Airlines' security costs in 2010 will be more than the $5.9 billion they spent last year because of the growth in traffic, the director general of air lobby group IATA.

Giovanni Bisignani, director general of the International Air Transport Association, said security accounted for 10 percent of airlines' operating costs and they should not have to foot the bill for additional security.

"Security is a national problem. Why do we as airlines have to pay for airport security?" Bisignani told Reuters in an interview during his first visit to Israel as head of IATA.

But regardless of the difficult situation, safety standards remain very high, he said, and air travel is the safest mode of transportation with just 685 deaths out of 2.2 billion travellers in 2009.

Cargo Security
Bisignani said the issue of how to improve cargo security needed to be addressed through better technology, intelligence and a supply chain approach to implementing security measures starting at the factories, a process already carried out in the United States.

In late October two packages containing bombs -- both sent from Yemen and addressed to synagogues in Chicago -- were intercepted in Britain and Dubai. One package was found in a United Parcel Service cargo plane and the other in a computer printer cartridge in a parcel at a FedEx facility in Dubai.

While cargo shipped in the hold of passenger aircraft is scanned, Bisignani said there was no technology yet that could scan containers shipped on freight planes.

Capacity Grows Faster than Demand
IATA is predicting that the world's international airlines will make a combined profit of $8.9 billion in 2010 compared with a loss of $10 billion in 2009 but profits are expected to drop to $5.3 billion next year.

Combined passenger and cargo demand this year will grow by 5 percent but capacity will rise by 6 percent, Bisignani said, adding that with oil at around $80 a barrel airlines will pay $137 billion for fuel.

Bisignani also said the aviation industry remained fragmented and obstacles should be eased to cross-border mergers, such as the system of bilateral treaties governing landing rights between countries which was created after World War Two.

For that reason Bisignani said the situation in Latin America was "really astonishing", pointing to the August merger accord between TAM, Brazil's biggest carrier, and Chile's LAN that will create Latin America's largest airline.

And while airline mergers have taken place in Europe in the past few years and more recently in North and South America, it will be a couple more years before large consolidations occur in Asia, where the economy is still growing.

"The rules of the game are old. It's difficult for us to consolidate or merge," he said.

"What we need is freedom to run this as a normal business and start to see some big transnational consolidation between a big European airline and a big Asian airline or a big Asian airline and a big American airline. Those rules were set in 1945, it was a different world and it's time to change." (Reuters)