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Giovanni Bisignani, Iata

Cointrin Airport, Geneva

Geneva, Switzerland (GenevaLunch) – The world’s airlines are expected to lose $5.6 billion in 2010, nearly twice earlier forecasts of $3.8b. The losses will come on the heels of an “Annus Horribilis” in 2009 where losses will likely be $11b for the industry worldwide, IATA (International Air and Transport Association) announced Tuesday 15 December. Between 2000 and 2009 airlines lost $49.1b, a Decennis Horribilis, according to Giovanni Bisignani, the industry group’s director general and CEO.

Bisignani, at the group’s annual press conference in Geneva, pleaded for less government regulation and a more competitive environment to ensure that the industry does not suffer another decade with this level of losses. “Government regulation is keeping the airline industry financially crippled,” he noted. “It is 30 percent cheaper to fly today than a decade ago. This is a very competitive industry but governments still refuse to let airlines operate competititively.”

British government worst tax offender for airlines

He came down hard on the British government in particular, saying that taxes rob the industry of the money it needs to invest in new technology, citing a $1.3 trillion commitment by the industry to buy new aircraft over the next few years. “The UK is the worst tax offender – raising its air passenger duty to collect £2.7 billion,” he said. “The government admits it’s just a tax to pay bankers’ bonuses.”

But he also warned unions to prepare for a rough ride at a time when airlines are struggling to survive, in answer to a question about British Airways. BA’s staff have voted overwhelmingly to strike for 12 days during the Christmas holidays. He would not comment on one airline, saying these are management decisions, but more generally, he said, “Everybody in the industry must understand that in difficult moments you have to fasten your seatbelt and prepare for turbulence.”

Smaller airlines “fragile”, travel costs likely to stay low

Bisignani does not expect major bankruptcies in coming months but he and Iata’s economist Brian Pearce say that smaller airlines are fragile.

“We had to terminate 30 airlines, simply because they could not pay the bills,” Bisignani says, “and 14 of them have disappeared. Poor yields are driving industry losses, not lower traffic: down 12 percent for passenger traffic, and 15 percent for cargo. It’s not a problem of passengers but of yield. And with two years of low travel costs,  consumers and corporate travel buyers will expect travel to remain cheap.”