The leaders of the world’s airlines met in Istanbul on 2-3 June 2008.
They were pleased to report a new record level of safety performance.
They were proud to announce the full roll-out of electronic ticketing.
Airlines achieved modest profits for the first time since September 11.
Yet this was no time for celebration.
Record oil prices are now driving airlines into uncharted territory. At the fuel prices currently predicted by the forward price curve, IATA airlines could face an additional financial burden of USD 99 billion over the next 12 months compared to 2007. A total of 24 airlines have ceased operations or entered into bankruptcy protection in the last five months. Many more will not survive.
Over the last six years, airlines have cut non-fuel unit costs by 18% and distribution costs by 25%; they have also improved fuel efficiency by 19% and there has also been a notable increase in labour productivity.
All these efforts are meaningless in the face of a tripling of oil prices since 2006, with a two-fold increase in the last year alone. There is limited scope for airlines to lower their costs further. A concerted effort is now required.
This is not simply an airline crisis. Airlines are an engine for global prosperity and failure amongst them would send shockwaves throughout the world economy.
Extraordinary times call for extraordinary measures.
The CEOs of the world’s airlines therefore call on governments and the entire industry value chain to show leadership and responsibility in this time of crisis.
- Governments must eliminate archaic rules that prevent airlines from restructuring across borders.
- In view of existing fees and charges, governments must refrain from imposing multiple and additional punitive taxes and other measures that will only deepen the crisis.
- State service providers must invest to modernise air transport infrastructure urgently, eliminating wasteful fuel consumption and emissions.
- Business partners, in particular monopoly service providers, must become as efficient as airlines are now. If not, regulators must restrain their appetite with tougher regulation.
- Labour unions must refrain from making irresponsible claims and join the effort to secure jobs in aviation and indeed in other industries.
- In the interest of the global economy and the flying public, we urge authorities to enforce the integrity of markets so that the cost of energy reflects its true value.