Skip to main content

Test Home

Search

You are here: Home » Pressroom » Speeches
  • Print this page
  • Share this page

Date: 2 June 2011

Remarks of Giovanni Bisignani at the AGM Curtain Raiser Press Briefing, Singapore

Today, we have lots of news starting with our traffic results for April. First the headline numbers, international passenger traffic in April was up 16.5% compared to last year and international freight was up 5.4%. On the domestic side, passenger traffic was up 4.7% but domestic freight was down 9.3%. We have more detailed numbers in the press release but let me highlight a few key areas.

International Passenger Traffic

The 16.5% increase in international traffic is good news but we are comparing to April last year when European airspace was closed for several days due to volcanic ash. This makes the improvement look better than it actually is. Europe for example, was up 29.3% because April 2010 was such a disaster. A better way to look at it is to see that we are 7% above the pre-recession peak of 2008.

Middle East and North Africa

In the Middle East, Syria, Yemen and Bahrain have been hit hard but they are small markets, only 6% of Middle East traffic combined. Overall, the region recorded 12.1% growth for international traffic. Libya, Tunisia and Egypt are having a bigger impact on African markets. African traffic fell by 7.1% in March and grew by 1.2% in April. About a quarter of flights to Egypt and Tunisia were cut but volumes have recovered half of the 18% that they lost in February.

Asia-Pacific

There are two stories in Asia-Pacific. The first is Japan. Asia-Pacific international traffic declined 0.6% in March and grew at 5.1% in April. Japanese international traffic is still down by about 20%, cutting 1% from global travel and the Japanese domestic market was down 31% in April. The other Asia story is China and India. As a result of tighter economic policies, domestic Chinese growth slowed to 10.8% in April below the 15% recorded in 2010. On the other hand, India is moving forward quickly with 25.6% domestic growth. Over the last five years, China’s domestic market has doubled in size to 240 million and now ranks second only the United States Meanwhile, India’s domestic market has tripled to 45 million - the sixth largest in the world.

 Cargo

Lastly is the cargo story. Since its post-recession peak in May last year, cargo has shrunk by 6%. After the re-stocking boom, demand returned to more normal levels. The 5.4% global growth for international cargo hides the fact that Asian cargo traffic fell 2.6% because of disrupted supply chains associated with Japan and slower Chinese growth. Asian carriers represent over 40% of the global cargo market so this impact is big. Slower Asian growth was hidden by the 13.4% improvement in Europe because we were comparing to such a bad month last year.

Overall

To sum up the situation, I see some very big positives signs - business confidence is high, demand is growing at 3-4% (after stripping out distortions) and we are maintaining overall load factors at around 77%. On the negative side, we are still vulnerable to shocks and oil continues to trade at $110 per barrel.  In March, we revised our 2011 outlook to a global profit of $8.6 billion. Since then, much has happened to make us less optimistic. We will announce our new outlook at IATA’s Annual General Meeting (AGM) on Monday. But I can confirm that the challenge for airlines to deliver profitability will be difficult. Maintaining high utilization of assets - the planes - in such a dynamic business environment will be difficult.

AGM

As you know, the IATA AGM will be held in Singapore starting this weekend. We are expecting over 700 industry leaders and about 250 of your journalist colleagues to attend the event. It is the biggest and highest level event on the aviation calendar. This is the third time that the AGM comes to Singapore. Previously, we met here in 1976 and 2004. The 2004 AGM is very memorable for me as it is when the industry decided to eliminate paper tickets. And 48 months later, we celebrated 100% e-ticketing at our 2008 AGM in Istanbul. The 100% e-ticketing was part of our Simplifying the Business program that has so far saved the industry over $17 billion. Simplifying the Business is indicative of the big changes that aviation has implemented over the last decade and yet, despite those changes, profitability is pathetic. Last year was a good year but still we only made around a 3% margin, not even enough to cover the cost of capital.

Sustainable Profitability,

One of the big themes of the AGM will be the search for sustainable profitability. It is a two-part discussion, getting governments to provide a level playing field and allowing airlines to compete with normal commercial freedom and finding a way for the value chain to work together to deliver efficiency and create new value for our customers.

Security

Another theme will be security. In Singapore, you are fortunate to have a very efficient airport and approach to security but it is not like that everywhere and for many passengers, security only means hassle. A key point is that the airport security checkpoint is a 40-year-old concept. It does not need updating, it needs to change completely. Last year, I announced a concept for a Checkpoint of the Future where passengers can walk through without stopping, stripping or unpacking. The checkpoint will take a risk-based approach using passenger information more effectively and the best of technology. I don’t want to give away all of the story but at the AGM you will see the first conceptual mock-up of the Checkpoint of the Future.

Asian Leadership

Another theme that we will hear a lot of is Asian leadership. Asia is already our biggest single market along with North America it is about 26% of total traffic. By 2014, just around the corner, Asia will be 30% of traffic and we will be looking to this region to deliver the changes that Europe and North America, our traditional leaders, have not been able to achieve. And I am absolutely convinced that this will happen. In fact so convinced, that I will spend time in Singapore after my retirement helping to teach the next generation of leaders at Nanyang Technological University.

Conclusion

With all this as background, I can promise you that this will be an exciting AGM and I am happy to take your questions

ADVERTISEMENT


Additional information

© International Air Transport Association (IATA) 2014. All rights reserved.