IATA hears of Europe's exception from world airline industry boom

THE global airline industry is predicting a significant turnaround in its fortunes during 2010 after two dismal years.

The International Air Transport Association (IATA) said it now expects airlines to report a total profit of $2.5 billion (1.7bn) this year, a swing of more than $5bn from its forecast of a loss just three months ago.

Despite the optimistic outlook for the industry as a whole, the IATA warned the sector in Europe will continue to struggle with the effects of national debts and the volcanic ash cloud.

IATA chief executive Giovanni Bisignani said at its AGM that the global economy was improving quicker than anyone expected, boosting traffic and yields sharply.

The industry saw revenues drop by $80bn or 15 per cent in 2009, and IATA initially believed three years or more would be needed to recover.

Bisignani now expects "a strong rebound of air traffic".

Passenger traffic is forecast to grow by 7 per cent to a total of 2.4 billion passengers in 2010. The forecast for cargo growth was revised sharply upward, from 12 per cent in March to 18.5 per cent.

The level of first and business-class travellers is also back to pre-recession levels.

Europe, however, remained a weak spot, with the IATA anticipating a $2.8bn loss for airlines on the continent – worse than the $2.2bn previously predicted.

Slow growth, strikes at some airlines, the eurozone debt crisis and the volcanic ash cloud that caused major disruption this spring are hampering the recovery.

"Europe is lagging behind," confirmed Bisignani.

North American carriers, which sharply cut capacity amid the crisis, are expected to earn $1.9bn in 2010 – a turnaround from the previously predicted loss of $1.8bn, and the $2.7bn that carriers lost last year.

Asian airlines are expected to earn $2.2bn this year, powered by strong growth across the region.

The IATA predicted a total revenue for the industry this year of $545bn.

Bisignani used the AGM to speak out over government regulation, which he sees as hampering the industry's growth prospects, singling out Europe's persistent failure to create a single airspace.

"Ministers do not have the leadership to address such an issue," he said.

Lufthansa's chief executive Wolfgang Mayrhuber also said that the conclusion of an agreement on a single European sky would improve the environment as airlines would have to fly fewer detours and could reduce emissions by some 12 per cent.

Mayrhuber said : "If they want us to be greener, the biggest project is the single sky," he said.

He also called for the European Union to postpone an emission trading scheme that would impose new costs.