The global airline industry will likely chalk up losses of USD$6 billion this year, up from USD$4.8 billion in 2004, as a result of sky-high fuel costs, the International Air Transport Association (IATA) said on Monday.
The loss estimate, based on an average oil price of USD$47 a barrel, was raised from last month's forecast of USD$5.5 billion.
"The crisis in our industry continues... the fuel bill (this year) of USD$83 billion is destroying our profitability," IATA Director General Giovanni Bisignani told a news conference in Tokyo, complaining that governments had "no vision, no leadership and no actions on important issues" facing the industry.
"European plans to raise USD$7.8 billion for development assistance by taxing air transport is about the dumbest possible way to help the developing world," Bisignani said.
Cutting European farm subsidies by only 12 percent would generate USD$7.8 billion, he said.
IATA, which coordinates aviation rules and standards, called on governments to cut taxes on airlines, push deregulation, and appoint an independent regulator to ensure that airport service companies boosted efficiency.
It was "political nonsense" that Europe had a single currency, but 35 air traffic control organizations, Bisignani said.
The USD$400 billion global airline industry, reeling since the September 11, 2001 attacks in the United States, aims to cut non-fuel unit costs by 4.5 percent through rationalization, route improvements and other measures this year.
World passenger traffic grew 8.7 percent in the first four months of 2005 but the growth has not translated into profitability due to skyrocketing fuel costs and other inefficiencies, the IATA director general said.
Benchmark US light crude prices reached a record high of close to USD$60 a barrel just last month. They have slipped since then but popped back above USD$50 on Monday.
Some carriers, however, are beginning to cope with soaring oil prices and low-cost competition and expect better years ahead.
"Clearly oil is the one that worries us all," said Robert Milton, CEO of Ace Aviation, Air Canada's parent, adding that for each dollar per barrel that oil moves, its costs would rise USD$28 million per year.
"I think we are managing to overcome that. We've really redefined our airline. Through the last couple of years we've gotten about USD$2 billion of our operating costs per year out."
As outbound travel expands, carriers like India's Jet Airways have benefited from increasing globalization, with its quarterly net profit up 60 percent.
Naresh Goyal, chairman of Jet, India's largest domestic carrier, said double-digit growth would continue as more international routes come on line.
"We're expecting our financial year 2005/06 to be even better than 2004/05 and we are expecting about 15 percent growth in the next few years," he said.
IATA, which is holding its annual meeting in Tokyo, last year launched a massive cost-cutting program that included plans to expand the use of e-ticketing systems, self-service kiosks for check-in and bar-coded boarding passes. The plan is expected to cut costs by USD$6.5 billion per year.
