The International Air Transport Association (IATA) called for a major resizing and reshaping of the entire air transport value chain as airlines battle the ongoing global economic crisis. Airlines are expected to post losses of $9 billion this year with an unprecedented 15 percent revenue drop that will see industry revenues shrink by $80 billion to $448 billion. “I am a realist and I don't see facts to support optimism. The industry is in survival mode. Whether this crisis is long or short, the world is changing. Travel budgets have been slashed and consumers will need to reduce their debt. It will not be business as usual in the post-crisis world. Governments, partners and airlines must use this crisis as an opportunity to build a stronger industry. That means resizing and reshaping,” said Giovanni Bisignani, IATA's director general and CEO in his State of the Industry address recently to 500 of the industry's top leaders gathered in Kuala Lumpur for the 65th IATA Annual General Meeting and World Air Transport Summit. IATA's Simplifying the Business program has given the industry a head start on cost cutting. In 2008, $4 billion in cost savings were achieved with 100 percent e-ticketing and the deployment of Common Use Self-Service (CUSS) kiosks. “This was only the beginning. We have our eyes set on another $10 billion in savings by improving baggage management, travel processes and with e-freight,” said Bisignani. He noted that the burden of change must be shared across the industry value chain. “Resizing and reshaping is not just a problem for airlines. Everyone in the value chain lives off our revenues. All must contribute to industry change,” he said. On labor, he said “we cannot reshape without flexibility. This is not the time for salary increases. To protect jobs, we must modernize work practices and we must all do more with less,” said Bisignani. On travel agents, he said “the clock cannot be turned back. To survive in the global online market, travel agents need to reshape services and business models to provide greater value that travelers are willing to pay for.” On monopoly suppliers, Bisignani said “every supplier-monopolies included-must reshape products and services to reduce their costs and ours. When demand drops, they cannot simply divide the same costs among fewer customers.” He further noted that aviation's emissions will fall by 7 percent in 2009 - 5 percent from the fall in demand and 2 percent as a direct result of the industry's united four-pillar strategy to address climate change. “Airlines have taken a monumental decision. Today we have committed to achieving carbon-neutral growth by 2020,” said Bisignani. Airlines have set three important sequential goals: (1) 1.5 percent annual improvement in fuel efficiency until 2020; (2) carbon-neutral growth in 2020 and (3) a 50 percent reduction in emissions by 2050. “We cannot achieve these ambitious targets alone. Governments must move from punitive taxation to actions that support reductions in CO2. That means establishing a global sectoral approach for aviation emissions under Kyoto 2 and supporting improvements in technology, operations and infrastructure, particularly the development of aviation biofuels and the implementation of important infrastructure projects such as a Single European Sky and NextGen in the US,” Bisignani said. __
