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Oil prices ‘crippling’ airlines
The world’s airlines will lose $5.5 billion this year, according to IATA. Speaking at the AirFinance conference in New York, IATA director general, Giovanni Bisignani said high oil costs were crippling airlines. But he also launched a scathing attack on government regulation of airlines and airport charges. ”Governments continue to milk the industry for taxes and charges that are at levels of alcohol and tobacco,” he said. “In the US the average tax charged on a $200 ticket has increased from 7% in 1972 to 26% in 2004 – or $40 billion a year.” Mr Bisignani added that airports and air navigation providers add another $40 billion to global airline costs. And he said labour costs were proving “stubbornly difficult to reduce”, although most airlines had got labour costs down by 2%-3% annually. But oil costs remain the predominant concern for airlines. “The fuel bill has risen from $44 billion in 2003 to $63 billion last year. If oil averages $43 per barrel for 2005, the bill will be $76 billion. And that would leave us with an industry loss of $5.5 billion for 2005,” said Mr Bisignani. “The high price of fuel is robbing our profitability,” he said. Government regulation of the industry continues to be a bugbear for Mr Bisignani, who says the nationalistic rules governing aviation are outdated and cost the business E5.9 billion a year in Europe alone. He wants to see the industry deregulated to allow more open competition between carriers. Report by Ginny McGrath
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