Mumbai: According to a forecast by the International Air Transport Association (IATA), the international aviation industry seems to be heading in for some inclement weather with industry wide losses forecast at $2.3 billion in 2008.     

The apex global body of the airlines operators, the IATA has revised downwards its industry financial forecast for 2008, recalculating losses at $2.3 billion. The previous forecast predicted a profit of $4.5 billion as per IATA's announcement in March this year, which calculated the numbers basis an average oil price of $86 per barrel. This represents a negative swing of $6.8 billion, and the revised forecast anticipates losses of $2.3 billion using a consensus price of oil at $106.5 per barrel. 

Speaking at IATA's 64th annual general meeting and World Air Transport Summit, at Istanbul, Turkey, Giovanni Bisignani, IATA director general, said, ''For every dollar that the price of fuel increases, our costs go up by $1.6 billion,'' said Giovanni Bisignani, IATA director general.

Bisignani said, "We also need to take a reality check. Despite the consensus of experts on the oil price, today's oil prices make the $2.3 billion loss look optimistic. For every dollar that the oil price increases, we add $1.6 billion to costs. If we see the price at $135 for the rest of the year, losses could be $6.1 billion.''

Based on oil at $106.5 per barrel IATA says the aviation industry's total fuel bill in 2008 is expected to be $176 billion, accounting for 34 per cent of operating costs. This is $40 billion more than the 2006 bill which was $136 billion (29 per cent of operating costs).  In 2002, the bill was $40 billion, or 13 per cent of costs.

He said that oil skyrocketing above $130 per barrel had brought aviation into uncharted territory. "Add in the weakening global economy and this is yet another perfect storm," Bisignani said. The situation has changed dramatically in recent weeks, he said, adding that $130 per barrel oil is reshaping the industry.

In a statement from Istanbul, leaders of the world's airlines unanimously agreed to a resolution calling for governments, airports and labour to take immediate action to help the industry survive the growing financial crisis. The resolution was made at the International Air Transport Association's (IATA) 64th Annual General Meeting and World Air Transport Summit. 

''Extraordinary times call for extraordinary measures. Airlines are an engine for global prosperity and failure amongst them would send shockwaves throughout the world economy,'' said IATA Chairman and TAP Portugal CEO Fernando Pinto.

The resolution comes after a recent spike in fuel prices that has led to two-dozen airlines ceasing operations or filing for bankruptcy.  ''Many more will not survive,'' Pinto said.

The declaration made six specific calls to action:

• Governments must eliminate archaic rules that prevent airlines from restructuring across borders.
• In view of existing fees and charges, governments must refrain from imposing multiple and additional punitive taxes and other measures that will only deepen the crisis.
• State service providers must invest to modernise air transport infrastructure urgently, eliminating wasteful fuel consumption and emissions.
• Business partners, in particular monopoly service providers, must become as efficient as airlines are now.  If not, regulators must restrain their appetite with tougher regulation.
• Labour unions must refrain from making irresponsible claims and join the effort to secure jobs in aviation and indeed in other industries.
• In the interest of the global economy and the flying public, we urge authorities to enforce the integrity of markets so that the cost of energy reflects its true value.

''The airline industry is sending a clear message to governments, partners and labour. We are in crisis. Governments, labour and our business partners must understand this. And they must act,'' said Bisignani.

World carriers had returned to a net profit in 2007, for the first time in seven years. The global airline industry had posted a net profit of $5.6 billion last year, the first profit since 2000.

Bisignani said that over the next 12 months the industry could face $99 billion of extra costs from oil, and that 24 airlines had already collapsed into bankruptcy in the last six months. "This is an extraordinary crisis with the potential to re-shape the industry with impacts throughout the global economy," said Bisignani. "Governments, industry partners and labour must deliver change."

He called on governments to end the present system of 3,500 bilateral treaties that govern international aviation and prevent global consolidation. Airlines should be free to innovate, compete, grow, become financially healthy or even disappear, he said.

Bisignani also warned airline unions that jobs would disappear, unless costs were reduced.