani.


Bisignani said governments must stop “crazy taxation, change the rules of the game and fix the infrastructure”.

“We are in this together. Don’t bite the hand that feeds you,” said Bisignani.