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Press Release No.: 2

Date: 31 January 2005

Air Traffic Rebounds in 2004 - Cost Efficiency; The Challenge for 2005

"The traffic recovery in 2004 was phenomenal across all regions," said Giovanni Bisignani, the Director General of the International Air Transport Association (IATA). Bisignani reported that 2004 full year international scheduled passenger traffic increased 15.3% and cargo traffic 13.4% over 2003 levels at a meeting of the Civil Air Navigation Services Organisation (CANSO) in Maastrict.

All regions reported double-digit year-on-year growth with the Middle East and Asia Pacific leading the way at 24.8% and 20.5% growth for passenger traffic. Freight also saw double digit growth in all regions with the Middle East carriers reporting the highest growth at 26.8%.

Link to December 2004 and Year End Statistics

The one-off recovery from SARS contributed an estimated 5% of the global passenger traffic growth. Going forward IATA forecasts average annual growth of 6.0% for the period to 2008, in line with the historical trend.

"The challenge for 2005 is to turn traffic growth into profitability with improved cost efficiency across the industry's value chain," said Bisignani.

The industry ended 2004 with an estimated loss of US$4.8 billion. IATA forecasts an industry profit of US$1.2 billion for 2005*. The price of fuel remains a critical factor for airline profitability.

"Airlines enter 2005 with a renewed determination to increase efficiency and reduce industry costs," said Bisignani. "We ask the same of our partners, many of whom are monopolies. The bill for air navigation services has increased by 9.4% since 1999 to a total of US$8 billion. Over the same period airline yields declined by over 10%. The level of cost efficiency among air navigation service providers (ANSPs) is simply not good enough."

"Our customers demand that we evolve to a low cost industry with simplified business processes. Our partners, including ANSPs and airports must be a part of that evolution. As customers paying an enormous bill, we demand better value, increased transparency and meaningful consultation on future developments. ANSPs must harmonise infrastructure and operations across borders. And we must agree on the adoption of new technology based on real value and business benefits," said Bisignani.

*Based on an average price of US$34 for Brent Crude

- IATA -

Notes:
Full text of Giovanni Bisignani's remarks to CANSO are available at /pressroom/speeches/2005-01-31-03.htm
Full details of Simplifying the Business are available at /whatwedo/simplibiz

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