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Date: 2 November 2006

FAA International Safety Forum - Remarks by Giovanni Bisignani

It is a pleasure to be here among great friends and discussing our common top priority—safety.

IATA represents some 260 airlines, 94% of scheduled international traffic. Our mission is to lead, represent and serve the air transport industry. Safety is at the core of our mission. Our industry can and should be proud of our achievements.

State of the Industry

Our industry has been in crisis since 2001, bleeding red ink. Between 2001 and 2005 airlines lost over US$40 billion. The crisis was a catalyst to improve efficiency. Since 2001:

  • Labour productivity increased 33%
  • Sales and distribution costs dropped 10%
  • And non-fuel unit costs reduced 13%

In 2001 the industry fuel bill was US$43 billion, 13% of operating costs. Now it is estimated at US$115 billion in 2006, accounting for 26% of operating costs. The increase 2005-2006 increase will be US$24 billion. Remarkably airlines will still improve their bottom line. From a US$3.2 billion loss in 2005 to US$1.7 billion in losses this year with US carriers posting operating profits. Next year we expect a small profit of US$1.9 billion. That's a 0.4% return on US$450 billion in revenues. No reason to open Champagne. But we are moving in the right direction.

Safety Record

The crisis did not distract airlines from safety. Numbers tell a great story. The industry hull loss rate for Western built jets was cut in half in 10 years. To 0.76 hull losses per million flights in 2005. IATA carriers—benefiting from our programmes—did significantly better, 0.35 hull losses per million sectors. The industry target for 2006 is 0.65. We are on track, achieving 0.62 by the end of September. But these figures mask some key realities.  If we look at ALL aircraft types and all accidents. The figure is three times higher—2.1 per million sectors. Later I will discuss in detail the situation in Africa, Russia and Latin America. My message is that there is more work to do.

A Business-like Approach

We need a business-like approach to safety. For IATA, that means first setting achievable targets with deadlines. Our target for 2008 is to reduce the hull-loss rate by a further 25% over 2006. And we also have set similar targets for all aircraft, and all regions. As with any business, you need a plan to achieve your targets. Ours is the 6 point IATA Safety Strategy.

  • The first point is to use data effectively to guide our efforts.
  • The next three are to take action in the areas of:
    • Infrastructure including ground handling
    • Cargo operations and
    • Flying operations

The final two points are to implement the right processes

  • Safety Management Systems and
  • Auditing

Finally we must focus on the basic principles: Global Standards and Harmonisation. These are the themes for my discussion. Let me start with two success stories

And then I will address some areas we have more work to do.

Global Aviation Safety Roadmap

Next month the industry will deliver the final part of the Global Aviation Safety Roadmap to ICAO. This is a clear vision for an efficient and consistent global approach to safety. At its heart are global standards and harmonization. Industry is committed to:

  • Eliminating inconsistencies in
    • safety management systems and strategies
    • regulatory compliance and
    • use of best practice
  • Closing gaps in the use of technology
  • Removing impediments to effective data analysis
  • And ensuring the adequate supply of qualified personnel


Statesmust eliminate inconsistencies in application of international standards and oversight practices and implement more effective reporting and investigation of accidents and incidents. Many of you helped develop the Roadmap. Thanks for a great effort. But words on paper do not deliver results. And a roadmap is useless if it is not followed. I signed the Roadmap along with the CEOs of Airbus, Boeing, ACI, CANSO, IFALPA and the Flight Safety Foundation. And ICAO's acceptance is a commitment by states. There is no excuse for anyone to get lost in uncoordinated plans. Airlines are committed and moving forward. And we must have no patience for anyone who is not on board.

IATA Operational Safety Audit (IOSA)

The IATA Operational Safety Audit (IOSA) is an example of quick airline action. IATA developed IOSA working with ICAO and individual states including the US, Canada, Australia. It is the first global standard for airline audits. And includes safety management systems—a component of the Roadmap. By the end of next year we plan to invest over US$5 million. IOSA is at the core of our efforts to raise the bar on safety and rationalise auditing. For those less familiar, here is a short description.

IOSA was launched at the 2003 IATA Annual General Meeting. It measures a collection of industry best practices compliant with ICAO standards. IOSA standards are free of charge for any commercial airline. Audits are conducted by a competitive market of 8 independent commercial audit organizations. IATA manages quality to ISO 9000 processes. Registration lasts for two years. A list of airlines on the registry can be seen on the IATA website. And Governments and airlines can access the entire IOSA audit documentation through a controlled process.

At our 2006 Annual General Meeting our airlines voted unanimously to make IOSA a condition of IATA membership from 2008. For an association, it is strong mark of commitment to quality. IOSA is core to achieving our targets to further improve safety. Already 121 airlines are on the IOSA registry. A quarter of these are not IATA members. Over 220 member airlines are in the IOSA process. Alliances are using IOSA as their safety standard—for membership and for code-sharing. The registry of audit results has already avoided close to 400 audits. IOSA complements ICAO's Universal Safety Oversight Audit Programme. And many individual governments are incorporating IOSA into oversight activities.

  • The FAA accepts IOSA data for US carrier code-shares
  • France included IOSA in their Label Horizon program
  • Switzerland expedites air rights to IOSA registered carriers
  • Egypt, Chile, Lebanon, Madagascar and many others have made IOSA a condition for AOCs
  • And ACAC made it a criteria for operations to and from the Arab region

I encourage all governments to use IOSA effectively. There is no cost. And Guenther Matschnigg and his team are eager to explore new ways to work together.

Ground Damage

I am pleased to report that we are tackling ground damage—a US$4 billion problem—in a similar manner. There is no global standard for oversight and auditing of ground handling companies. So IATA is developing one using the IOSA approach. Last week we started developing standards with key stakeholders including ICAO and ground handlers. Boeing, Airbus and Flight Safety foundation have provided the basic data to guide our efforts. The target is to conduct the first audits in 2008. I hope that I can count on your support to contribute to the development of the audit criteria and incorporate this valuable tool into your safety oversight programs.

Areas of Concern

That's the good news. Now let's look at areas where challenges remain. Specifically:

  • Regional Differences
  • Foreign Operator Specifications and
  • Air Traffic Management

 

Regional Efforts

Numbers tell powerful stories. While the global average for all aircraft accidents is 2.1 per million flights.

  • Latin America is 3.4
  • Russia is 5.9
  • And Africa is off the chart at 10.2

This is not acceptable. The first step to a solution is honestly recognising that there is a problem. I applaud the toughening of the USOAP. And publication of results. European countries implemented blacklists as part of their safety programs. To be frank, blacklists do not improve safety. And more transparent criteria—such as IOSA—are needed to back-up naming decisions. But I welcome the strong statement made on the performance of some governments

  • Swaziland
  • Sierra Leone
  • Djibuti and
  • Congo

Their safety record is an embarrassment. Flags of convenience have no place in a safe industry. We must all take action. IATA supports the Safe Skies for Africa programme. But we must see better results from Africa. IATA has taken action with a Partnership for Safety programme. It prepares carriers for IOSA by identifying and filling gaps. Our first targets are Africa and Latin America. In Africa Partnership for Safety has already. Trained 175 professionals from 17 Civil Aviation Organisations and 47 Airlines. And will have completed gap analysis on 26 airlines by year-end. In Latin America, 110 representatives from Governments and airlines have been trained and 5 gap analysis are complete with 13 more scheduled.

I have written to Russian Minister Levitin to personally offer IATA assistance. IOSA standards include considerations for Eastern-built aircraft. And we are examining actions under Partnership for Safety. Our budget for Partnership for Safety is US$3 million to the end of 2007. But support from partners has—quite frankly—been disappointing. Pratt and Whitney and Boeing contributed US$180,000. Where are the others partners?

Our industry's meek response to the French Governments United for Aid proposals is also disappointing. Alternative funding for drug purchases is noble. But taxing aviation is counter-productive—and contravenes ICAO principles. Aviation taxes must be invested in aviation. And regional safety needs a more serious funding-commitment from governments.

Foreign Operator Specifications

I am also disappointed in proliferating Foreign Operator Specifications. In addition to long-standing US requirements. China, Russia, Trinidad and Tobago, UAE have recently announced their own programmes. And Europe, Australia and Canada are expected to follow. If we continue down this road. We will spend our efforts and budgets managing bureaucracy. With little positive—and possibly negative—impact on safety. It makes no sense to add complexity to regulations. Safety is better served by consistency. And it is misguided at a time when we have all committed to global standards. As an interim measure, I challenge those countries with specific Foreign Carrier Operations to harmonise. I look forward to seeing results from the ICAO group comprising Europe, the US, Canada and Australia. Ultimately, if Governments are concerned about the safety oversight capabilities of their peers. They can use IOSA to look at specific airlines. And they can strengthen ICAO's role. Putting even more teeth into the USOAP programme.

Air Traffic Management

Safe air traffic management is also critical. That means standard rules, procedures, and technology. Every variation in procedure, every change in units of measurement and every difference in required equipment. Is in opportunity for disaster. We are working with governments across the globe on implementing RNAV and other ATM enhancements. But we need to have a big picture. The IATA One Sky Global ATM Roadmap initiative highlighted the need for a grand plan. ICAO's Global Air Navigation Plan reflects the results. But I am concerned. We are not moving fast enough and we don't have a common direction.

The US Joint Planning and Development Office (JPDO) is focused on Next Generation Air Transport System based on US technology. And The Single European Sky ATM Roadmap (SESAR) is focused on European technology and solutions. In parallel, Boeing and Airbus are have their own initiatives. If we don't harmonise. The result will be chaos. We must build the future of air navigation. National egos and parochial support of local technology have no role place or role. We must harmonise efforts. In July, an MoU was signed by the FAA and EUROCONTROL to cooperate. This is good, but an MoU is only paper. We need speed and action at the working level.

Security

Before concluding, I will make a few comments on security. The way forward is exactly the same as for safety. Global standards and harmonization. Security improved tremendously since 2001. But we missed the opportunity to harmonize. The recent agreement on sharing PNR data access between the US and the EU was an important step forward. Similarly the harmonization of rules for hand luggage across Europe is a step in the right direction. But one must certainly question. Why we cannot agree to common hand luggage requirements everywhere? And why we cannot arrive at common standards for hold baggage screening so that we can eliminate the need for re-screening? This is a waste of US$100 million that could be more meaningfully used elsewhere. As first step we could have an agreement among countries with similar standards?

I realize that the purpose of this conference is safety. But let's not miss the opportunity to remind our security colleagues of the success of global standards and data driven approach in safety. And encourage them to learn form the excellent example that you are setting.

Conclusion

In conclusion I would like to thank Marion and the FAA for organising this third International Safety Forum. Marion has brought an international approach to the FAA that has made a great partner even better. We also need to recognize and support Roberto Kobeh Gonzalez, Dr. Taïeb Chérif,  and ICAO for their efforts. No one entity can deliver success in safety. It must be a team effort. The team is in this room

  • Industry—airports, ANSPs, airlines, aircraft manufacturers, pilots
  • Governments, ICAO
  • And suppliers

Each of us has a role to play and a responsibility to learn and to share. Our common goal must be to achieve and implement a harmonized set of global standards that will make the safest form of transport even safer.


 

FAA International Safety Forum - Remarks by Giovanni Bisignani
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