‘Light on the horizon for aviation sector'

There was finally some good news for the global airline industry at the recently concluded Annual General Meeting of the International Air Transport Association (IATA) — that it is likely to post a profit of $2.5 billion in 2010.
In an interaction with leading Indian newspapers, including The Hindu Business Line, the IATA Director-General, Mr Giovanni Bisignani, shared his views on the airline industry in India, and spoke of the debt-ridden European economy and its implications for the global aviation sector.
Excerpts from the interaction:
On the current status of the global airlines industry:
This is an industry which is expected to make a $2.5-billion profit in 2010, operating at a 0.5 per cent margin. But, in order to survive last year, the industry had to raise $44 billion debt, so we have $217 billion in debt in total. This is not an industry that can live forever with shock in prices. The airline industry has similarities with Europe at present. Borrowing money, what has happened in Greece… there is a dead-end at a certain point. We have to build a different structure before we arrive at a dead end, not just for aviation, but for the financial system as a whole. You may ask what the similarities are between Europe and the airline industry. Well Europe was expanding its debt. There were more countries that were indebted. In airlines — there are over 1,000 airlines in the world, all expanding through debt.
Sometimes they vanish – 30 airlines were terminated in the last period. But capacity stays because of leasing companies.
Your views on India?
India could be an example for others. It took a bit of time. A country which is growing so fast and wants infrastructure badly has to have a regulator to discipline airlines and airports. There have been other airports that have shut down due to high charges. IATA has criticised India for high airport charges earlier. So, where does India stand – it has not made it to IATA's “Wall of Shame” for high airport charges this year at least…We had to be fair and give time. When we know that a regulator is starting to do its job, it would be incorrect for IATA to not consider this.
14/06/10 Mamuni Das/Business Line

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Categories: Indian Aviation- In General Jun 2010