AACO 47 th Annual General Meeting

Transcription

1 AACO 47 th Annual General Meeting Speech by Paul Steele, SVP Member & External Relations and Corporate Secretary, IATA. Sir Tim Clark, Excellencies, Secretary General of the Arab Air Carriers Association, Ladies and Gentlemen, it is a great privilege and honor to address you this morning and on behalf of IATA, may I express our sincere appreciation for your kind invitation. It's a true pleasure to be here in a region which is a benefitting enormously from the growth of air transport, an industry that has developed into a key driver of the global economy and which connects and unites people and businesses around the world. One hundred years ago, on the first of January 1914, a single plane with a single passenger crossed the bay from St. Petersburg to Tampa in Florida. That flight was the first scheduled commercial passenger flight in history. The passenger, Abram Pheil, paid US$400 at auction for the ticket and the privilege to fly. That is almost US$10,000 in today s money. Airlines can only dream of fares like that today!! Since that first hop across the Bay, aviation has grown to service nearly 3.3 billion passengers a year across nearly 50,000 air routes. That amazing story of growth over the last hundred years is an excellent vantage point from which to look forward to the opportunities and challenges ahead. The latest figures from Oxford Economics estimate that in the Arab Region, 2 million jobs and around $116 billion of GDP are supported by aviation. That represents around 1.2 million flights a year by 64 airlines using 131 airports. This year, airlines are experiencing impressive growth. Year-to-date RPK s are growing at 10% compared to the same period last year and cargo yearon-year growth is 10.1%. Last year, airlines in the region made a profit of around US$1 billion and the latest 2014 forecast is for that to rise to $1.6 billion. Profitability is also better than the world average. Last year s EBIT margin was 1.9% and per passenger profit of $6.33 compared to this year s estimated margin of 2.6% for a profit per passenger of $8.98. That compares with the global 2014 estimate of the 2.4% margin and $5.40 per passenger. If this growth continues, prospects look good for the future of the Arab region. It will be the joint fastest growing region according to the new IATA 20-year passenger forecast. The region will see average growth of around 4.9% per annum, similar to Asia-Pacific and above the global average of 4.1%. By 2034, there will be an additional 237 million passengers per year in the region, taking the total passenger numbers beyond 380 million. That growth is being driven by rising incomes, favorable demographics, and the falling cost of air travel. Aviation in this region has benefited enormously from strategic investments and very positive policies by governments, particularly those in the Gulf. However this story of success does not mean that there aren t significant challenges to be addressed with respect to safety, air traffic management, regulation and the environment, so let me turn to them now.

2 Safety In the Middle East and North Africa the western-built jet hull loss rate in 2013 was 0.68 per million sectors flown which is higher compared to the global average of 0.41%. There is therefore some work to be done to match the global average. The IATA Operational Safety Audit (IOSA) can play key role in this regard. In the region, 36 airlines are already on the IOSA registry. ICAO, IATA, regulators, airports, airlines and other organizations are working as partners to improve safety under the Regional Aviation Safety Group. They have developed the MID Region Safety Strategy which encompasses several significant safety targets. Firstly all MID states will accept the IATA operational safety audit as an acceptable means of compliance by 2015 to complement their safety oversight activities. Secondly, all ground handling service providers will be certified under the IATA Safety Audit for Ground Operations or ISAGO by the end of And thirdly, the IATA Ground Handling Manual (IGOM) has been endorsed as a reference for ground handling safety standards by all MID states by the end of So significant progress is being made. It is important to stress that aviation remains the safest form of mass transport. The industry can truly be proud of its continuing record of improving safety. Nevertheless this year has seen some unique and tragic events. Firstly, in the case of Malaysian Flight 370, we shouldn't be tempted to speculate on the cause of that aircraft disappearance until wreckage is found but one thing is clear, we can never again be in a position of not knowing where a major airliner is in the world in real time. Following that tragic incident IATA established the Aircraft Tracking Task Force with participation from ICAO, ACI, CANSO and other stakeholders. The final report and recommendations from the task force are being submitted to IATA's Board of Governors in December. Once the Board review is complete, the report will be provided to ICAO for discussion with member States during the High-Level Safety Conference in February The objective is to recommend performance-based options to ensure that aircraft can be tracked at all times. The task force will focus on near-term options, with ICAO placed in the best position to elaborate mid-to long-term actions. On the second major tragedy of this year - Malaysian Flight 17 - it is clear and essential that airlines are given timely, accurate information on the safety of the airspace through which they intend to fly. This is the responsibility of States. And clearly the system did not work in this terrible case. Immediately after the incident, ICAO formed a Task Force on Risks to Civil Aviation Arising from Conflict Zones in which IATA and other industry partners are closely involved. Industry s main focal areas in these discussions have been firstly to identify the type of information that is required. Secondly, to identify what mechanisms exist or could be created to better share information within the industry and thirdly to make recommendations regarding processes that can help to improve the crucial data flow between governments and industry.

3 Industry has also called on ICAO to advance the incorporation into international law, through appropriate UN frameworks, measures to govern the design, manufacture and deployment of modern anti-aircraft weaponry. The first pilot project agreed to by States, regional organizations and the industry is how the Notice to Airmen or NOTAM system, already in place between states and operators could better be used to share urgent and critical conflict zone risk information. Let me now turn to one further unexpected challenge this year and that is the terrible outbreak of Ebola in West Africa. It's essential that the aviation community continue to help the brave people working to eradicate Ebola. This means taking necessary precautions but not closing the doors. Without aviation links, doctors, nurses and supplies can't reach those in need. It is almost impossible to catch Ebola from someone on a plane. Ebola is not an airborne virus. It can only be caught by exposure to bodily fluids from someone already showing clear symptoms of the disease. And national medical services are able to contain it, should an infected person enter a country. The World Health Organization guidance is that aviation links should remain open. IATA continues to liaise closely with the WHO on this issue. We urge governments to follow their guidelines which focus on proper exit-screening from Ebola-affected countries rather than a range of complex, ineffective measures that are being implemented by some governments around the world. Air Traffic Management (ATM) Now let me turn to the tricky issue of air traffic management. We sincerely hope that the Arab Region will learn from Europe's mistakes and ensure that air traffic management does not become its Achilles heel in its bid to grow air transport in the region. Airspace constraints in the Gulf mean delays for passengers and additional costs for airlines. The lack of capacity is a great concern and greater civil-military cooperation for the flexible use of airspace is urgently required. The original single FIR for the Gulf region has become fragmented into six and although work is underway to try to harmonize these into a virtual FIR, for example by using harmonized separation and regulatory standards, the players in the region need to buy in urgently to a vision for seamless airspace management and then work together in a team effort to make it happen. Technology should be implemented in a cohesive way so that one country does not overinvest in systems that cannot be used across the region. One particular challenge at the moment is arising with traffic being routed around Syria and Northern Iraq which is displacing traffic to Iran and elsewhere. IATA is working with stakeholders in the region to try to alleviate the resulting congestion. Regulation Let me move on now to the regulatory challenges. Smart regulation is desperately needed for aviation connectivity to thrive. But there is growing evidence that governments in the region are tempted to emulate some poor legislation originating from Europe and the United States, particularly with regard to consumer protection.

4 Earlier this year, the Arab Civil Aviation Commission (ACAC) issued draft guidelines on consumer protection for consideration by governments. The industry has significant concerns that the guidelines are prescriptive in nature and serve neither airlines nor consumers well. The ACAC Executive Committee has asked for further revisions and we urge them to ensure that the guidelines do not conflict with existing international conventions and do not apply to thirdparty carriers operating from outside the Arab region. Furthermore, they must ensure the preeminence of safety considerations, excluding safety-related delays and cancellations from the list of compensable events. IATA s core principles on consumer protection, endorsed by our membership at our 2013 Annual General Meeting, are based on lessons-learned from existing regimes. They attempt to minimize the unintended consequences of such regulatory regimes and strike a balance between protecting passengers and ensuring industry competitiveness. We call on governments to incorporate these principles into their deliberations on this issue. We also need governments to ratify two important treaties. Firstly the Montréal Protocol 2014 or MP14 as it's known, is a revision to the Tokyo Treaty which deals with the issue of unruly passengers. Unruly passenger behavior is a significant and growing daily issue faced by airlines. It impacts safety and security as well as the travel plans and experience of other passengers. This is an issue where AACO and IATA are working closely together. It requires a comprehensive, multi-stakeholder solution. The solution must focus on deterrence as well as prevention and management. As a deterrent the Tokyo Convention 1963 is not sufficient, with many unruly passengers not facing any legal, administrative or economic sanctions for their misconduct. The new Montréal Protocol 2014 which amends the Tokyo Convention was adopted by States in April 2014 and closes many of those gaps. There is strong support for MP14 from many states in the Arab world and we hope that Arab states will lead in the ratification process. The industry is also focused on prevention and management of unruly passenger incidents. IATA has produced guidance materials, based on best practice, for airlines to use when updating their policies and procedures to prevent and manage unruly incidents. So we are calling on governments and industry to work closer together to solve this issue. Governments need to ratify MP14 as soon as possible so we have an effective deterrent. Airlines need to make sure that they use the guidance we have created to have clear policies and procedures when dealing with unruly passengers, including the appropriate de-escalation and restraint techniques so we can prevent and manage such incidents. The second treaty for ratification is the Montréal Convention 1999 or MC99 which is an update of previous treaties such as MP4 and the Warsaw Convention. It is designed to harmonize and update areas such as liability and compensation. An important benefit of MC99 is that it facilitates electronic data transfer which is essential for the success of the e-freight project to remove paper from air cargo shipments. I am delighted to say that Emirates, Saudia and Qatar Airways have all made great efforts in recent months to push e-airway Bill shipments. Finally let me address the issue of the environment.

5 This region is been a positive force for progress in ICAO towards the development of comprehensive approach to tackling the growth of aviation s CO 2 emissions, including in the current discussions to develop proposals for a global market-based measure for aviation. It is essential that momentum is maintained as the details continue to be worked out. Failure to agree a global scheme in 2016 would result in a patchwork of regional and national carbon taxes and charges which would significantly damage aviation connectivity and harm our future prospects for growth. At the same time they would make very little difference in the fight against climate change. From an industry perspective we remain focused on delivering our commitments to carbon neutral growth in 2020 and a reduction in CO 2 of 50% compared 2005 levels. We must ensure above all that we remain unified in our endeavors to support ICAO s initiatives to agree a comprehensive global approach. So our industry faces a number of significant challenges as it faces the next century of commercial flight. How are we going to address these? The simple answer is by working together. IATA has an excellent working relationship with AACO. We truly value AACO s support and input on issues like safety, security, smarter regulation and the environment. We recognize also that as an organization, IATA has to be closer to our members in each region in order to be more responsive to their needs. Over the last 12 months we have given greater resources, responsibilities and autonomy to our regional hubs. Our Middle East and Africa hub office in Amman under Hussein Dabbas has a strong record of protecting airline money in our efficient settlement systems and working with stakeholders to add value and implement innovative solutions. IATA is also working closely with sister organizations on important projects. A good example is the memorandum of understanding with Airports Council International which has led to close cooperation on the Smart Security program to improve the efficiency, effectiveness and experience of passenger security. In September the joint IATA/AACO Aero-political Affairs Forum held in Amman allowed us to jointly define the 2015 regional public policy agenda, focusing on many of the issues I have spoken about. This cooperation and aligned focus is critical to ensuring we sustain the value of air transport in this region. Your Highness, Excellencies, Ladies and Gentlemen, in conclusion let me affirm that aviation has been a huge success story in much of the MENA region. It has an unrivalled reputation for growth and excellent standards of customer service. However if the huge future potential is to be met, it will need a concerted, joined up effort from both industry and governments in order to ensure that infrastructure and regulation are optimized for success. We have the pleasure of hindsight looking back a hundred years to that first commercial flight across Tampa Bay. The entrepreneur who organized that first commercial flight, Percival Fansler, was also something of a philosopher. He said: What was impossible yesterday is an accomplishment of today - while tomorrow heralds the unbelievable. As we look forward into the 21st century we can see that aviation is poised to enter its next century with the Middle East ready to lead the way. Thank you very much.