Press Release No.:
20 April 2004
US and EU Challenged to Lead the Industry's Change-Rising Fuel Costs Challenge Profitability-
WASHINGTON—Giovanni Bisignani, Director General and CEO of the International Air Transport Association (IATA), today urged the US to demonstrate leadership to move the aviation industry forward with an agenda for change in a speech to the International Aviation Club of Washington.
Bisignani urged policy changes to enable U.S. airlines to seek unlimited foreign capital. Concerning the current US-EU aviation negotiations, he challenged both sides not to miss a "great opportunity" to create a liberalized operating environment that would allow airlines to compete like any other business.
"If the current talks between the U.S. and Europe are successful, they will again change the face of the aviation industry," said Bisignani. But he said that he was concerned the talks "being driven more by domestic politics on both sides of the Atlantic than by the genuine needs of the airline business."
Bisignani said the current Bush Administration proposal to raise the limits of foreign investment in U.S. airlines from 25% to 49% does not go far enough. "Quite frankly, there is not much use in owning 49 per cent of a company," he said. "Failure to move forward with this symbolic change is an alibi to avoid change on more substantive issues."
"While the industry is showing signs of recovery and a global profit of US$3.2 billion is expected for 2004, the crisis is not over," said Bisignani. Current fuel prices projected over the full year period are expected to bring the total fuel bill that airlines pay to US$67 billion—an US$ 8 billion increase over 2003. "Rising fuel costs will challenge our profitability and are yet another reminder of airlines' need for the same flexibility as other businesses in dealing with a volatile operating environment. As a matter of survival, our industry needs the ability to change," said Bisignani