IATA has an ambitious target to achieve savings of $900 million this year from the industry's value chain, well up on the $630 million it claims in cost savings from airports and air traffic service providers last year.
Up to the end of May, it had reached $330 million of this goal, with a further $133 million saved in fuel fees and taxes at airports, says Giovanni Bisignani, IATA's director general.
He pledges to continue IATA's drive to "rebalance our relationships with our partners in the value chain". According to Lufthansa chairman Wolfgang Mayrhuber: "In a nutshell, what we want is cost down and quality up. A landing fee is only of value for me if I arrive on time - if I am three hours late it is of no value."
Bisignani says that IATA is challenging its partners to demonstrate cost efficiency, and has a strategy to convince airports and air traffic service providers to set efficiency and cost-reduction targets. These groups are showing signs they are ready to accept IATA's help. But there has "got to be a carrot and stick approach, not just stick", cautions Ashley Smout, chief executive of Airways New Zealand. "We've got the message, now we've got to move on together and you've got to help us as well," he adds.
"It won't serve the airline industry by ruining the airport industry as well," says Geoff Muirhead, group chief executive of the UK's Manchester Airport Group. "We're not partners and that's a big failing in the industry."
In air traffic control, there is an urgent need to change the "cost plus" pricing environment, says Smout. "Cost recovery is dead, but so is break-even pricing. If we are to take costs out we need a certain level of return," he says.
Don Birch, president of Asia's Abacus global distribution system, echoes the partnership sentiment. He describes the booking process today as "too complex and expensive", costing from $15-20 per ticket to the global distribution system, travel agent and customer. However, he believes this can be cut: "The industry has not achieved the right level of partnership to achieve the saving."
Source: Airline Business
