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Fuel costs to negate airlines' traffic gains

By The Associated Press

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The association's director general, Giovanni Bisignani, said it had predicted a profit of $2.4 billion in 2004, the first annual profit since 2002, but the sudden jump in the price of oil will spoil the gains.

Airlines have collectively lost $24 billion since 2001 due to terrorism, wars and international health scares.

The association, which has most of the world's airlines as its members, said international passenger traffic for the first eight months of 2004 rose by 18.7 percent and cargo by 14.2 percent.

Last year, traffic was down significantly due to the SARS health crisis.

Bisignani acknowledged there is overcapacity in aviation partly responsible for the weak results. But he said government-owned airports and navigation services have not done their part to reduce costs and share the burden of aviation's troubles.

He also called on governments to adopt more liberal policies to allow airline competition and consolidation.

Bisignani said that barring crises, the best airlines have profit margins of 4 to 5 percent and aerospace manufacturers have margins of 10 to 12 percent, while airports and air-navigation services earn profit margins of 20 to 30 percent.

Copyright © 2004 The Seattle Times Company

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