Friday, April 29, 2005

Major airlines carry more passengers but struggle with rising fuel prices

Airlines carried 9.4 percent more passengers during the first quarter of 2005 compared to the same period last year but are unable to keep pace with rising fuel prices, the main industry association said.

The International Air Transport Association warned that the "good news" would not be enough to secure profits for struggling airlines in the coming year.

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"With oil in the 50 dollar per barrel (Brent) range we are a long way from profitability," Giovanni Bisignani, director general of IATA, said in a statement.

Bisignani said increased cost cutting and more efficient use of aircraft could not keep pace with the industry's fuel bill.

IATA predicted in a "conservative estimate" earlier this month that airline fuel costs will reach 76 billion dollars this year against 63 billion dollars last year.

"However you look at it, 2005 is shaping up to be another difficult year for

the airlines. Fundamental and large-scale change is absolutely critical," Bisignani added.

Freight traffic expanded at a slower 4.2 percent in the first three months of this year, prompting some concern in the industry.

"While it is too early to identify a slowing trend in freight traffic, we need to watch this development closely over the coming months," the IATA chief said.

Twenty-six percent of the tickets sold by IATA members in the first quarter were cost-saving electronic tickets against 19 percent at the beginning of 2004.

The association, which groups 275 airlines, is aiming for a 40 percent take-up of "e-ticketing" this year and complete paperless ticketing by the end of 2007.

Electronic ticketing is estimated to cost one-tenth of the traditional paper slip, potentially saving airlines up to three billion dollars a year, according to IATA.

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