With passenger and cargo movement plunging drastically, officials call on governments to save the industry The International Air Transport Association (IATA) boss last week urged world governments to roll back taxes on airlines which face a tough year ahead due to the deepening of world economic recession. "Don't tax us to death in order to pay for investments in the banking industry," said IATA Chief Executive Giovanni Bisignani, citing the British government's plans to increase its air passenger duty and the Dutch government's departure tax. He said the tax burden on airlines increased by $6.9 billion in 2008 "even as governments delivered tax breaks to stimulate economic growth." Bisignani's plea was an attempt to warn against the danger that threatens the air transport business. A recent IATA report showed that world airlines' traffic for both passengers and cargo slumped sharply in January compared with a year earlier as global economic conditions deteriorated. Passenger traffic fell 5.6 per cent while air cargo shipments plunged 23.2 per cent. That was the fifth consecutive monthly drop in passenger traffic and the eighth straight monthly decline for cargo. "The industry is in a global crisis and we have not yet seen the bottom," said Bisignani. "Alarm bells are ringing everywhere." He said every region's carriers reported big drops in cargo and that only the Middle East had a gain in passenger traffic. The association said January's drops were greater than those recorded for December, when passenger traffic fell 4.6 per cent from the previous December and cargo dropped 22.6 per cent. Asian carriers led the decline in passenger demand in January with an 8.4 per cent drop, followed by North American carriers with a 6.2 per cent decline. European carriers were down 5.7 per cent, a sharper decrease than the 2.7 per cent fall in December "as European economies move into deep recession," IATA said. African carriers were down 2.6 per cent, it said. The Middle East was the only bright spot -- up 3.1 per cent. On the cargo side, Asia Pacific carriers had the biggest drop at 28.1 per cent. Africa was down 19.8 per cent, Latin America declined 17.2 per cent and the Middle East dropped 6.1 per cent. However, IATA Regional Vice President for Middle East and North Africa Majdi Sabri expected the airlines in the Middle East to be less affected by the global economic. He projected that the air traffic in the region would grow by 1 to 2 per cent in 2009, compared to 7 per cent in 2008 and 18 per cent in 2007. Middle East airlines have ordered over 1,000 airplanes in the past three years, scheduled to be delivered in the next 10 years. On the other hand, Airlines across the Middle East lost $100 million in 2008 due to high oil prices and the onset of the credit crunch, but the 'worst is yet to come', according to Sabri. "Following five years of double-digit traffic growth and investment in aircraft and infrastructure that has created 460,000 jobs and $17.5 billion in economic activity, the Middle East airline industry now faces an economic crisis of its own," he explained. One of the keys to the region's growth was its exposure to traffic in North America, Europe, and Asia, which have been hardest hit by the downturn. With recession taking a further bite out of demand this year, Middle East airlines will see traffic growth slow to a crawl, leading to losses of $200 million in the sector throughout the region, Sabri predicts.
