The (IATA) is seeing “serious downside risks” for its projection of a $3 billion profit for its members in 2012.
“The biggest and most immediate risk is the crisis in the Eurozone,” IATA Secretary General Tony Tyler told delegates at the group’s annual general assembly in Beijing. “If it evolves into a banking crisis we could face a continent-wide recession – dragging the rest of the world and our profits down.” IATA predicts $631 billion in revenues and a $3 billion profit in 2012, representing a margin of 0.5%. But a 1% shift in revenues could turn the profit into a $3 billion loss. IATA nonetheless kept its current guidance unchanged for the time being.
IATA also made clear its opposition to Europe’s emissions trading scheme (EU ETS). The ETS “is not a stepping stone on the way [to a global solution],” Tyler believes. “It is a polarizing obstacle that is preventing real progress.” In his view, the only real solution is a global agreement through the International Civil Aviation Organization (ICAO) at its 2013 assembly.
Roberto Kobeh, ICAO’s Secretary General, told the IATA delegates that market-based options have been analyzed and a report is to be presented to the ICAO council by the end of this month. But he cautions that “a lot of work still needs to be done before we report back to the assembly in 2013. All stakeholders have to cooperate – there is no way around it.”
Separately, Tyler announced a new initiative for airline distribution. The global distribution systems “have not been able to facilitate innovation like we have seen in other industries,” Tyler asserts. Therefore product innovations “cannot break free of product descriptions limited to booking classes such as F, C or Y and their derivatives.” IATA is working on new distribution standards that better enable airline differentiation. The foundation standard is to be defined this year.