(MENAFN- Gulf Times) IATA director general and CEO Alexandre de Juniac has requested the Gulf Cooperation Council governments to help maintain the 'competitive advantage of their national airlines.
'One of the major successes of the GCC carriers is that they have been able to keep their costs very low. Their national strategies helped them do that. But newly imposed taxes and other charges may reduce the competitive advantage of the GCC carriers. It is simple, de Juniac said in an interview with Gulf Times here.
He said it was a fact that the GCC carriers catered to mostly connecting passengers. Their number of originating passengers is small compared to connecting passengers.
'By keeping costs low, the GCC carriers have been able to provide competitive fares to their passengers. There has been enormous growth in the GCC region. This is particularly because three big and rapidly growing Gulf carriers Qatar Airways, Emirates and Etihad are based in the region, said de Juniac, who took over as the chief of International Air Transport Association in September.
He said the increase in passenger fees in the region are 'risking the Gulf's amazing success story with $700mn in new costs.
The IATA chief urged governments around the world to 'innovate their thinking about the industry and the impact of high costs from taxes and charges.
Airlines are catalysts for economic development, he said. Airlines deliver about a third of goods traded internationally by value. They support some $2.7tn of GDP. And employment levels associated with aviation have reached almost 69mn.
'Global connectivity promotes prosperity. But charges and taxes dampen demand. And there is an economic cost to that. That is why IATA spends a lot of time fighting taxes and charges. And sometimes enlightened government policies are the result, de Juniac said.
He said expected higher oil prices would have the biggest impact on the industry's outlook for 2017. In 2016, oil prices averaged $44.6 for barrel (Brent) and this is forecast to increase to $55 next year.
This, he said, will push jet fuel prices from $52.1 (2016) to $64.9 in 2017. Fuel is expected to account for nearly 20% of the industry's cost structure in 2017, which however, will be significantly below the peak of 33.2% in 2012-2013.
De Juniac said the demand stimulus from lower oil prices will taper off in 2017, slowing traffic growth to 5.1% from 5.9% in 2016. Industry capacity expansion is also expected to slow to 5.6%, down from 6.2% in 2016. Capacity growth will still outstrip the increase in demand, thus lowering the global passenger load factor to 79.8% from 80.2% in 2016.
Congestion in the GCC airports is a problem on account of the region's 'growth and success, he said. A significant portion of the airspace in the region is currently reserved for the military.
'But I am sure the issue can be and will be resolved because aviation industry's growth is key to the region's development as is the case globally, said de Juniac, the former CEO of Air France KLM.
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