$6.4 trillion of goods travel by air

There is no doubt that air transport is the backbone of any economy and upon which a continent or country must develop to actualise the gains therein.

The airline sector is the only one that promptly delivers goods to markets, connect people and foster opportunities for development through.

The sector, according to Tony Tyler, the director general of the International Air Transport Association (IATA), global airlines body would this year be responsible for over 35 percent of all world trade by value.

According to him, ‘$6.4 trillion of goods travel by air,’ adding that this year, the industry will safely and securely transport some 3 billion people and 48 million tonnes of cargo.

“This activity supports 3.5 percent of global Gross Domestic Product (GDP) equivalent to $2.2 trillion annually and transports around 35 percent of world trade by value, or around $6.4 trillion. We deliver goods to markets, connect people to business and reunite family and friends. And by bringing people of different cultures together, we foster opportunities for understanding and friendship.

But we are challenged in turning the great value that we create as an industry into consistent and sustainable earnings for ourselves and airline shareholders,” he said.

Tyler, who spoke at the Annual General Meeting, International Federation of Airline Pilots’ Associations (IFALPA), added that since 2003 airlines, generated about $5 trillion in revenues but had struggled to cover costs while the industry barely broke even with a net margin of only 0.1 percent.

“There’s no denying it—we work in a very challenging business. And everyone involved in the airline industry—and the value chain for that matter—must keep that in mind. Knowing that I am addressing you today, my members will want me to remind you that pilots are no exception,” he added.

He was however quick to say that so many changes have been brought into the system through hard work.

“But if you look back over the $5 trillion break-even decade, you will see change in every aspect of our business. That airlines are making even a small profit this year—with weak economies and jet fuel around $130 per barrel is evidence of the enormous improvements and efficiencies that have been achieved through hard work and sacrifice—including by pilots.

“We might all wish that we could sit back and enjoy a period of prosperity as a result. But with a 1.6% net profit margin that’s not the case. Airlines can and do go bust. We saw that with Malev, Spanair and others last year. The only way to ensure sustainable companies and employment is with constant improvements in productivity—and everybody needs to contribute—from those in the head office, to those who sell tickets, operate the check-in counters or fly and maintain the airplanes.”

Meanwhile, the Airline business confidence improved further in April according to the global airlines’ body quarterly of airline CFOs and heads of cargo.

The survey indicates that 73 percent of respondents expect an improvement in profitability over the next 12 months while the the improvement in outlook compared to January largely reflects the outcome of structural changes rather than an acceleration in global economic growth.

“The outlook for passenger and cargo demand was mostly unchanged in April compared to January, but respondents still anticipate an increase in traffic over the next 12 months.

“Yields are reported to have increased over the past 3 months compared to a year ago and the 12 month outlook is up on the January survey for both passenger and cargo.

Article accredited: Businessday