IATA chief calls for aviation industry common vision to tackle low profit margin

22:11, February 14, 2011      

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The International Air Transport Association (IATA) Director General and Chief Executive Officer Giovanni Bisignani on Monday called for "common vision" to tackle pathetic low profit margins of the industry.

Speaking on the conclusion of the Vision 2050 meeting in Singapore, Bisignani said the profit margin of the global aviation industry was only 2.7 percent despite all the efforts to cut costs, and it is expected to shrink to 1.5 percent this year. The industry was expected to generate 600 billion U.S. dollars in revenues with the burden of 205 billion U.S. dollars in debt.

He said the profit margins were a pathetic 0.1 percent over the past 40 years for the air transport industry despite all the efforts to simply the business, improve cost efficiency and reduce fuel burn.

"This is not sustainable. We need to look ahead to anticipate change as we prepare to handle the 16 billion passengers and 400 million tons of freight that we will handle in 2050," he said.

The aviation industry has been lagging behind other sectors in global economic recovery and it has been struggling to put behind it heavy debt burdens.

Over the last decade of crises, the industry lost 50 billion U. S. dollars. It also improved productivity by 63 percent, cut sales and distribution costs by 19 percent and improved fuel efficiency by 20 percent.

Bisignani said that the passenger should remain the core of thinking for the industry, calling for the right technology, efficient infrastructure and, last but not the least, financial sustainability in the future.

He said nobody has all the answers or a crystal ball to see the industry in 2050 but the general consensus was that one of the industry's biggest challenges is "to evolve from the financial disaster of a partial de-regulation that has created fierce competition among airlines but without giving them the normal commercial freedoms to do business."

"There was consensus among all present that there is strategic value in thinking together ... The industry is sick. To protect the value that aviation delivers to consumers, companies, countries and the global economy, we need a common vision to change as we move forward," he said.

The Vision 2050 initiative was launched at IATA's annual general meeting last year. The industry body said it will put all the vision generated at the event that featured prominent leaders including Singapore Minister Mentor Lee Kuan Yew into a document and present it at the IATA annual general meeting scheduled for June 5-7 this year.

Source: Xinhua
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