Reshaping to Build a Stronger
Kuala Lumpur - The International Air Transport
Association (IATA) called for a major resizing and reshaping of the
entire air transport value chain as airlines battle the ongoing global
economic crisis. Airlines are expected to post losses of US$9 billion
this year with an unprecedented 15% revenue drop that will see industry
revenues shrink by US$80 billion to US$448 billion.
“I am a realist and I don’t see facts to support optimism.
The industry is in survival mode. Whether this crisis is long or short,
the world is changing. Travel budgets have been slashed and consumers
will need to reduce their debt. It will not be business as usual in the
post-crisis world. Governments, partners and airlines must use this
crisis as an opportunity to build a stronger industry. That means
resizing and reshaping,” said Giovanni Bisignani, IATA’s Director General
and CEO in his State of the Industry address to 500 of the industry’s top
leaders gathered in Kuala Lumpur for the 65th IATA Annual General Meeting
and World Air Transport Summit.
IATA’s Simplifying the Business program has given the
industry a head start on cost cutting. In 2008, US$4 billion in cost
savings were achieved with 100% e-ticketing and the deployment of Common
Use Self-Service (CUSS) kiosks. “This was only the beginning. We have our
eyes set on another US$10 billion in savings by improving baggage
management, travel processes and with e-freight,” said Bisignani.
Bisignani noted that the burden of change not
keeping pace with the industry’s need for improved efficiency: BAA and
the UK Civil Aviation Authority for agreeing an 86% increase in London
Heathrow charges for 2008-2013; Airports of Delhi and Mumbai for their
207% increase in charges; Quiport in Ecuador for increasing charges by
79% since 2005 to pre-finanmust be shared across the industry value
chain. “Resizing and reshaping is not just a problem for airlines.
Everyone in the value chain lives off our revenues. All must contribute
to industry change,” said Bisignani.
“We cannot reshape without flexibility. This is not the time for salary
increases. To protect jobs, we must modernize work practices and we must
all do more with less,” said Bisignani.
“The clock cannot be turned back. To survive in the global online market,
travel agents need to reshape services and business models to provide
greater value that travelers are willing to pay for,” said Bisignani.
“Every supplier—monopolies included—must reshape products and services to
reduce their costs and ours. When demand drops, they cannot simply divide
the same costs among fewer customers,” said Bisignani. An IATA Wall of
Shame gave special mention to the most serious cases of infrastructure
providersce a new airport that may never be built; Air Traffic and
Navigation Services (ATNS) South Africa for proposing a 44% increase in
charges in 2010/2011 and the EUROCONTROL States of Denmark, the
Netherlands and Poland for proposing charges increases between 27% and
“We cannot accept that Western GDSs charge around US$4 per transaction
when China TravelSky does the same job for US$0.50. This must change,”
Bisignani also urged a resizing and reshaping of the
relationship between airlines and governments. “Our relationship with
governments must move from punitive micro-regulation to joint problem
solving,” said Bisignani who cited four areas for enhanced cooperation.
Making Aviation Greener:
Aviation’s emissions will fall by 7% in 2009—5% from the fall in demand
and 2% as a direct result of the industry’s united four-pillar strategy
to address climate change. “Airlines have taken a monumental decision.
Today we have committed to achieving carbon-neutral growth by 2020,” said
Bisignani. Airlines have set three important sequential goals: (1) 1.5%
annual improvement in fuel efficiency until 2020; (2) carbon-neutral
growth in 2020 and (3) a 50% reduction in emissions by 2050. “We cannot
achieve these ambitious targets alone. Governments must move from
punitive taxation to actions that support reductions in CO2. That means
establishing a global sectoral approach for aviation emissions under
Kyoto 2 and supporting improvements in technology, operations and
infrastructure, particularly the development of aviation biofuels and the
implementation of important infrastructure projects such as a Single
European Sky and NextGen in the US,” said Bisignani.
Protecting citizens with
better security: “We must spend the US$5.9 billion
that airlines and their passengers pay for security more wisely by
focusing on the threats, rather than the 99.9% of travelers who are not a
risk,” said Bisignani. He challenged governments to coordinate security
measures and standards across borders to avoid the double checking of the
nearly one million passengers a day who make connections. “Europe is
progressively doing this with One-Stop Security. It’s time to push this
much further,” said Bisignani.
Improving efficiency by
reducing delays: Airlines are investing billions in
new avionics to fly more efficiently, reduce delays and improve
environmental performance. Bisignani noted significant progress on a
Single European Sky and urged President Obama to make NextGen a reality
in the United States. “The trillions of dollars being spent in stimulus
programs are a great opportunity to improve infrastructure. The combined
benefits of NextGen and a Single European Sky in 2030 would be 41 million
tonnes of CO2 reduction and US$21 billion in fuel savings. To achieve
these, we need the investments now,” said Bisignani.
Saving jobs and
stimulating the economy: “We don’t want bailouts.
All that we ask for is access to global capital. If we cannot pay the
bills, saving the flag on the tail will not save jobs,” said Bisignani in
asking governments to progressively liberalize access to markets and
capital. “This would be a cheap stimulus. Liberalizing key routes would
create US$490 billion in economic activity and 24 million jobs. The next
logical step would be for the US and Europe to expand Open Skies to Open
Aviation,” said Bisignani. IATA continues to push for similar progress
globally with its Agenda for Freedom—a group of 15 key government players
in aviation policy. “Later this year, IATA’s Agenda for Freedom will
deliver an important policy tool with governments signing a Multilateral
Statement of Policy Principles,” said Bisignani.
“Air transport is a responsible industry—in good times and
in crisis. Today’s situation is unprecedented—the most difficult ever.
Governments and partners must understand that we are struggling to
survive in a new and harsh reality. We are, however, resilient and
capable of great change. Together we must turn challenges into
opportunities to be safer, greener and profitable,” said Bisignani.
Director Corporate Communications
+ 41 22 770 2967 (Geneva time zone)
+ 603 233 08759 (AGM Media Room Kuala Lumpur)
Notes for Editors:
(International Air Transport Association) represents some 230
airlines comprising 93% of scheduled international air traffic.