Air Transport World

Airlines down, IATA Inc. up.

A mandate to reduce dues continues to transform IATA from industry association into commercial service provider

The business meetings and seminars at IATA's 55th Annual General Meeting unmistakably focused more on internal, safety and Y2K matters than on commercial issues. Director General Pierre Jeanniot led off the first session with the downwardly arcing final results for 1998. Total revenues were off 2.1% from 1997 to $142.7 billion, traffic was up 2.2% on a capacity increase of 5.2%, yields decreased 4.2% but unit costs fell 5.7%. That produced net income of $3.1 billion, almost 40% lower than 1997. Jeanniot suggested carrier results were helped "to some degree" -- some might say "enormously"--by lower fuel and interest costs.

And, he warned, results might be "marginally worse" this year, though IATA members should still record their sixth straight year of net profit. "That has never happened before," he noted. Of course, with traffic declining where it had been strong and picking up where it had been weak, the components of this year's results remain a bit hazy.

But, Jeanniot suggested, the best way to ensure profits is for carriers to moderate capacity ambitions. He supported now-retired United Chairman/CEO Gerald Greenwald's plea that airlines stop customizing equipment and let manufacturers build standard units. In turn, those aircraft could be put into pools from which airlines could draw as needed, he said.

With results headed down, the pressure is ever greater to reduce association dues. They've been cut to $17.5 million this year, from $20 million in 1998. When IATA needs to fill the gap, it increasingly levies special assessments. Pay-as-you-go is considered more businesslike and equitable.

Accelerating the safety focus begun in 1995, IATA announced two initiatives: 1) A cooperative project with Flight Safety Foundation that will give members access to FSF research and analysis, and 2) establishment of operational quality standards for new members.

The FSF project requires a special assessment of $2,000 a year, approved without objection, for non-FSF members. …

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