IATA doubles estimate of 2009 losses

The world’s airlines are now expected to lose twice as much this year as earlier forecasts had predicted, and may have to change their business models permanently to survive in a post-recession environment. Those were the messages delivered by Giovanni Bisignani, CEO of the International Air Transport Association, to the group’s member airlines at its annual gathering in Kuala Lumpur. Earlier, IATA had been predicting its airline members would lose a combined total of $4.7 billion in 2009; now the estimate is for a $9 billion deficit, Bisignani said – and that comes on top of 2008’s $10.4 billion in red ink. Although the world’s airlines are expected to spend $59 billion less on fuel than they did last year, they will likely take in $80 billion less from passengers than they did in 2008. “That is the total revenue that will disappear with falling demand, collapsing yields, broken consumer confidence, and pandemic fears,” Bisignani said. “Our customers don’t have confidence…Business habits are changing are corporate travel budgets have been slashed. Video conferencing is now a stronger competitor.” He claimed that the world’s airlines are now in “survival mode,” and that even as the economy recovers, “the world is changing” for business travelers and the airlines that carry them. The current crisis is even worse for airlines than the post-9/11 environment, he said, noting that revenues then fell by 7 percent, while the current recession has led to a 15 percent drop. Bisignani harshly criticized some airports for hitting airlines with big increases in landing fees and other charges at a time when the industry is in crisis. He blasted governments and oil companies for failing to invest in alternative fuels that could help airlines cut costs and reduce the environmental impact of commercial aviation. And he urged governments to move ahead with improved navigational technology and other improvements. “Governments want to reduce delays. We can help, but we need efficient infrastructure,” Bisignani said. “Slot auctions and legislation on passenger rights are not the solution.”