Mideast carriers urged to improve efficiency

Middle East carriers need to improve fuel efficiency and expand commercial freedoms to meet the rising challenges facing the industry, the International Air Transport Association (IATA) has said.

While European and US carriers have scaled back plans, Middle East airlines – buoyed by soaring oil prices – have largely avoided the turmoil hitting the industry.

But IATA director general and chief executive Giovanni Bisignani warned: “The oil price is falling but what we save in fuel we lose in revenue. This industry will lose $5.2 billion this year. Even the Middle East is not immune.”

Speaking at the AGM of the Arab Air Carriers Association, he said the combined profit of airlines based in the region would fall from £300 million in 2007 to $200 million this year.

And while traffic from the region’s carriers grew 18.1 per cent in 2007, in August this year growth dropped to just 4.3 per cent.

“Only a handful of carriers will be profitable while the majority bleed red ink,” said Giovanni. “The region’s fleet is set to double to 1,300 aircraft over the next decade. As we enter a period of global economic uncertainty, the challenge of matching capacity to demand will be difficult.”

IATA: 20 airlines face bankruptcy

IATA: 20 airlines face bankruptcy

The International Air Transport Association (IATA) has warned that at least 20 international carriers are at risk of bankruptcy amid the worst crisis the industry has ever faced.

The International Air Transport Association (IATA) said passenger demand growth in August slowed to 1.3 per cent, following disappointing growth of 1.9 per cent in July.

Passenger load factors fell to 79.2 per cent – a sharp drop-off from the 81 per cent recorded during the same period last year as capacity growth outpaced demand.

Giovanni Bisignani, IATA’s director general and chief executive officer, said: “The global industry is in a perfect storm of high fuel costs and falling demand.

“The financial turmoil in the US is also affecting the airline industry and at least 20 airlines are at risk. The industry crisis is deepening and no region is immune.”

IATA forecasts the industry will make a loss of $5.2 billion this year and $4.1 billion in 2009.