IATA: traffic grows, but losses continue

John Rimmer

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The airline association's 2005 figures show growth in traffic but continuing losses in the airline industry, with US airlines the worst hit

International Air Transport Association (IATA)'s full-year traffic results for 2005 show international passenger traffic growth of 7.6% in 2005. Despite the growth, the global airline industry lost $6bn last year, with US airlines recording a loss of $10bn. European carriers made $1.3bn and Asian carriers earned $1.5bn. Latin America (11.4%) and the Middle East (13.1%) reported the strongest growth in traffic.

"The industry is returning to a more normal growth pattern after the shocks that began in 2001," said IATA director general and CEO Giovanni Bisignani. "Passenger traffic is lower than the 15.3% increase recorded in 2004, but above historical growth of 6%.

"Growth and profitability are completely different concepts. Freight and passenger traffic are forecast to grow in the 5-6% range during 2006, but the industry is projected to record another loss of over $4bn for 2006. The industry will not see black ink until at least 2007.

"Cost reduction remains critical," continued Bisignani. "All industry partners and stakeholders will have to sustain their focus on fuel efficiency and attack costs.  While we have made some good progress, the road ahead is long. Far too many airport monopolies do not understand the need for efficiency and too many governments are shirking their responsibility to regulate where commercial discipline is absent.

"Governments must also modernise their approach to the industry. Air transport is intensely competitive, but airlines are denied basic commercial freedoms by an outdated bilateral system and are micro-managed through mis-regulation. For the industry to turn the corner in 2006, the agenda for change must continue."