Giovanni Bisignani Fuel Quotations

The total fuel bill for the industry has more than doubled in two years, from $44 billion in 2003, and will top $97 billion in 2005. With a total industry turnover in the range of $400 billion a year, jet fuel will make up 25 percent of our total costs.

Airlines will spend $34 billion more for fuel this year than last, and about $1.4 billion of that will make its way to the bottom line. That will drive losses to $7.4 billion for 2005.

Oil remains the wild card for industry profitability. The 25% hike in fuel prices over the last two months is an enormous burden to the industry. However, the S$ 1.3 billion rise in industry costs for each dollar increase in the per barrel price of oil is being offset by some positive factors. Industry hedging levels are 50%. Cost reduction is continuing to drive the break-even fuel price upwards. And the US domestic yield rose 12.4% in February.

Oil remains the single-biggest challenge for airline profitability. Strong demand gives little hope of significantly reduced prices this year. What is disappointing is the response of the oil industry. Instead of expanding refinery capacity, the oil companies plan to return a quarter of a trillion dollars to investors over the next two years. Airlines alone have contributed $14 billion to this windfall profit. It is time that governments stepped in to encourage investment in new refinery capacity along with research into alternative fuel sources.

The first priority of all concerned was maintaining operations at Heathrow with 35 percent less fuel supply.

The fuel crisis at Heathrow is unprecedented. Today's agreement is a pragmatic solution to a very difficult, complex and unique situation. IATA will continue to closely monitor the situation. The next hurdle will be accommodating summer schedules that begin on 31 March. Simultaneously IATA will undertake to develop a global standard for handling future supply crises.

Cost reduction remains critical. All industry partners and stakeholders will have to sustain their focus on fuel efficiency and attack costs. While we have made some good progress, the road ahead is long. Far too many airport monopolies do not understand the need for efficiency and too many governments are shirking their responsibility to regulate where commercial discipline is absent.

Moreover, the impact of Hurricane Katrina on fuel supplies and refinery capacity will only ensure that relief will not come soon.