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No sign of recovery in global airline industry, experts say

THE world's airlines will collectively lose US$9 billion this year - nearly double previous projections - and face a slow recovery as the economic crisis saps air travel and cargo demand, an industry body warned yesterday.

The International Air Transport Association, which represents 230 airlines worldwide, increased its loss estimate from the US$4.7 billion it forecast in March, reflecting a "rapidly deteriorating revenue environment."

Although there have been signs of a bottoming out of the recession, IATA said the industry was severely hit in the first quarter with 50 major airlines reporting losses totalling more than US$3 billion. Weak consumer confidence, high business inventories and rising oil prices pose headwinds for future recovery, the association said during a two-day global aviation conference in Kuala Lumpur.

Revenues are expected to decline by US$80 billion - an unprecedented 15 percent from a year ago - to US$448 billion this year, and the weakness will persist into 2010, it said.

"There is no modern precedent for today's economic meltdown. The ground has shifted. Our industry has been shaken. This is the most difficult situation that the industry has faced," said IATA Chief Executive Giovanni Bisignani. The Geneva-based association also revised its estimated loss for last year to US$10.4 billion from US$8.5 billion previously.

It said passenger traffic for 2009 is expected to contract by 8 percent from a year ago to 2.06 billion travelers. Cargo demand will decline by 17 percent and 100,000 jobs worldwide are at risk, it said.

The association expects the industry's fuel bill to shrink by US$59 billion, or 36 percent, to US$106 billion this year, accounting for 23 percent of operating costs with an average oil price of US$56 a barrel. But crude oil prices have rallied in recent weeks, breaching the US$70 a barrel level on Friday on hopes of economic recovery.

Bisignani urged governments to avoid protectionist policies and reiterated his call for more liberalization such as the lifting of restrictions on routes and cooperation between airlines to bolster the global airline industry.

"It would be a cheap and effective stimulus ... Liberalizing key routes today would create 24 million jobs and US$490 billion in economic activity," he said.


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