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Press Release No.: 28

Date: 27 September 2004

Geneva - IATA announced increases of 18.7% for international passenger traffic and 14.2% for international cargo traffic for the first eight months of 2004 over 2003. "The increase in traffic is well beyond our expectations. It will not mitigate the high cost of fuel, but it is certainly a much needed shot in the arm for a beleaguered industry," said Giovanni Bisignani, IATA's Director General and CEO.

The high growth figures for the January to August period are partially exaggerated by the comparison to a period in 2003 which was severely depressed due to the SARS crisis. Nonetheless indications of healthy traffic growth are clearly evident in the August performance. Year-on-year for August, passenger traffic grew by 10.8% while freight was up 13.6%. More capacity is now entering all major markets but the passenger load factor globally remained at a relatively high level of 78.3% for the month of August.

Comparisons to the year 2000, the last year not marked by a crisis in the airline industry, continue to indicate several years of lost growth. January to August 2004 passenger traffic was 8.4% above 2000 levels for the same period. Cargo traffic showed growth of 15.1 % over 2000 levels.

Airlines continue to be aggressive in cost cutting. In 2003 the industry achieved a 2.5% reduction in non-fuel unit costs and indications are for a further 3.0% reduction for 2004, which is above expectations.

"Airlines have done a great job of reducing costs with some very difficult circumstances. Unfortunately, the high price of fuel is eating up these gains and more," said Bisignani. Strong traffic and a low cost base will maintain profitability in the Asian region. Europe's airlines have been partially sheltered from oil prices by hedging and the strong Euro. North American airlines continue to experience very difficult trading conditions.  "Overall, we expect that the airline industry (domestic and international) will lose between US$3 and US$4 billion in 2004," said Bisignani.

"To recover from these extraordinary losses and build a healthy industry structure, we need our partners and governments working in tandem. Airports and air navigation providers must achieve the same efficiency gains as the airlines. And governments must come to grips with more structural issues like security, insurance and liberalisation. As the 35th ICAO Assembly convenes in Montreal, our key message to governments is simple. We need to work together urgently to build cost effective and efficient industry structures at the same time as we need to make real progress on liberalisation," said Bisignani.

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