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IATA boss warns against more taxes on airlines

The boss of IATA has urged governments against combining austerity measures with taxing airlines.

Director general and CEO Giovanni Bisignani made the plea as the organisation revealed a 10.5% rise in passenger traffic in September over the same month last year.

The rate of increase was described as “significantly stronger” than the 6.5% rate of growth recorded in August. By contrast the increase in freight flown was weaker, giving a mixed picture of the industry’s performance.

“The industry’s situation is volatile,” said Bisignani. “Passenger traffic represents about three quarters of the industry’s revenues. While September’s passenger growth is reassuring, the accelerating decline of air freight, including in Asia, is an early indicator of some turbulence ahead.”

He added: “Government actions can impact the sustainability of the recovery. Austerity measures will dampen demand. When combined with new or increased taxation, as we have seen in Germany and the UK, the challenges are even greater.

“Governments must understand that air transport is an economic catalyst. Last year, we saw that a 312 million euro departure tax in the Netherlands cost the Dutch economy 1.2 billion euro.

“Further taxing the industry makes no sense when the focus of governments should be on making the recovery sustainable.” His comments came ahead of the latest rise in Air Passenger Duty from Monday (November 1).

European carriers met an 8.4% increase in passenger demand in September with a 5.9% increase in capacity. The region’s carriers reported an average load factor of 82.6%. Europe is now 2% above pre-recession levels, according to IATA.

North American carriers saw traffic climb back to pre-recession – early 2008 – levels during the month with an 11.1% increase in passenger demand compared to the previous September. This outstripped a 7.2% capacity expansion. The region recorded the strongest passenger load factors at 84.1%.

Asia-Pacific carriers posted an 8.6% traffic increase over the previous September against a capacity increase of 6.9%.

“While the region led the recovery with an early surge in demand, growth in 2010 has been largely flat. Traffic in the region remains 2% below the pre-crisis peak of early 2008,” IATA said.

Bisignani said: “It is good news that the recovery in passenger markets continued in September. But the freight numbers are worrying. Freight activity has fallen 6% since May’s post-crisis peak.

“What we see in air cargo markets is inevitably reflected in the broader economy. As international air cargo accounts for 35% of the value of goods traded internationally, it is a leading indicator of economic activity.”

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