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Istanbul: The International Air Transport Association's (IATA) 34th Annual General Meeting and World Air Transport Summit is being held in Istanbul from June 1-3 in the backdrop of challenging times.
The global aviation industry faces a decline in profitability brought on by surging fuel prices and is under pressure to cut carbon emissions. But there is reason to cheer as the global aviation body announced a 100 per cent transition to e-ticketing beginning on Sunday.
The airline industry managed to post an estimated $5.6 billion profit last year, but with oil prices surging to $130 a barrel, the focus is on trimming operational costs and enhancing labour productivity.
Beginning June 1, the world's leading airlines have switched to e-ticketing, which translates into major cost savings in terms of paper.
Over the next two days, 500 aviation experts will discuss fuel prices, e-ticketing, carbon emissions and new management initiatives intended to help the aviation cope with the challenge of rising costs.
On Monday, the annual general meeting formally opens with the keynote State of the Industry address by Giovanni Bisignani, Director General and CEO of IATA. In a recent report, Bisignani pointed out that the aviation industry's profitability remained minimal in 2007 with US airlines suffering the most.
Despite cost savings such as the introduction of more economic routes and the elimination of jobs, the sector had a profit of only $5.6 billion on sales of $480 billion last year, and profit was forecast to fall this year to $4.5 billion, far below the margin of 7 per cent needed to cover investments, he said.
Increasing bill
The IATA forecasts the sector's bill for jet fuel will rise $35 billion this year to $159 billion, but that is optimistic as it is based on an oil price of $88 a barrel, Bisignani has said. With US airlines looking to consolidate and European airlines feeling the pinch of a soaring euro, it is interesting to note that airlines in the Middle East are in expansion mode.
Emirates posted its 20th consecutive year of net profit last year to a new record of Dh5.3 billion ($1.45 billion), up 54.1 per cent from the previous year. Its fuel hedging programme saved its Dh888 million ($242 million) in 2007-08.
Hedging against high fuel prices will on top of the agenda as the CEO Forum meets this afternoon with six industry captains - Jean-Cyril Spinetta of Air France, Tim Clark of Emirates, Tony Tyler of Cathay Pacific, Tom Enders of Airbus, Scott Carson of Boeing and Josef Ackermann of Deutsche Bank - discussing the main issues of aviation.
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