Executive Briefings

IATA Calls for IT Solutions to Airline Industry Crisis; Sees 'Deep Losses' Continuing Through 2008

Information technology holds the key to driving down costs and improving the general lot of the airline industry, according to Giovanni Bisignani, director general and chief executive officer of the International Air Transport Association (IATA). Speaking at a recent conference in Brussels, he claimed that IATA's "Simplifying the Business" program stands to save airlines $6.5bn annually. Innovations include 100-percent electronic ticketing, which alone will save the industry an estimated $3bn. Other efforts center on more self-service options for passengers, including self-tagging of baggage, automated document checks, self-boarding and kiosks for resolving service problems. Bisignani also called on governments to employ IT as a means of improving security, with a particular focus on passenger convenience. Too often, he said, "we get more hassle than value for the $30bn that airlines and their passengers have paid in the last seven years." The IATA-led "Simplifying Passenger Travel" project will result in more effective security measures, he claimed.

Even so, IATA continues to issue negative outlooks for the rest of this year. In June, it projected industry losses of $2.3bn, down sharply from the $4.5bn in profit forecasted back in March. And the final tallies are likely to be much worse, given that the June estimate was based on crude oil at $106 per barrel. One month after that, oil prices were breaking the $140 per barrel mark. "For every dollar that the price of fuel increases, our costs go up by $1.6bn," said Bisignani, addressing IATA's annual meeting in Istanbul, Turkey. With oil at $130 per barrel, industry losses could be $6.1bn, he said, adding that the record high "has brought us into uncharted territory. Add in the weakening global economy and this is yet another perfect storm." He called for cooperation by government, industry partners and labor to address the problem. While the airline industry has improved its fuel efficiency by 19 percent over the last six years, "there is no fat left," he said. "To survive this crisis, even more massive changes will be needed quickly."

Visit www.iata.org

Information technology holds the key to driving down costs and improving the general lot of the airline industry, according to Giovanni Bisignani, director general and chief executive officer of the International Air Transport Association (IATA). Speaking at a recent conference in Brussels, he claimed that IATA's "Simplifying the Business" program stands to save airlines $6.5bn annually. Innovations include 100-percent electronic ticketing, which alone will save the industry an estimated $3bn. Other efforts center on more self-service options for passengers, including self-tagging of baggage, automated document checks, self-boarding and kiosks for resolving service problems. Bisignani also called on governments to employ IT as a means of improving security, with a particular focus on passenger convenience. Too often, he said, "we get more hassle than value for the $30bn that airlines and their passengers have paid in the last seven years." The IATA-led "Simplifying Passenger Travel" project will result in more effective security measures, he claimed.

Even so, IATA continues to issue negative outlooks for the rest of this year. In June, it projected industry losses of $2.3bn, down sharply from the $4.5bn in profit forecasted back in March. And the final tallies are likely to be much worse, given that the June estimate was based on crude oil at $106 per barrel. One month after that, oil prices were breaking the $140 per barrel mark. "For every dollar that the price of fuel increases, our costs go up by $1.6bn," said Bisignani, addressing IATA's annual meeting in Istanbul, Turkey. With oil at $130 per barrel, industry losses could be $6.1bn, he said, adding that the record high "has brought us into uncharted territory. Add in the weakening global economy and this is yet another perfect storm." He called for cooperation by government, industry partners and labor to address the problem. While the airline industry has improved its fuel efficiency by 19 percent over the last six years, "there is no fat left," he said. "To survive this crisis, even more massive changes will be needed quickly."

Visit www.iata.org