"The deterioration in traffic is alarmingly fast-paced and widespread," says ATA director general and CEO Giovanni Bisignani. "Even the good news that the oil price has fallen to half its July peak is not enough to offset the impact of the drop in demand. At this rate, losses may be even deeper than our forecast of $5.2 billion for this year."

The IATA reports the freight declines have slowed year-to-date growth to 0.1%, with all regions except the Middle East and Africa reporting negative results. It says Asia Pacific carriers, the largest players in the market, suffered the most serious drop at 10.6%, while European and North American carriers, which had seen flat growth through August, saw cargo traffic fall 6.8% and 6%, respectively.

"The industry crisis is deepening - along with the crisis in the global economy," observes Bisignani. "Airlines, like all other businesses, are facing enormous challenges. But unlike other companies, they are denied some basic commercial freedoms such as access to markets and to global capital that could help them manage their business in this difficult time."

He notes that the web of 3,500 bilateral air service agreements that govern international air transport denies market access except in rare cases. In addition, he says the ownership clauses in these agreements preclude mergers across borders.

"Look at what the banking industry is doing," he says. "They are taking government handouts. They are accessing global capital. And we have seen mergers without anybody asking to see the investors' passports. Airlines are not asking for handouts. But today's crisis highlights the need for airlines to be able to run their businesses like normal global businesses."

In response to the deteriorating conditions, IATA has taken steps to facilitate a discussion among 15 major governments on the future regulatory structure of international air transport. The organization circulated a paper examining solutions within the bilateral system that could be quickly implemented to expand opportunities for access to markets and global capital.

"I hope that the Agenda for Freedom Summit will conclude as a successful discussion that sparks a process of change by governments," says Bisignani. "We are not asking for anything other than the basic freedoms to do business that other industries take for granted."

Instant Insights /

Air Freight Sees Steepest Decline Since Dot-Com Crisis

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