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Airlines must look at alternative fuels to boost efficiency: IATA
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  • GENEVA, July 27 (AFP) Jul 27, 2006
    Airlines must adapt to high oil prices and consider alternative fuels and other innovations to regain profitability despite a 6.7-percent growth in passenger traffic in the first half of 2006, the top industry association said Thursday.

    Airlines are still battling for financial prosperity despite growing revenues and better load factors in the first half of the year, the International Air Transport Association (IATA) said in a statement.

    "Change is urgent and now is the time. Airline efficiency gains must be matched throughout the value chain. And we must find new ways of doing business," said IATA Director General Giovanni Bisignani.

    "The bottom line is all about oil. Prices continue at near record levels and we expect a fuel bill of 112 billion dollars this year at an average price of 66 dollars per barrel," he added.

    "Increased political instability in the Middle East does not bode well for a price drop any time soon."

    Bisignani said operational changes were improving efficiency. But airlines needed to be able to go further, he insisted.

    "The 100 percent conversion to (electronic) e-ticketing by the end of 2007 is a great example."

    "But we now look to the oil industry to move faster at developing alternative fuels to further improve efficiency and environmental performance," said Bisignani.

    "The good news is that neither the extraordinary price of oil nor the inching-up of interest rates negatively impacted demand," he added.

    IATA represents about 260 companies that account for more than 90 percent of world air traffic.

    Last month, passenger traffic grew by 6.5 percent compared to June 2005, to bring average growth over the first six months of the year to 6.7 percent.

    Airlines achieved high average load factors of 78.3 percent in June, a measure of the number of passengers carried on each aircraft and their efficiency.

    However, IATA is maintaining its forecast of about 3.0 billion dollars in losses industry-wide at the end of the year, fuelled by an expected additional bill of 24 billion dollars due to increasing jet fuel prices.

    IATA spokesman Anthony Concil declined to specify any particular alternative to current jet fuel, pointing only to possible synthetic or biofuel alternatives.

    The industry is coming under pressure to clean up emissions from aircraft even further, amid claims that air travel has a significant impact on global warming.

    IATA has rejected a carbon tax on greenhouse gas emissions that France is levying on each airline ticket sold.

    "There is a bit of hysteria about the impact of air travel on climate change but the industry is committed to improving its environmental performance," Concil told AFP.

    Airlines have traditionally pointed to a 70 percent improvement in fuel efficiency in aircraft since the 1970s.

    Until recently IATA was lukewarm about the feasability or value of cleaner fuels.

    However, just over six months ago its board of governors adopted a strategy that described potential alternative fuels as "the primary means to address aviations greenhouse gas emissions", along with other technological changes.

    Concil acknowledged that durably high oil prices make the case for alternative fuels more pressing.

    "We're a bit more enthusiastic for the oil industry to search for alternatives," he said.

    Jet fuel at 90.5 dollars a barrel is approaching a near-100 dollar peak reached last September. The current price is nearly one-third higher than a year ago and nearly three times what it was in 2000.

    Oil prices currently stand around 75 dollars a barrel compared to 20 dollars four years ago.

    Analysts predict that oil prices will stay high because of a combination of supply chain problems and soaring demand from emerging nations, especially in China, on top of traditional tensions that bedevil oil markets.

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