IATA : 'Airlines can no longer pay for airport monopolistic inefficiency'

The International Air Transport Association (IATA) called for a new partnership between airports and airlines based on increased transparency.

The call came as Giovanni Bisignani, IATA Director General and CEO addressed the ACI World Assembly in Tokyo Japan. "If one of the partners in a partnership is losing his shirt while the other is counting his money, it is no longer a partnership!" declared Bisignani.

Citing the disparity between the returns of airlines and airports, Bisignani called for a structural change in the partnership. He asked airport managements to explain "what you are doing to make yourselves more efficient; to reduce your costs and your charges to airlines while at the same time improving the services you offer."

Competition means ever lower prices for consumers and airlines can only survive through cost efficiencies. Airlines are paying over US$15 billion to airports and air traffic service providers annually for their international services alone. Rather than decreasing, this is increasing and now accounts for nearly 10% of airline operating costs with no relief in sight. "I don't accept the pricing policies of our suppliers who basically operate as monopolies. Airlines and their customers cannot pay for airport inefficiencies."

Bisignani called on airports to join in a new partnership based on transparency and value for money. IATA is benchmarking airports to highlight disparities between charges, the costs of providing facilities and services and airport profit targets.

"We will be challenging service levels, and demanding greater attention from airports and ATS shareholders, to the need for more efficient management and more value for money for airlines and their customers;" concluded Bisignani.

NOTES

· Airline Business, , in a survey covering 2000 and 2001, showed that the operating margins of the different industry sectors were as follows: 

- Airports 27.6% 

- Selected ATS providers 23.4% 

- Top CRS's 14.7% 

- Major manufacturers 11.8% 

- 4.8% for the top 150 airlines.

· The latest ACI Airport Economic Survey in the Autumn of 2002, indicated that airports recorded earnings before interest, taxes, depreciation and amortisation of 30% on their total revenues.

· The most recent report of the Transport Research Laboratory on airport performance indicators lists operating profits for some airports that are truly amazing, to say the least: 

- Auckland 57%

- South African Airports 50%

- London-Heathrow 41%,

- Frankfurt 32%

· Globally airlines lost USD 18 billion in 2001 - 12 billion on international services and 6 billion on domestic services.

· The outlook for 2002 anticipates losses of USD 5 billion on international scheduled traffic. The US domestic market is expected to show a loss of at least USD 7 billion.

· Global losses in 2002 are therefore expected to be USD 12 billion.