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Date: 29 March 2007

Orient Aviation Green Skies Conference, Hong Kong

Environment is at the top of the industry's priority list. I just arrived from Europe where we are facing an attack by Politicians, NGOs and the media. The good news is that people want, need and love to fly. More people than ever are flying - 2.2 billion people in 2006.  Airlines have brought the world closer together, bringing goods to market and people to business, supporting US$2.9 trillion in economic activity, and providing 29 million jobs.  Discovering the world used to be for the rich but “Now everyone can fly” as Air Asia's Tony Fernandes often says.

But not everyone has the same view. For example, a UK newspaper recently said that the planet is in a suicide pact with aviation.  We are being misunderstood and it's also our own fault.  Let's have some honest self-assessment. The industry was too shy.  We didn't foresee the risks of changing public opinion and when it changed we were afraid to react. We kept our great achievements a secret and the problem evolved into a crisis centred in Europe. The EU draft on emissions trading came as a shock but it was an opportunity for IATA to take a leadership role: to align the industry And to move us forward with dialogue and action.

Some Facts:  A Great Story to Tell

The first step is telling our story so let me put some facts on the table. The UN attributes 2% of global carbon emissions to aviation; the auto industry is responsible for 18%; electricity and heating 35%; and cattle production 9%.  Airlines are a small part of the climate change problem.

But that is not an excuse to do nothing. In fact, airlines were working on fuel efficiency-and reducing emissions-long before Kyoto with a 70% improvement in the last four decades.  The fuel efficiency of modern aircraft is 3.5 litres per 100 passenger kilometres and the A380 and 787 will take that below 3 - better than any hybrid car on the market. Moreover, the billions of dollars being invested in new aircraft will drive a 25% improvement in global fuel efficiency by 2020.

These are impressive facts but they are not enough. Other sectors are winning the environment debate. The auto-industry talks about a carbon neutral future; gas and oil see green business opportunities; and GE has green at the heart of its corporate strategy. Global industry is shifting gears on the environment issue to make it a core business principle. Despite our achievements, we are being left behind. We need to catch-up-fast.

IATA’s position on the environment

Let's review IATA's environment position. It starts with technology.

  • Technology has driven our progress to date.
    We target 25% improvement in fuel efficiency by 2020. We must now pressure our manufacturing partners to start thinking beyond the 787 and A380 to the next generation. And let's put more pressure on the oil companies to come to the table with some alternatives on fuel Our target is for 10% conversion to alternative fuels by 2020. Airlines will spend US$117 billion on fuel this year and oil companies will make over US$4 billion in profit on the refinery margins alone. Clearly there are sufficient resources to support some major research.
  • The second pillar of our policy is on operations
    Every minute that we can shorten flight time saves 62 litres of fuel and 160 kg of carbon emissions. The UN identified 12% inefficiency in global air traffic management. That's a US$13.5 billion bill for wasted fuel and 73 million tonnes of un-needed carbon emissions.

    European ATM is a bureaucratic mess. There are 34 service providers, when one could do the job. This inefficiency results in 12 million tonnes of wasted CO2 each year.

    For three years we have been trying to solve the Peal River Delta situation. The approach and departure procedures waste up to 25 minutes. In dollar terms the waste is up to a million Hong Kong dollars a day. In CO2 terms, it is equivalent to having 200,000 extra cars in the Hong Kong area. But that is not the only issue. There are serious airspace problems in China: delays in the Golden Triangle of Hong Kong/Guangzhou, Beijing and Shanghai are measured in hours not minutes. And with China traffic growing at double-digit rates the situation will get worse.

    We must act quickly. IATA is a consultant to the CAAC and we appreciate the constructive relations we have built with Minister Yang and with the Air Force, thanks to General Zhang Jianping. Together we achieved new routes to China from Europe. And we are working on more entry points for polar routes and an Olympic Bypass route for Beijing. Our goal is to have a leading edge globally harmonised ATM system for China.

    Our work on routes is broad. In 2006 work on over 350 routes resulted in a 6 million tonne annual reduction in carbon emissions and over US$1 billion in fuel savings for our member airlines. Government-industry cooperation is critical In China and all over the world and all governments must bring along the military. We can only make progress by working together. Operational progress is a win-win solution but far too often we have to battle with governments and ATM to get them to see the benefits. If we are going to meet expectations on the environment - often set by governments - this must change.
  • The third element of our policy is to avoid taxes and charges
    Many governments think green and see cash. As politicians compete for their green credentials, taxing airlines and our passengers is becoming a popular sport. Look at the nonsense in the UK where Chancellor Gordon Brown doubled the air passenger duty to help the environment.

    The UK treasury scored GBP1 billion pounds in new revenue but I have yet to hear how many trees Mr. Brown is planting with the cash. Mr. Cameron - the potential next Prime Minister but one is wrapping himself in green and wants a progressive tax on travellers called green air miles. Mr Cameron's way means people will get one low tax short haul trip a year. After that, the intention is to return flying to being a hobby of the rich.

    And it is not just the UK - the Netherlands plans a EUR 350 million environment tax on aviation and earlier this month we stopped Belgium from imposing a EUR1 billion tax on air travel to maintain a 0.3% budget surplus. It is the perfect issue for politicians. Champion a good cause, beat-up on the industry, while carefully avoiding the facts and improve the national finances. So the list of taxes will continue to grow. 

    Let me be clear, airlines do not get a free ride and we're not asking for one. We already pay US$42 billion a year for airport and ATM infrastructure. More taxes only rob us of the cash to invest in new technology and the opportunity to further improve our performance.
  • Emissions Trading makes more sense
    Provided that it is properly designed. What is a properly designed scheme? Open, with equal obligations to other industries and globally harmonised. A global solution is critical because regardless of where carbon is emitted it stays in the atmosphere for a very long time. And it's everybody's problem. The drafters of Kyoto asked ICAO to take this on.

    Technical guidance was agreed at CAEP in February. You are probably aware that the Europeans are jumping the gun with plans to include international aviation in their emissions trading scheme from 2011 for European Airlines and from 2012 for the rest of the world. The extra-territorial aspects of this are a big concern. This underlines the importance of ICAO in the process. The ICAO Assembly in September of this year is critically important to achieve a global solution.

The Asian Agenda

So where does that leave Asia? You are growing above the global average - about 6% per year to 2010. By that time flights to, from and within Asia will be a third of the global total. The largest single block of air traffic.

Governments in the region see aviation as a catalyst for economic growth. Your fleet is younger - 10 years compared to the global average of 12. That makes you more fuel efficient and environmentally friendly. In the last decade, most of the world's major airport projects were in Asia: Bangkok, Kuala Lumpur, Nagoya, Beijing, Shanghai, Guangzhou, Hong Kong and Seoul.

You have some great leaders in ATM. Australia, to name just one, is at the leading edge of environmentally friendly user preferred routes. They have daily flexibility to take advantage of the best flying conditions, which saves an average of 2 to 3 minutes per flight to Asia.  So what are you going to do? Sleep easy knowing that aviation is the greenest form of long distance transport? WRONG - that is the mistake that we made in Europe.

Time to Communicate

We had a great story and kept it a secret. And we did not put enough pressure on governments to come to the table with solutions like the Single European Sky. Asia, as a major player in the industry, must find its own way of taking leadership and addressing the issue. Now is the time to shout politely to communicate our story in Asia.

First, to ensure that governments and the media understand the good things that we are doing and our commitment to do even more.

Secondly, to involve governments in the solutions. What's the point of saving 30 minutes with a new route to Europe-IATA-1 if we waste 25 minutes touring the skies of Hong Kong on arrival? The role of Governments in ATM is absolutely critical.

Third, in all of this, you need to participate strongly in developing our future vision because Asia is the future of our industry. Combined, these three points are Asia's best insurance against the crisis that we face in Europe

Lastly, I want to draw your attention to the posters around the room The goal is to work with our members to kill the myths, put the problem into perspective and point towards solutions. It is coordinated with the ATAG campaign that will be part of Philippe Rochat's discussion tomorrow. A poster campaign will not solve all our problems but it is one example of the industry story we can tell together. We are an industry of many parts and solutions must be team efforts. Airlines, airports, ANSPS, Travellers and Governments, including the military. So thanks to Orient Aviation for assembling the team at this conference. IATA looks forward to working with all of you to build a strong, environmentally friendly future for air transport in Asia.

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