Leaders of the global air transport industry gathered in Sydney, Australia, for the Association’s 74th Annual General Meeting (AGM) and World Air Transport Summit. Hosted by Qantas, the event included addresses by Sir Peter Cosgrove, Governor-General of Australia; Michael McCormack, Deputy Prime Minister and Minister for Transport; and Dr Fang Liu, Secretary General, International Civil Aviation Organization (ICAO).
Below a summary of the news coming from the AGM:
IATA, AFRAA sign MoU to Advance Aviation in Africa
The International Air Transport Association (IATA) and The African Airline Association (AFRAA) signed a memorandum of understanding (MoU) to deepen their cooperation.
The MoU was signed by Alexandre de Juniac, IATA’s Director General and CEO and AFRAA’s Secretary General, Abderahmane Berthé on the sidelines of the 74th IATA Annual General Meeting in Sydney.
Under the MoU, IATA and AFRAA will exchange information, expertise and capabilities and work jointly to:
- Enhance safety by assisting airlines to successfully implement the IATA Operational Safety Audit (IOSA), IATA Safety Audit for Ground Operations (ISAGO) and IATA Ground Handling Manual (IGOM)
- Promote regional air connectivity by working jointly with governments to implement supporting the implementation of the Single African Air Transport Market (SAATM)
- Encourage data exchange among aviation stakeholders to improve the passenger experience
- Enhance security through capacity building
- Liberate airline funds blocked by governments from repatriation by advising governments on best practices to clear backlogs
- Achieve reasonable levels of taxes and charges by helping governments to focus on the social and economic benefits of aviation
"Africa is full of potential. Unlocking the economic and social benefits of aviation is a critical element of the continent’s development. Achieving Africa’s potential, however, will not happen by chance. Continuous improvement in safety, an effective regulatory framework, and fit-for-purpose infrastructure are essential. To achieve that; strong partnerships are key. This MoU will strengthen IATA’s already close relationship with AFRAA and help ensure that global standards and best practices form the backbone of Africa’s aviation growth," said de Juniac.
The MoU paves the way for further development in African aviation. Air transport already supports 6.8 million jobs and generates $72.5 billion of economic activity on the continent.
"AFRAA and IATA share a common vision – the development of a safe, secure and sustainable aviation industry in Africa that facilitates business, trade and tourism and contributes positively to Africa's economic growth and development. This MoU with IATA will commit both our organizations to work together even closer on the main priorities for African aviation. In particular, we count on IATA to provide the requisite technical support across a number of areas such as improving aviation infrastructure and capacity building with national regulators," said Abderahmane Berthé, AFRAA’s Secretary General.
IATA, Deloitte Develop Airport Ownership and Regulation Guidance
Recognizing the Strategic National Importance of Airports
The International Air Transport Association (IATA) and Deloitte have published guidance materials for governments considering public-private partnerships (PPP) and other forms of privatization programs for airport infrastructure.
"Airports provide critical infrastructure. It is important that governments considering privatization or PPP take a long-term view and focus on solutions that will maximize the economic and social benefits of connectivity. The aim of Airport Ownership and Regulation is to help governments make better-informed decisions using best-practices gleaned from decades of experience with the good, the bad and the ugly of airport privatizations," said Alexandre de Juniac, IATA’s Director General and CEO.
Airport Ownership and Regulation was commissioned by IATA and researched by Deloitte. It is freely downloadable from the IATA Website.
Solid Profits Despite Rising Costs
The International Air Transport Association (IATA) announced its expectation for airlines to achieve a collective net profit of $33.8 billion (4.1% net margin) in 2018. This is a solid performance despite rising costs, primarily fuel and labor, but also the upturn in the interest rate cycle. These rising costs are the main driver behind the downward revision from the previous forecast of $38.4 billion in December 2017.
In 2017 airlines earned a record $38.0 billion (revised from the previously estimate of $34.5 billion). Comparisons to this, however, are severely distorted by special accounting items such as one-off tax credits which boosted 2017 profits.
Profits at the operating level, though still high by past standards, have been trending slowly downwards since early 2016, as a result of accelerating costs.
"Solid profitability is holding up in 2018, despite rising costs. The industry’s financial foundations are strong with a nine-year run in the black that began in 2010. And the return on invested capital will exceed the cost of capital for a fourth consecutive year. At long last, normal profits are becoming normal for airlines. This enables airlines to fund growth, expand employment, strengthen balance sheets and reward our investors," said Alexandre de Juniac, IATA’s Director General and CEO.
Securing Aviation’s Future
Smarter Regulation, Global Standards, Infrastructure
The International Air Transport Association (IATA) called for governments to facilitate the growth of global connectivity by avoiding creeping re-regulation, maintaining the integrity of global standards, and addressing a capacity crisis.
The call came in the IATA Director General’s Report on the Air Transport Industry at the 74th IATA Annual General Meeting (AGM) and World Air Transport Summit.
"On aviation’s core mission to deliver safe, secure, accessible and sustainable connectivity, the state of our industry is strong and getting stronger. And with "normal" levels of profitability we are spreading aviation’s benefits even more widely. But there are challenges. Smarter regulation needs to counter the trend of creeping re-regulation. Global standards must be maintained by the states that agreed them. And we need to find efficient solutions to the looming capacity crisis," said Alexandre de Juniac, IATA’s Director General and CEO.
IATA Open Borders Strategy
The International Air Transport Association (IATA) called on governments to intensify efforts to spread the economic and social benefits of aviation by removing onerous barriers to the free movement of people across borders.
"Over the next 20 years, the number of passengers will double. That’s excellent news for the global economy, as air connectivity is a catalyst for job creation and GDP growth. But we will not get the maximum social and economic benefits from this growth if barriers to travel are not addressed and processes streamlined," said Alexandre de Juniac, IATA’s Director General and CEO.
There are many barriers to travel, ranging from visa restrictions and government information requirements to the capacity of current facilitation processes to absorb growing numbers of air travelers. IATA has evolved a comprehensive Open Borders Strategy to help governments work with industry to maintain the integrity of national borders while removing inefficiencies that prevent the industry from satisfying travel demand.
Research by the UN World Tourism Organization (UNWTO) and the World Travel and Tourism Council (WTTC) on the impact of visa facilitation indicates that $89 billion in tourism receipts and 2.6 million jobs would be created in the Asia-Pacific region alone with the reduction of barriers to travel.
The IATA Open Borders Strategy has four main components:
- Reviewing visa requirements and removing unnecessary travel restrictions:
The goal is to remove unnecessary barriers to travel. Existing visa regimes are overly restrictive, expensive and inefficient, and will be unable to cope with forecast travel demand. The solution to this lies in unlocking the potential from shared information in a trusted framework. This will improve security, while smoothing passenger flows and easing demand for new infrastructure to accommodate the forecast doubling in air travel over the next two decades.
- Including travel facilitation as part of bilateral and regional trade negotiations : Free trade agreements have seen an expansion of goods and services moving across borders. This has stimulated economic growth for participating countries. Restrictive visa requirements are non-tariff barriers to trade, yet they are not normally addressed in trade discussions. IATA believes that removing restrictions on the free movement of travelers should receive as much priority as other barriers to liberalized trade in goods and services. One way is for governments to include liberalized visa requirements in trade agreements.
- Linking registered-traveler programs : Several states already operate registered traveler programs. Research shows that a large majority of travelers are willing to provide personal information in exchange for expedited handling in the travel process. Registered-traveler programs are a key component of risk-based security measures which help governments to use scarce resources with maximum efficiency. Where these program are linked (Canada-US for example) the efficiencies grow. But these are still rare cases. IATA encourages more governments to build links between their programs.
- Using API data more effectively and efficiently : Airlines spend millions of dollars providing Advance Passenger Information (API) as required by governments. Governments must process API data efficiently. For example, as governments have information in advance of boarding, inadmissible passengers should be notified before their journey begins, rather than on arrival which is costly for airlines and disappointing for passengers. Similarly, arrival procedures should be streamlined for passengers whose data has been vetted in advance.
Governments Urged to Address Airline Blocked Funds
The International Air Transport Association (IATA) called on governments to abide by international agreements and treaty obligations to enable airlines to repatriate revenues from ticket sales and other activities. According to IATA, the amount of airline funds blocked from repatriation totaled $4.9 billion at the end of 2017, which was down 7% compared to year-end 2016. However, airline funds remain blocked in some 16 countries.
"The connectivity provided by aviation is vital to economic growth and development. Aviation supports jobs and trade, and helps people to lead better lives. But airlines need to have confidence that they will be able to repatriate their revenues in order to bring these benefits to markets," said Alexandre de Juniac, IATA’s Director General and CEO.
"We have had some recent success. The $600 million backlog in Nigeria has been cleared. And we have made $120 million of progress from a peak of over $500 million in Angola. I encourage the government of Angola to work with airlines to help to reduce this backlog further," said de Juniac.
Airlines Denounce Human Trafficking and Commit to Action
The International Air Transport Association (IATA) 74th Annual General Meeting (AGM) [unanimously] approved a resolution denouncing trafficking in persons, and committing to a number of actions related to anti-trafficking initiatives.
An estimated 24.9 million people are illegally trafficked and live in conditions of modern slavery. The extensive reach of the global air transport network means that unfortunately, airlines are used by traffickers to facilitate their activities.
"Aviation is the business of freedom, flying 4 billion people to every corner of the earth last year alone. Some, however, try to use our networks nefariously. Trafficking in people creates misery for millions, and funds criminal gangs and terrorism. As a responsible industry, our members are determined to help authorities stamp out human trafficking," said Alexandre de Juniac, IATA’s Director General and CEO.
Airlines Urge Caution on Airport Privatization
The International Air Transport Association (IATA) 74th Annual General Meeting (AGM) urged governments to take a cautious approach when considering airport privatization. In a unanimously passed resolution, IATA members called on governments to prioritize the long-term economic and social benefits delivered by an effective airport ahead of the short-term financial gains provided by a poorly thought-out privatization.
"We are in an infrastructure crisis. Cash-strapped governments are looking to the private sector to help develop much needed airport capacity. But it is wrong to assume that the private sector has all the answers. Airlines have not yet experienced an airport privatization that has fully lived up to its promised benefits over the long term. Airports are critical infrastructure. It is important that governments take a long-term view focusing on solutions that will deliver the best economic and social benefits. Selling airport assets for a short-term cash injection to the treasury is a mistake," said Alexandre de Juniac, IATA’s Director General and CEO.
Korean Air to Host 75th IATA AGM in Seoul
The International Air Transport Association (IATA) announced that Korean Air will host the 75th IATA Annual General Meeting (AGM) and World Air Transport Summit in Seoul, South Korea, from 2-4 June 2019. This will be the first time that the South Korean capital hosts the global gathering of aviation’s top leaders.
Akbar Al Baker New IATA Board Chairman
The International Air Transport Association (IATA) announced that Qatar Airways Group Chief Executive, His Excellency Akbar Al Baker, has assumed his duties as Chairman of the IATA Board of Governors (BoG) for a one-year term effective from the conclusion of the 74th IATA Annual General Meeting in Sydney, Australia. Al Baker is the 77th chair of the IATA BoG and the first CEO from Qatar Airways to hold the position. He has served on the BoG since 2012. He succeeds Goh Choon Phong, CEO of Singapore Airlines.