Airlines recovering strongly but still in red-IATA

Guest Writer

Airlines are recovering strongly from the crisis, as passengers, freight and pricing power return, the airline industry association IATA said, halving its forecast for a 2010 loss.With capacity for both passengers and cargo hitting record levels at the end of last year, all indicators are moving in the right direction, and the recovery is much better than expected, IATA Director-General Giovanni Bisignani said.The recovery, still leaving the industry deeply in the red, is good news for both the industry and the global economy as a whole, indicating that exports are reviving, he said.IATA estimates that 30% of world trade by value is moved by air freight.”We are moving in the right direction. The recovery is strong. But we are still at pre-crisis levels,” Bisignani told a news conference.IATA said airlines would lose $2.8 billion (SG$ 3.9 billion) this year, half the $5.6 billion loss it forecast in December.Passenger demand would rise by 5.6 percent in 2010 after falling 2.9 percent last year, while cargo demand would jump 12.0 percent after an 11.1 percent fall, IATA said in its updated financial forecast.But airlines may be suffering a structural shift in premium travel, with the number of passengers paying for first and business class tickets recovering at a slower rate than economy travel, IATA said.Performance varies strongly across regions, with Asia and Latin America driving the recovery.But it will take airlines 2-3 years to make up the losses from the crisis, Bisignani said.Another uncertainty is the price of fuel. IATA forecasts the price of oil will average $79 a barrel this year, an increase of $17 over 2009, driving fuel as a proportion of operating costs to 26 percent from 24 percent.

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