Announcement

Collapse
No announcement yet.

"Too many airlines" states IATA CEO...

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • "Too many airlines" states IATA CEO...

    MONTREAL The skies are filled with too many airplanes and a long-overdue consolidation of the airline industry can't happen unless national governments loosen restrictive trade rules, says the head of the global air carriers' association.

    "There are far too many airlines. We have over 1,000 airlines," Giovanni Bisignani, director general and chief executive officer of the International Air Transport Association, said in an exclusive interview with The Globe and Mail.

    Despite steps in the right direction toward truly "open skies," most governments remain overly protectionist and there is a high degree of misplaced antitrust sentiment against much-needed mergers and partnerships, Mr. Bisignani said at his Montreal office.

    "The flags on the tail are killing our industry, because this flag that represents a country doesn't allow us to be able to run this industry economically," he said.

    Restrictive foreign-ownership rules and lack of progress in reaching an open skies agreement between Europe and the United States are seriously hindering the ability of the struggling airline industry to slash overcapacity and reshape itself as a healthy business with sustainable profit margins, he added.

    A Europe-U.S. open skies deal would set the stage for a global liberalization of air transport that would generate an estimated annual profit of $12-billion (U.S.), according to IATA research.

    IATA is forecasting that the airline sector's losses in 2006 will narrow to $1.7-billion from $3.2-billion last year and swing to a modest profit of $1-billion to $2-billion in 2007.

    Revenues are in the $400-billion to $500-billion range.

    According to IATA figures, it would take airline profit of more than $25-billion for investors to get what is considered an acceptable return on capital of 7 to 8 per cent.

    Cyclical factors such as high fuel prices and the cost of heightened security measures in a post-Sept. 11, 2001, context have of course played havoc with air carriers' attempts to return to stability.

    But beyond those cyclical issues are structural concerns that include the incomplete deregulation of the airline industry and thus a lack of progress in longer-term restructuring efforts, Mr. Bisignani said.

    He cited as an example the New Zealand High Court's nixing two years ago of a proposed capacity-cutting partnership between Qantas Airways Ltd. and Air New Zealand Ltd.

    But Mr. Bisignani stopped short of calling for the outright liquidation of airlines that run into financial difficulties.

    Some critics have said the U.S. industry won't really bounce back until some of the competition is taken out for good, rather than repeatedly resorting to Chapter 11 bankruptcy protection when things go wrong.

    Four of the six top U.S. airlines have taken cover under Chapter 11 over the past few years, one of the carriers twice in a two-year span.

    "Certain airlines have been successful re-engineering themselves under Chapter 11," he said, citing Montreal-based Air Canada, which emerged from bankruptcy protection two years ago.

    "It's a case study in how an airline can be re-engineered and reinvented in a very effective way with a very effective return to profitable service," he said.

    Robert Milton, head of Air Canada's parent ACE Aviation Holdings Inc., is the outgoing chairman of IATA.

    Among other issues underscored by Mr. Bisignani are the need for greater international harmonization of global air travel rules and for governments to assume their share of the costs for airport security.

    The airline sector has been struggling to cope with the fallout from the impact of a host of tumultuous events over the past few years, including an economic downturn, Sept. 11, instability in the Middle East and the soaring cost of oil, the SARS outbreak and breakthrough of upstart low-cost carriers.

    Cost-cutting and efficiency efforts in the air carrier sector continue apace and every little bit helps, Mr. Bisignani said.

    The negotiation last year of 300 new, more efficient air routes has resulted in a $1.2-billion cut in fuel costs, he said.

    Electronic ticketing is being rolled out and is on track for the elimination of paper tickets by the end of next year, which will result in annual savings of $3.5-billion a year, he said.

    http://www.globeinvestor.com/servlet...ata18/GIStory/
    I for one, certainly do not think that there are too many airlines. I also like the idea of flag-carriers and think that a little protection of those carriers is a good idea. To stifle competition is horrible, but flag carriers are often the result of governmental involvement and as a response to the needs of it's citizens in a time where other carriers were unavailable. BTW, what kind of bearing does IATA have on the industry?
    Whatever is necessary, is never unwise.

  • #2
    Too many airlines for sure though I do not agree with total deregulation.

    Comment


    • #3
      Not doubt there are too many airlines, but easing restrictions will not help that problem. While there might be a few mergers, at the same time eased restrictions would allow for new start-ups to take to the skies, trying to "fill the gap the XYZ/ABC merger has left behind".

      Comment


      • #4
        ^I would write they are too many unproductive and unefficient airlines which can hardly justify what they are doing !
        Alain
        Thanks for visiting
        *Avimage's Monthly Slide list *
        *JetPhotos*
        Airliners*Pbase.com

        Comment


        • #5
          Well, if you look at it that way, there should actually be more restrictions, especially on launching a new airline. I can't count the times a new carrier started up in GER/AUS/SWI and either folded up real soon, like Styria or Dau Air, or longers on thanks to braindead investors like "37.5% loadfactor" Helvetic.

          Comment


          • #6
            Restrictions if set, must be high. Turkey recently raised the requirements for newcomers in term of minimum capital and number of aircraft, from 2 to 3...
            Alain
            Thanks for visiting
            *Avimage's Monthly Slide list *
            *JetPhotos*
            Airliners*Pbase.com

            Comment


            • #7
              That's the way it should be. Granting an AOC based on just a business plan is probably the worst thing any aviation authority can do these days, because face it, business plans rarely, if ever, work out the way the were planned.

              Comment


              • #8
                Originally posted by uy707
                ^I would write they are too many unproductive and unefficient airlines which can hardly justify what they are doing !
                Alain
                Agreed. Though it is the want to choose what airline to fly on that drives the boom...
                ________
                Marijuana Vaporizers

                Comment


                • #9
                  I believe in no state support of airlines, period. Thank goodness this never happened in the United States. I can just see an airline Amtrak.

                  Comment


                  • #10
                    I dont know....I think United is pretty close to being Gov't supported...
                    ________
                    Mercedes-benz r230 specifications

                    Comment

                    Working...
                    X