The airline industry expects to lose a total of $6 billion in 2005. The International Air Transport Association (IATA), which represents almost all air carriers around the world, is looking for a little help from the government.
Fuel prices have increased almost 90% over the last three years, and have had a huge effect on the losses airlines have seen. The IATA is looking for governments to lower taxes on tickets and cut down restrictions.
The director general of the International Air Transport Association, Giovanni Bisignani, told reporters on Tuesday that taxes and surcharges imposed by local and national governments are also hurting air carriers. “We are not looking for assistance, we are not looking for subsidies,” he said. “We are looking for the government to play their role. Taxation – do you think that it is fair 26 percent on a $200 ticket in the United States, that we are taxed more than alcohol and tobacco? Do you think it is reasonable that we pay $5.6 billion for security?”
The association is also fighting a French-German proposal to tax air tickets to aid the developing world.
“European plans to raise $7.8 billion for development assistance by taxing air transport is about the dumbest possible way to help the developing world,” said Bisignani.
The World Trade Center attacks certainly did nothing good for the airline business except for airlines boosting their security measures. 2004 was deemed the safest year for airline travel.
“After 9/11, on the basis of decreased traffic activity, rates across the board, all over the place – air traffic controls, airports, went through the roof. ‘Hey, we’ve got less activity, we better [raise] prices so we don’t have to cut anything.’ Well, you know what? Now we’re back up to those [pre-9/11 air traffic] levels and we’re not seeing a corresponding decrease,” said Robert Milton, chairman of IATA’s board of governors.
This is all being discussed at a two-day commercial aviation meeting in Tokyo, Japan. The biggest topics of the meeting are cost cutting and boosting efficiency while security and fuel costs continue to put huge dents in carriers’ funds.
Chris is a staff writer for Murdok. Visit Murdok for the latest ebusiness news.
