Traffic Improves but Bottom Line Worsens

27th Oct 2004

The International Air Transport Association (IATA) released industry traffic data
for the first three quarters of 2004 demonstrating sustained traffic increases
across all regions. International scheduled passenger traffic for the nine months to
September 2004 grew 17.7% over the same period in 2003 while cargo posted gains of
14.1%. Single month comparisons for September 2004 to September 2003 show 10.9%
growth for passenger and 13.6% for cargo traffic.

“People are travelling again. Every region is reporting double digit growth.
Traffic clearly is rebounding from 2003, which was an exceptionally bad year,” said
Giovanni Bisignani, IATA’s Director General and CEO.

Effective capacity management continues to be evident in strong load factors of
75.5% for September and the nine-month average load factor of 74.6%.

“Airline efforts to meet demand and reduce costs are paying off. We are well placed
to achieve 14% passenger growth in 2004 with a 3% reduction in non-fuel unit costs,”
said Bisignani. Airlines’ cost-cutting has been particularly successful with respect
to personnel and distribution costs. “Some airlines have achieved increases in
productivity of as much as 13%. Similarly, reductions in distribution costs in the
region of 14% have been realized,” said Bisignani.

“The sad story is that, despite these improvements, the bottom line is worsening
with the extraordinary price of fuel. If current fuel price levels persist, losses
may well exceed the US$3-4 billion previously forecasted for 2004,” said Bisignani.


“Efficiency, efficiency and efficiency. Improving efficiency is the mantra. This
applies equally to shortening air routes, operating more fuel efficient aircraft and
streamlining industry processes. IATA is taking a leading role in simplifying the
industry’s complex processes that will save billions and generate added value for
passengers. With oil in the US$50/barrel range, it is critical that our industry
partners join these efforts in earnest. In particular governments, air navigation
service providers and airports need to cooperate to optimise flight operations and
reduce fuel consumption,” said Bisignani.


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