Airlines expected to lose $9 billion this year, according to IATA

The world's airlines will lose $9 billion this year after shedding $10.4 billion in 2008, IATA DG and CEO Giovanni Bisignani said Monday.

Addressing delegates at the 65th IATA Annual General Meeting in Kuala Lumpur, Bisignani said, "There is no modern precedent for today's economic meltdown" and expressed doubt that growth will resume by year end, making the case instead for an "L-shaped" recovery. "I am a realist. I don't see facts to support optimism," he said.

IATA expects annual airline revenues will fall by $80 billion this year to $448 billion from $528 billion in 2008. Bisignani also warned that "whether this crisis is short or long, the world is changing. . .It will not be business as usual." He cited, for example, the growth of videoconferencing during the downturn, which is now "a stronger competitor" to air travel.

But whereas airlines have made major progress in boosting productivity and cutting costs, suppliers and manufacturers "must reshape their products to reduce their costs and ours." He cited GDS transaction fees as an example. To widespread applause he told delegates, "We cannot accept that those [GDS suppliers] in the West charge around $4 per transaction when China TravelSky does the same job for 50 cents. This must change." He said that 11% of airline revenues go to "monopoly suppliers" such as airports and air navigation service providers, singling out several, among them UK airports operator BAA and Delhi and Mumbai airports in India, for special criticism.

On the environmental front, IATA expects airline CO2 emissions to fall 7% this year compared to 2008, 5% from reduced capacity and 2% from direct actions. He said that on Sunday, the IATA board "took a landmark decision" that "by 2020 the airline industry will achieve carbon neutral growth. . .demand will continue to increase but any expansion of our carbon footprint will be compensated."