Airlines face US$4b in losses over oil, security

PUBLISHED : Tuesday, 28 September, 2004, 12:00am
UPDATED : Tuesday, 28 September, 2004, 12:00am

Higher fuel and security costs may see the world's airlines lose up to US$4 billion this year despite a dramatic rebound in demand for passenger and cargo services in key markets such as the Asia-Pacific region, according to the International Air Transport Association (Iata).

Terrorism protection measures introduced since September 11, 2001, had imposed US$5 billion in additional costs on airlines per year, said Iata chief executive Giovanni Bisignani yesterday.

'Governments have failed miserably at co-ordinating and harmonising measures. We are left to battle bureaucracy when we should be helping to fight terrorism,' said Mr Bisignani. 'Along with [the need for] urgent action to harmonise measures, governments must also stop passing the buck to the airlines and accept their responsibility to pay for national security.'

Demand for business and leisure travel in the Asia-Pacific - measured in revenue-passenger kilometres - rose 27.3 per cent in the first eight months against the Sars-depleted numbers of last year.

Globally, passenger numbers grew 18.7 per cent to last month, or 8.4 per cent higher than the healthier numbers of 2000.

Cargo - measured in freight-tonne kilometres - was up 15.1 per cent against the first eight months of 2000.

The available capacity was up 7 per cent for passengers and 10.8 per cent for cargo against 2000's global fleet. No volumes were given.

Iata singled out the rapidly rising price of aviation fuel as the biggest obstacle to profitability this year. Mr Bisignani said record high fuel costs had eroded any gains the airlines may have made in reducing other operating costs.

The price of a barrel of jet kerosene traded in Singapore, the region's benchmark index, had risen 59 per cent since April 5 to US$58.45.

He said the inefficient use of industry airspace which forced carriers to take longer routes between destinations added unnecessary costs for Iata's members and the environment.