IATA Warns Airlines about Rising Crisis

The increasing cost of airport infrastructure is creating risks to the global airline industry’s profitability and growth, according to the head of the International Air Transport Association (IATA), while adding that a crisis due to the inadequate infrastructure was brewing almost everywhere in the world.

IATA warns other airlines about the rising crisis on infrastructure costs.

“We are headed for a crisis... Infrastructure in general is not being built fast enough to meet growing demand,” Alexandre de Juniac, CEO of IATA, said in a conference on Monday ahead of the Singapore Airshow.

He stated that the airport privatization is among the major reasons driving cost increases. This is when the industry needs affordable infrastructure to accommodate capacity increases.

“Our members are very frustrated with the current state of privatized airports. By all means invite private sector expertise to bring commercial discipline and a customer service focus to airport management. But our view is that the ownership is best left in public hands,” said de Juniac.

Alexandre de Juniac also mentioned the proposed 14 billion pounds or $19.8 billion cost of a new runway at London’s Heathrow Airport and the development of a fifth terminal at Singapore’s Changi Airport as cases where it was crucial that expenses were kept under control.

“We must pay attention to these costs from the beginning,” added de Juniac. “We would like to avoid big projects in which we see overruns because the infrastructure is fantastic but it is very costly.”

According to de Juniac, Asia Pacific needs to make much faster improvement to address bottlenecks, and that some big cities such as Jakarta, Bangkok, and Manila are in desperate need of capacity developments.

Meanwhile, global airline profits are expected to increase to a combined $38.4 billion this year, according to the forecasts of IATA. However, the net profit margins were at 4.7 percent.

On the other hand, Alexandre de Juniac stated that the bosses of airlines are not yet complaining about the increase in the price of oil.

“There is a consensus this is an acceptable price,” de Juniac said to the reporters on the sidelines of the Singapore Airshow Aviation Leadership Summit. He also cited a range of $65 to $70 a barrel.

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