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World's airlines to gather in Tokyo

PROFIT SEARCH With airline companies losing money despite carrying more passengers more safely than ever, moneymaking strategies have been elusive


The world's airlines, which are carrying more and more passengers and losing more and more money, hold a summit in Tokyo this week looking for ways to turn a rise in air passengers into profits.

The International Air Transport Association (IATA), which represents 95 percent of air traffic, will call on governments to make air travel more efficient and less costly for the industry.

At the start of the two-day meet today, the association is expected to say that the aviation industry will lose even more this year than the present forecast of US$5.5 billion, IATA director general Giovanni Bisignani said.

Last year, the airlines lost US$4.8 billion.

But at the same time, IATA has seen the number of passengers around the world rise by 8.7 percent in the first four months of this year.

"The situation is very difficult," Bisignani said. "The biggest challenge for the airlines is how to convert the traffic growth into profitability."

The 700 delegates at the Tokyo air summit represent 265 companies and will discuss ways to cut back their costs, which have taken off as the price of oil remains high.

IATA estimates that every dollar rise on a barrel of oil means a further loss of one billion dollars to the world aviation industry.

With long-term question marks remaining over fuel prices, IATA last year launched a major project to slash costs, largely by embracing technology.

It plans to replace paper tickets completely with electronic ones by 2007 -- a measure alone it estimates will save US$3 billion a year -- and to develop a baggage identification system based on radio frequency and boarding passes using barcodes.

Last year, air companies also saved US$1 billion in fuel by improving efficiency in their routes.

IATA highlights that the industry has taken measures to improve itself for passengers.

Last year saw the lowest number of accidents in aviation history and in the past 10 years airplanes have reduced noise by 75 percent and pollution emissions by 70 percent, according to the association.

"The airlines have done a lot. But we are not very pleased with the governments. In many parts of the world air traffic is inefficient," Bisignani said.

He said the lack of a "single sky" in Europe, with airspace instead being divided up between nations, costs the industry US$4.4 billion a year in air traffic complications and delays.

Four new rules to integrate European skies came into effect in March 2004 but no date has been set to put a single sky into practice.

"The governments have deregulated our industry, but at the same time they have still to deregulate monopoly suppliers," the IATA chief said of airports and air traffic controls.

"The airlines will soon start receiving the Airbus A380 or the Boeing 787, but the rules of the game are still the rules we had when we were flying the DC3," he said.

"We see too many inefficiencies in the system. We the customers are not ready anymore to pay for the inefficiencies."

Bisignani said the meeting will also discuss the push to privatize airports and air navigation systems.

"Privatization is successful only if we see improvement in the quality of service and if it brings lower costs. If not, it makes no sense. We would move from a public monopoly to a private monopoly?" he said.

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