Watching global airlines battle adversity has become the norm for Giovanni Bisignani, the International Air Transport Association's chief executive officer since mid-2002.
He witnessed carriers struggle in the economic slowdown after the terrorist attacks on Sept. 11, 2001, then endure slumping air traffic after the 2003 Iraq war and SARS outbreak.
Fuel expenses became a major concern as oil prices exceeded $147 (U.S.) a barrel in July, 2008. Airlines breathed a sigh of relief when oil markets cooled off in the fall of 2008, but fuel has again emerged as an escalating cost with crude prices surging to lofty levels in recent months.
Mr. Bisignani said there is uncertainty over whether travel demand, which picked up after the recession in 2009, will stay healthy amid soaring airfares. Load factors, or the proportion of seats filled by paying customers, are starting to show signs of weakening, notably as budget-minded consumers in economy class begin balking at high ticket prices.
He said the difference now versus 2008 is that the economy is on better footing, although the devastating earthquake in Japan has disrupted that country's aviation growth in the short term.
In March, IATA chopped its 2011 profit forecast for the global airline sector to $8.6-billion from $9.1-billion, which was the estimate issued last December. But if oil prices climb to the record highs of 2008, many airlines that expected to be profitable this year will likely fall into red ink, industry analysts say.
With airlines dogged by volatile oil markets, "uncertainty is what is creating the biggest problem today," Mr. Bisignani said in an interview. Longer term, he sees potential in new jets using sustainable biofuels on commercial flights, perhaps on a small scale by 2020.
IATA represents about 230 international carriers that account for 93 per cent of scheduled global air traffic.
Mr. Bisignani, 64, will be stepping down as IATA CEO shortly after the group's June annual meeting in Singapore. Tony Tyler, CEO at Hong Kong-based Cathay Pacific Airways Ltd., will become IATA's new head on July 1, though Mr. Bisignani will stay around for a transition phase before he departs in October.
Brent Jang