“First quarter passenger growth of 9.4% combined with a load factor of
73.7% is good news. Carriers are successfully increasing fleet utilisation. This is
particularly true in the North America where March load factors topped 81.1%.
Nonetheless, with oil in the US$50 per barrel (Brent) range we are a long way from
profitability,” said Giovanni Bisignani, Director General and CEO of the
International Air Transport Association. IATA released traffic data to the end of March 2005. Capacity expansion in all
regions for the first quarter was below traffic growth, pushing load factors higher.
Freight expansion was less impressive at 4.2%. “While it is too early to identify a
slowing trend in freight traffic, we need to watch this development closely over the
coming months,” said Bisignani.

“However you look at it, 2005 is shaping up to be another difficult year for the
airlines. Intensified cost cutting and better aircraft utilisation are steps in the
right direction. But they cannot keep pace with the increases in the industry’s fuel
bill. From 2003 to 2004 the industry fuel bill rose by US$19 billion from US$44
billion to US$63 billion. At an average fuel bill of US$43 per barrel (Brent), the
fuel bill for 2005 will exceed US$76 billion—and even that seems conservative
given today’s prices. Fundamental and large-scale change is absolutely critical,”
said Bisignani.

“There is no silver bullet for the industry and there is no tolerance for
inefficiency in the value chain. Airlines are doing their part by Simplifying the
Business. One measure of progress is the rise in e-tickets issued by travel agents
and processed through IATA’s settlement systems. From 19% in 2004 we are now over
26% for the first quarter of 2005. We are on track to meet our targets of 40% by the
end of this year and 100% by the end of 2007. Airports and air navigation service
providers contribute US$40 billion in costs to the industry. They have a vital role
to play in delivering cost efficiencies to the industry. Similarly governments must
liberalize ownership rules and let airlines operate like real global businesses. The
situation is critical and we must move fast with our agenda for change,” said
Bisignani.

The agenda for change will form the basis of discussions at the World Air Transport
Summit and 61st IATA Annual General Meeting. Over 600 aviation leaders will gather
in Tokyo 29-31 May to discuss the future of air transport in these challenging
times.
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