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Oil prices force airlines to become low-cost globally: IATA

Written by: Staff

Paris, June 5 (UNI) Aviation worldwide is en-route to becoming a low-cost industry.

''We have not landed as yet but the approach is near,'' said Mr Giovanni Bisignani, director general and CEO of the International Air Transport Association (IATA).

With crude oil prices hovering over 70 dollars a barrel, airlines globally are likely to pick up a fuel bill of 112 billion dollars this year, he said while opening the World Air Transport Summit (WATS).

This is up 21 billion dollars more than in 2005.

''Oil is the wild card. Prices are racing ahead of efficiency gains and robbing our profitability,'' said Mr Bisignani. Losses for 2006 will be slightly lower than last year's at three billion dollars, he added.

The IATA is an apex body of 265 airlines comprising 94 per cent of scheduled air traffic.

There are bright spots in airlines business though. Since 2001 labour productivity has improved 33 per cent, sales and distribution cost dropped 10 per cent and overall non-fuel reduced by 13 per cent.

The industry also moved the breakeven fuel price from 14 dollars per barrel to 50 dollars per barrel.

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