Britain's airline regime under attack

Airline industry attacks airport charges and taxes as it forecasts $9bn annual loss

BAA and the Civil Aviation Authority were named and shamed by the International Air Transport Association (Iata) for the second year running yesterday at the global airline industry's annual conference in Kuala Lumpur.

Against a backdrop of "economic meltdown" leaving airlines facing $9bn (£5.7bn) losses this year – twice the $4.7bn forecast by Iata as recently as March – the 86 per cent rise in charges for the use of Heathrow gave the UK a place on Iata's "wall of shame", alongside price increases in India, Ecuador and South Africa.

Giovanni Bisignani, the Iata director general, told delegates in the Malaysian capital: "Enough! There is no room for this nonsense in our future. When demand drops, suppliers cannot divide the same costs among fewer customers. The shape of everything must change. This includes the comfortable position of our happy monopoly suppliers."

Although the speed of decline is slowing and the freight market has steadied at about 23 per cent down, Iata sees few positive signs for the sector. Behind the massive losses predicted for 2009 is an estimated 15 per cent revenue drop of $80bn over the course of the year as demand falls – particularly for high-margin first and business-class tickets – and oil prices rise.

There is little optimism for a recovery in passenger numbers. High debt levels and low job security are keeping the brakes on consumer spending and business travel budgets remain slashed. In the first quarter, airlines have so far reported worse than expected losses of more than $3bn. Passenger numbers were down 10 per cent internationally and 8 per cent overall in the quarter, and Iata is anticipating further falls, forecasting an average decline of 8 per cent this year. Carriers are also still struggling to raise finance, despite a 5 per cent improvement industry-wide in the vital cash reserves – now at $70bn compared with total debt of $170bn – needed to cushion against falling revenues. "Optimists see growth by the end of the year but pessimists view this as a mirage and expect an L-shaped recovery," Mr Bisignani said. "I am a realist. I don't see facts to support optimism. Our industry is in survival mode."

Airports and air traffic controllers are not the only target for Iata's criticism. Governments are neither doing enough to support airlines' environmental efforts, nor responding fast enough in terms of regulatory change. Markets need to be liberalised and barriers to consolidation removed to allow the sector to function as a normal commercial industry. Progressive liberalisation would be a cheap and effective economic stimulus, creating 24 million new jobs globally and $490bn in economic activity, according to Iata estimates. "Governments must understand that the survival of the industry is at risk. They must deliver normal commercial freedoms urgently and effectively," Mr Bisignani said.

Next to the dire economic conditions, environmental concerns are top of the agenda. At the weekend, the Iata board passed a resolution for carbon neutral growth for the aviation industry by 2020. Emissions are already set to fall 7 per cent this year, although most of this is due to recessionary contraction. But governments are not providing the right incentives for research into biofuels, and are too fast to apply green taxes, says Iata.

The UK Government was singled out for raising the air passenger duty in April's Budget. "It is unacceptable that money collected from our responsible industry in the name of the environment is being used by an irresponsible government to pay inflated MP expense claims or bail out banks," Mr Bisignani said.

Iata's calls were echoed by member airlines. Christoph Franz, the chief executive of Swiss Air, said: "It is more and more clear that the industry is still deeply ill. The international regulatory framework is changing too slowly. We have asked for years and years to become a normal industry but we are not allowed. So we should not be surprised to see losses."

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Admin Assistant

£12000 - £15000 per annum: Recruitment Genius: An expanding Insurance Brokerag...

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Guru Careers: Pricing Analyst

£30 - 35k (DOE): Guru Careers: We are seeking a Pricing Analyst with experienc...

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Day In a Page

Revealed: Why Mohammed Emwazi chose the 'safe option' of fighting for Isis, rather than following his friends to al-Shabaab in Somalia

Why Mohammed Emwazi chose Isis

His friends were betrayed and killed by al-Shabaab
'The solution can never be to impassively watch on while desperate people drown'
An open letter to David Cameron: Building fortress Europe has had deadly results

Open letter to David Cameron

Building the walls of fortress Europe has had deadly results
Tory candidates' tweets not as 'spontaneous' as they seem - you don't say!

You don't say!

Tory candidates' election tweets not as 'spontaneous' as they appear
Mubi: Netflix for people who want to stop just watching trash

So what is Mubi?

Netflix for people who want to stop just watching trash all the time
The impossible job: how to follow Kevin Spacey?

The hardest job in theatre?

How to follow Kevin Spacey
Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

Armenian genocide and the 'good Turks'

To continue to deny the truth of this mass human cruelty is close to a criminal lie
Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

'Lou needed care, but what he got was ECT'

The truth about the singer's upbringing beyond
Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

This human tragedy has been brewing for years

EU states can't say they were not warned
Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

Women's sportswear

From tackling a marathon to a jog in the park, the right kit can help
Hillary Clinton's outfits will be as important as her policies in her presidential bid

Clinton's clothes

Like it or not, her outfits will be as important as her policies
NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders