Press Release No.:
Date: 18 August 2006
Partnership for Change with Air Navigation Service Providers - Cost Efficiency, Environment and Liberalisation
(Gold Coast, Australia) - "Air navigation service providers (ANSPs) and airlines are partners in the business of air transport. Together we must pursue an agenda for industry change," said Giovanni Bisignani, Director General and CEO of the International Air Transport Association (IATA).
Addressing a regional air navigation services conference hosted by Airservices Australia, Bisignani said that "Our common agenda rests on three pillars: cost efficiency, environmental responsibility and liberalisation. We appreciate the leadership of Airservices Australia in gathering Asia-Pacific providers together to work towards regional solutions that are harmonised with the industry's global agenda. It is great to see that the cooperative relationship we have with the Civil Air Navigation Services Organization (CANSO) is now translating into regional action and implementation."
Airlines achieved amazing results in the last four years. Non-fuel unit costs decreased by 13%. Labour unit costs decreased by 33% and distribution costs were slashed by 10%. Airlines will absorb US$21 billion in additional fuel costs without an erosion of profitability," said Bisignani.
Bisignani commended ANSPs for starting to effectively benchmark productivity and efficiency, but noted that much work needs to be done to improve cost efficiency.
Bisignani identified the emerging trend by governments to privatise ANSP's as a challenge. "Privatisation must be focused on efficiency—not making a quick buck for government coffers. Germany is a worry as it fattens its ANSP (DFS) for privatisation. Already we see the cost base increasing by 15% with demands for a unit rate increase of nearly 13%. Airlines do not care who owns and ANSP so long as it operated with efficient business principles.
Privatisation needs a strong regulatory framework. The goal must be to constantly improve efficiency, drive down costs—and maintain safe operations. That is exactly what the airlines have done. And our partners must achieve the same," said Bisignani.
"Efficiency is directly linked to environmental performance. Inefficient air traffic management results in 12% of unneeded CO2 emissions. At current fuel prices that 12% inefficiency is a US$13.56 billion cost. More direct routings, improved terminal operations and efficient fuel management are all part of a solution. IATA achieved some impressive results last year—saving over 12 million tonnes of CO2 with a bottom line impact of savings totalling US$2.4 billion. Good, but it is still not enough," said Bisignani.
Bisignani set some priority targets for Asia Pacific including optimising operations in Hong Kong's Pearl River Delta where "inefficiency costs airlines US$1 million a day and the environment 700 million tonnes of CO2 a year." Bisignani urged follow-up on the achievement of IATA-1, an alternate route between China and Europe that saves 30 minutes of flight time "with more flexible entry points and a charging regime that reflects costs. We must pursue efficiency—everywhere."
"Air transport was the first industry to operate globally, but we are among the last to benefit from globalisation. Airlines are battling for commercial freedoms not provided for by the 60 year-old bilateral system. We need the freedom to serve markets where they exist and to merge or consolidate when it makes business sense," said Bisignani. "ANSPs must also share a vision for the consolidation of airspace. There are too many service providers and national politics and pride play too big a role.
Air traffic management is a service that needs to run with efficiencies and economies of scale. National borders are important, but they should not stop innovation. Europe is the worst example where we have 35 providers with a cost of inefficiency totalling EUR 1.4 billion. This makes no sense and we cannot afford it! We need a Single European Sky—now," said Bisignani.
Challenge to lead:
Bisignani laid down a leadership challenge to Asia-Pacific ANSPs. "Continue to lead the way in terms of airspace management, cooperation with customers and cost efficiency. Contract air services for some of the Pacific Islands provide an interesting model. They address the issue of sovereignty and prove that there are no technological barriers.
Now we need to take advantage of further opportunities for rationalisation. Push the model further and broaden the shared use of facilities and technology. Asia-Pacific has never been afraid to break the mould. Change, new ideas and leadership are what our industry needs most. Efficiency, environmental responsibility and liberalisation must be the pillars on which our industry faces future challenges," said Bisignani.
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