Fixing The Mismatch

The world’s scheduled airlines are expected to rake in some $750 billion this year but will only make a net profit of $18 billion – a paltry margin of only 2.4% or $5.42 for every passenger carried, reports Press Today editor, Mike Dunbar from IATA’s AGM in Qatar.

And that’s partly due to a crippling tax burden of $120 billion that incoming board chair of the International Air Transport Association (IATA) Calin Rovinescu says he’s determined to tackle.

The Air Canada CEO, who moved into the IATA post at this week’s annual meeting in Doha, explained, “Some governments are bringing aviation to its knees with taxes because they have tended to view this industry as a cash cow.”

He added, “It’s an issue that exists all around the world and a battle that will continue for some time because there’s ignorance concerning the economic impact of our industry. For every dollar of revenue, we generate six or seven times that amount in economic impact.

Top carrier delegates to the AGM were told by IATA director general Tony Tyler that their combined revenues will total one percent of global GDP but that they will continue to suffer from “a mismatch between the value that the industry contributes to economies and the rewards generated for those who risk their capital to finance the industry.”

Although he didn’t elaborate, Rovinescu told a wind-up AGM press conference that one of his other priorities would also be “the security of cash payments to ensure that funds are collected on a proper basis from the travel trade.”