JEANNIOT SEES RENEWED OPTIMISM IN AIR TRAFFIC FORECASTS

"The average annual world growth rates for the years 2000 - 2004, of 5.6 percent for international passengers and 6.7 percent for freight, are the most optimistic forecasts made by the IATA airlines for 3 years - and that renewed optimism is fuelled in large part by a new positive outlook for Asia," said IATA Director General Pierre J. Jeanniot at a press conference in Singapore, 4 October.*

"During the first seven months of this year, IATA international passenger traffic worldwide has grown by 8.6 percent, and freight by 11.8 percent," continued Jeanniot, "But the corresponding figures for IATA Members registered in the Far East have been 11 percent in passenger traffic and no less than 16 percent in freight traffic."

The Director General remarked that it remains to be seen whether that sort of growth is going to be converted into increased profitability. He said that the Europe-Far East and Within Far East services recovered well from the recession at the beginning of the 1990s, but latterly have been hit by increased fuel prices.

"Fuel is currently some 18 percent of airlines' operating costs, up from 12 percent only two years ago and this, coupled with continued yield erosion, means that airlines together are unlikely to make much more than USD 2 billion net profit on their international scheduled services in the year 2000, on revenues of USD 156 billion"

"Distribution remains the largest single source of airline costs, in a normal year. And airlines are increasingly taking steps to encourage use of the Internet to sell their products. Our latest Corporate Air Travel Survey shows that use of this channel has increased from 5-10 percent of business travellers in 1997 (depending on the region in which they live), to 20-40 percent in the year 2000."

Jeanniot concluded, "The fundamental over-optimism and many of the structural economic defects which contributed to the Asian down-turn have now been remedied. I see much more robust economies and, for the most part, robust carriers in this region."