Oil remains the single-biggest challenge for airline profitability. Strong demand gives little hope of significantly reduced prices this year. What is disappointing is the response of the oil industry. Instead of expanding refinery capacity, the oil companies plan to return a quarter of a trillion dollars to investors over the next two years. Airlines alone have contributed 14 billion to this windfall profit. It is time that governments stepped in to encourage investment in new refinery capacity along with research into alternative fuel sources.
More Quotes from Giovanni Bisignani:
Freight and passenger traffic are forecast to grow in the 5 to 6 per cent range during the year but the industry is projected to record another loss of over US4 billion for 2006.Giovanni Bisignani
Efficiency and cost reduction are a matter of survival for airlines. Charles de Gaulle Airport is already the second most expensive airport in Europe. It should be focusing on cost decreases not increases. This short-sighted decision will have long-term effects on the competitive position of Paris as a major hub.
Giovanni Bisignani
The growth is there, the issue is how we can make this growth into a profitable industry. The solution is increasing efficiency of airlines, increasing the load factor and handling better capacity.
Giovanni Bisignani
The industry is returning to a more normal growth pattern after the shocks that began in 2001.
Giovanni Bisignani
We are filling the planes-and with high load factors-but there is a lot to do before the industry's balance sheet recovers. The industry faces several risks. The rising price of oil continues to kill our profitability. The airlines are managing capacity as carefully as they are managing costs. As the record aircraft orders of last year are delivered, matching capacity to demand will become even more critical. And Avian Flu is the wild card for 2006.
Giovanni Bisignani
Cost reduction remains critical. All industry partners and stakeholders will have to sustain their focus on fuel efficiency and attack costs. While we have made some good progress, the road ahead is long. Far too many airport monopolies do not understand the need for efficiency and too many governments are shirking their responsibility to regulate where commercial discipline is absent.
Giovanni Bisignani
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