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Efficiency focus for 2007
Don’t expect a bigger revenue growth in 2007, the International Air Transport Association (IATA) is projecting in its yearly outlook just released in Geneva.
“The focus for 2007 is efficiency,” said Giovanni Bisignani, IATA’s Director General and CEO.
“Slower traffic growth rates and a less buoyant global economy will impact revenue growth. Industry-wide we expect revenue growth to slow from 8.0% in 2006 to 4.5% in 2007.
“While lower oil prices are a welcome relief, they remain around US$60/barrel—more than double the price in 2000.
“Bottom line improvement depends on achieving further efficiencies across the board. “Airlines have reduced non-fuel unit costs by an average of 3.5% per year over the last five years.
“It is time for our industry partners across the value chain—including airports and air navigation service providers—to deliver similar results,” added Bisignani.
IATA said 2006 traffic figures showed a steady, more profitable growth for the airline industry.
Global passenger growth slowed from the 7.6% recorded in 2005 to 5.9% in 2006. While the cargo growth rate increased from 3.2% in 2005 to 4.6% in 2006, it remains below the historical growth trend of 5.6%.
Average passenger load factors in 2006 rose to a record high of 76.0%, up from 75.1% in 2005.
“The lesson for 2006 is that pursuing profitable growth pays off,” said Bisignani. “While passenger growth slowed, the bottom line improved.
“The industry showed an estimated operating profit of US$10.2 billion for 2006 while net losses were reduced to a projected US$500 million.
“Cost reduction, improved efficiencies and careful capacity management have positioned the industry to achieve a projected net profit of US$2.5 billion in 2007.”
Virgin goes Embraer
Matching seat capacity to passenger demand is a major factor that moved low fare operator Virgin Blue to order a fleet of the Brazilian manufactured Embraer jets.
In a November 2006 announcement, both Embraer and the Australian-based airline said the deal would see Virgin Blue buying three Embraer 170 aircraft and 11 Embraer 190 jets. The purchase includes the option of six more jets.
“This new jet will enhance our ability to serve the corporate market by more accurately matching seat capacity and frequency to passenger demand,” said Brett Godfrey, chief executive of Virgin Blue.
“We believe the Embraer E-Jet family will do that, providing us with a family of jets with large capabilities which will enable us to provide the right-sized aircraft not only for specific routes, but for specific days and even particular times of the day and night.”
Members of ASPA, the Association of South Pacific Airlines, were treated to a demo flight of an Embraer 190 jet when it flew into Nadi last November. The aircraft was on a demonstration flight around the world and its stopover in Fiji was timed to coincide with ASPA’s two-day conference at Denarau’s Sofitel Resort.
“We are delighted with Virgin Blue’s selection,” said Frederico Fleury Curado, Embraer’s Executive Vice President (Airline Market).
“It is particularly satisfying to know that our technologically advanced and fuel-efficient E-Jets fit the bill for this innovative and successful carrier strategy.”
Press reports in New Zealand last month said this fleet of E-Jets will be initially used by Virgin Blue to service its domestic Australian routes. Plans to use them in New Zealand and other destinations in the South Pacific have yet to be finalised.
Headquartered in São José dos Campos, Embraer said its firm order backlog as of September 2006 had totalled US$13.3 billion.
Drysdale completes stint
Air Pacific’s former chief executive Andrew Drysdale finishes as regional vice president Asia/Pacific for the International Air Transport Association (IATA) this May.
He was the first IATA vice president for the region when he was appointed in 2002.
The Fiji-born airline executive joined IATA after managing a domestic airline in Australia, a job he had secured after successfully managing Air Pacific for several years.
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