Aviation losses at $2.3 billion in 2008: IATA

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. 

Giovanni Bisignani 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.