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Mon, Dec 20, 2004 - Page 12 News List

Airlines look at ways to cut costs and save industry


The world's major airlines could save billions of dollars if they follow the advice offered by the top industry body this week on how to cut fuel consumption and costs linked to delivering tickets.

"Fuel is the enemy this year that will steal our return to profitability," the International Air Transport Association's (IATA) director general Giovanni Bisignani told reporters.

As the price of a barrel of oil soared above US$40 this year, the combined fuel bill for the top carriers climbed to US$62 billion -- about US$15 billion more than last year, IATA said.

As a result, the companies are due to suffer losses of about US$4.8 billion this year, despite a 14 percent rise in passenger volume.

IATA, however, hopes that its members will return to profit in the coming 12 months provided that the price of oil falls to US$36 a barrel.

Airliners have already managed to save US$1.1 billion this year by negotiating with governments, notably in Iraq, China and Mexico, to make flights more direct to reduce the duration of the journey.

IATA companies, which exclude low cost fliers such as Easyjet and Ryanair, would save a total US$2.7 billion a year for every one minute that is cut off the length of a route, according to IATA.

More direct routes could, for example, reduce by half-an-hour flights between Hong Kong and Europe, it said.

Carriers should also better calculate the amount of fuel needed for each voyage. If an airplane carries a superfluous five tonnes of oil between Frankfurt and New York it would eat up an extra 1.3 tonnes of oil, said IATA's vice-president Guenther Matschnigg.

In addition, if a plane is washed regularly it reduces air friction, which in turn saves 12 tonnes of oil per year, per aircraft, he said.

Confronted with stiff competition from the low-price carriers, which sell tickets directly over the Internet, IATA also suggested making electronic tickets the norm instead of traditional hard copies.

An electronic ticket costs US$1 to produce compared with US$10 for the regular print-out variety.

At present, 17 percent of tickets sold by IATA companies are electronic, but the industry body wants this ratio to rise to 40 percent by next year and 100 percent by 2007.

This would save the carriers some US$3 billion per year, said Tom Murphy, another IATA vice president.

Another cost saver is the "self-service" check-in, which has already begun to pop up in airports such as Amsterdam and reduces passenger expenses by US$3.5 per person as well as shortening the length of time the process takes to one minute from three.

While some airlines have launched self-service check-in machines, IATA is exploring how to establish basic machines that all passengers for any airline can use.

As a final economizing measure, the industry association proposed generalizing the bar-codes on boarding passes -- a practice that is already carried out in the US -- and identifying luggage by using a radio-wave device.

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