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Date: 17 September 2013

Remarks of Tony Tyler at Aviation Day Africa, Lagos

Good morning. It is a pleasure to be here in Lagos. This is my first visit to Nigeria. And the warm African welcome that you have extended to me has already made it a very memorable one.

It is great to see such a broad gathering of leaders for this Aviation Day. It befits an industry that is so critical to Africa today, as the esteemed speakers before me have noted. Aviation supports 6.7 million jobs and some $68 billion of economic activity in Africa. Those numbers themselves are impressive. And behind them are countless real-life examples of how aviation enriches lives across this vast continent.

Every plane carries with it enormous possibilities. Business is connected to markets. Tourists are brought to amazing destinations. Students travel to study. Products are delivered to consumers. Aid is transported to the needy. Doctors reach their patients. Components are brought to assembly lines. Ideas cross oceans. Families are reunited. Friends are made. International understanding is facilitated. And our world becomes a better place.

As you can see, I am passionate about aviation. And I firmly believe that we have only just begun to realize the potential for aviation in Africa. Since becoming Director General and CEO of IATA just over two years ago, it is among the destinations that I have visited most often. Of course, it is a vast continent and I know that I have only just scratched the surface in exploring it. But it is absolutely clear to me that aviation can and, with our combined efforts, will contribute even more to Africa’s development.

Earlier this year we showcased Africa’s potential to the aviation world as we held our Annual General Meeting in Cape Town, South Africa. It was only the third time that the event has been hosted on African soil. And it occurred at a golden moment in Africa’s development. This year we are celebrating the 50th anniversary of the African Union. And Africa is poised for rapid development and great changes. Half of the top 20 fastest growing economies over the next five years are expected to be on this continent. Aviation will not be a passive beneficiary of growth. Its role in driving growth and development will grow even more prominent.

We are here today to build the future. The theme for today could not be more appropriate—Safety, Infrastructure and Capacity Building. Realizing aviation’s potential will not happen by accident or without effort. These are the fundamental issues that must be addressed. Nobody has all the answers. Strong partnerships—between the various players in the value chain and with governments—are the way forward.

Symbolic of that partnership, later today IATA will sign with the African Civil Aviation Commission (AFCAC) a Memorandum of Understanding (MoU). This MoU will commit our two organizations to even closer cooperation on the priorities for African aviation.

Safety

No priority is greater than safety. And Africa’s performance is well below what we are achieving globally. In 2012 African airlines had one accident (with a Western-built jet aircraft) for every 270,000 flights. Globally, the industry average was one accident for about every five million flights. Put another way, African aviation accounts for about 3% of global traffic. And last year it accounted for nearly half of the fatalities on Western-built jets.

While these figures are a shocking call to action, I must say that 2012 also gave us cause for optimism. None of the 25 IATA members in Africa (17 in Sub-Saharan Africa and 8 in North Africa) had an accident. Furthermore none of the 384 airlines on the IATA Operational Safety Audit (IOSA) registry had a jet hull loss—including some three dozen carriers on this continent.

It is clear that IOSA is making a difference—not just in Africa, but in safety globally. In each year since 2008 when IOSA became a condition for IATA membership, IOSA carriers have performed better than those that have not been audited to its 900+ standards.

African Governments have recognized the need to improve safety. And the Abuja Declaration sets out a comprehensive approach to reaching world-class safety by 2015. And I should take a moment to commend Nigeria for the important role that it played in building the political will to reach this agreement.

The Declaration focuses on concrete initiatives:

  1. The establishment of independent and sufficiently funded civil aviation authorities
  2. Implementation of effective and transparent safety oversight systems by all African states
  3. Completion of IOSA by all African carriers
  4. Implementation of accident prevention measures focused on runway safety and loss of control
  5. Implementation of flight data analysis
  6. And implementation of safety management systems by all service providers

Linking this list together is the common theme of global standards. IATA is actively contributing its expertise and resources to all the Abuja Declaration’s commitments. And we are paying special attention to IOSA. Having African carriers on the IOSA registry demonstrates that IOSA’s global standards are achievable by carriers on this continent. But I recognize that it will be a challenge.

We are doing workshops with governments and carriers across Africa. And, through the International Aviation Training Fund (IATF) we are sponsoring ten African airlines with in-house training to achieve IOSA registration. Gap analysis for nine of these airlines is complete. And the last one will be done in November.

I will take this opportunity—with so many African governments represented here—to urge them to make IOSA mandatory. So far Egypt and Madagascar are the only governments on the African continent to have done so. More governments joining them will send a signal that Africa is serious about the Abuja Declaration commitments.

IOSA can assist governments in safety oversight. But it is not a substitute for effective safety oversight by civil aviation authorities. The results of the International Civil Aviation Organization (ICAO) Universal Safety Oversight Audit Program (USOAP) are very telling. As of the end of 2012 only 11 African states have achieved 60% implementation of ICAO’s safety-related standards and recommended practices (SARPS). Two of those were newcomers to the list—Mauritania and Sudan. There is improvement, but over 40 states are below this important benchmark. Meeting the Abuja Declaration’s 2015 commitment will require a major acceleration in the pace of implementation across the continent.

We have two years, three months and 14 days before the end of 2015. A lot of ground needs to be covered and we cannot lose momentum. IATA is a committed partner. And I hope that over the next days we will develop an even better understanding of how we must work together as a team of stakeholders to deliver world-class safety to Africa.

And while we are focusing on safety, I will need to address two further issues.

The first is to encourage states to submit data to the Air Operator’s Certificate Database hosted by ICAO. Cabo Verde is among the first five states to provide data and the only one from Africa. This data will perform a vital role in helping the industry to manage the proliferation of operational specifications that are being introduced. I hope that Nigeria will be among states submitting by year-end.

The second is to comment on the European list of banned carriers. The Abuja Declaration has spurred work across Africa to improve safety. This stands in stark contrast to Europe’s misguided banned list which lacks the transparency needed to guide actions. But as ineffective—and unfair—as it may be, I don’t see any signs of a change in Europe’s approach.

Already Africa is united, under the leadership of an African Union declaration, in efforts to achieve world class safety performance. And it cannot be disputed that the major part of the African industry is performing well and in line with global performance levels. But the overall safety performance still indicates a gap.

I am convinced that successfully delivering on the Abuja Declaration’s target will deliver safety improvements that Europe cannot argue with. That is why IATA is here, engaged and committed. And, in anticipation of that success, I can see the African Union taking on a role as interlocutor with Europe on how to reflect these imminent improvements that we all hope for in a revised approach by Europe.

Infrastructure

Alongside safety, infrastructure development is also a critical challenge for Africa.

Some of the challenges are physical—infrastructure in many parts of Africa needs to improve. Yesterday I was briefed on improvements to Lagos airport, Nigeria’s main gateway. From the ambitious project, it is clear to me that Lagos wants to continue as a main hub for aviation in this part of Africa. Nigeria is also investing in its air navigation services infrastructure. It is one of the leaders of Performance-Based Navigation implementation in Africa.

I am also pleased to note that Ghana is also strategically planning for aviation connectivity to be a key component of its economic development. Although I have yet to visit, my team has given me positive reports on ambitious expansion plans there.

Aviation infrastructure built to global standards—on the ground and in the air—is one of the foundation stones for a successful air transport sector. And I must say that I am pleased that so many governments in this part of the world—Ghana and Nigeria among them—are taking advantage of IATA’s expertise in reflecting user needs as infrastructure is developed.

As I am in Lagos, my members would be disappointed if I did not mention one piece of physical infrastructure that is in desperate need of urgent attention. That is the fuel transportation infrastructure from Apapa Terminal to the airport. It goes without saying that fuel supply reliability is crucial.

We need to find a sustainable long-term solution to this long-standing problem. The vandalized pipeline is no longer in use. Trucking fuel through dense traffic for storage on site is inefficient and costly. And making unscheduled technical stops to top up fuel causes schedule disruptions and inconveniences for passengers on top of the direct costs of a technical stop.

Without making light of the challenges involved—I know that they are many and complex—securing a few kilometers of pipeline is not an impossible task. We are working with the oil industry to find a solution. And we will be seeking the government’s political will to help us make it happen. Ensuring fuel reliability is critical to Lagos’s future as a hub for connectivity across South-West Africa.

Aside from the physical infrastructure, there are infrastructure policy issues which must be addressed. Most of these concern charges. As with safety, global standards exist to provide guidance. ICAO has clear principles on charges. These include cost-relatedness, non-discrimination and transparency. It is also recommended that charges be developed in consultation with users. And there should be no pre-financing.
In Africa there are too many exceptions to the pragmatic approach that has been agreed internationally. Let me give you a few examples to illustrate:

  1. In Senegal, airport charges include an infrastructure development fee. If airlines and their passengers were enjoying a beautiful new modern and efficient facility, that might be acceptable. But they are paying for an airport that is still under construction. You would not charge a toll for a bridge that is not yet built. ICAO principles indicate that the same approach should be followed here.
  2. The Senegal case also highlights the issues with lack of transparency and consultation. On a per passenger basis, total charges are well in excess of even the most expensive European airport. As there has been little if any consultation with the airlines on the project. There is not even the assurance that we are paying for something that we will eventually want.
  3. There is also an emerging trend in security charges that is worrying. Some governments are agreeing to broad security and facilitation contracts without prior industry consultation. And when we start discussions, we find that non-aviation items have been thrown-in—the cost of securing land borders for example. I am pleased to see the delegation from Sierra Leone here. We are working together closely to resolve successfully a very similar situation.
  4. And, as we are here in Nigeria, I must also mention that we are working closely with the government to resolve the differential charging regimes for air navigation services between international and domestic operations.

There will be a whole session on financing aviation infrastructure later today. But I wanted to give these few examples to illustrate the importance of the problem.

On top of charges for services, we also see many governments looking to aviation as a source of funding. A number of revenue raising regimes exist—Solidarity taxes, tourism taxes, VAT and sales taxes and so on.

The industry is reasonable. We understand that infrastructure needs to be paid for. We also believe that aviation should not have a free ride on taxes. As with any industry or activity, governments have the right to levy reasonable taxes while understanding the economic costs and benefits of the action. And finally we realize that Africa has some very fundamental problems such as combatting poverty, fostering development and improving education—all of which need to be funded.

What I am asking for today is that governments consider this holistically and strategically. Aviation is an economic driver. Its success can stimulate economic activities and generate wealth on a scope and scale that is well beyond what could be extracted from the industry in tax. And that will go a long-way to solving some of the other problems that government face.

Governments must also recognize that every dollar counts. If we average the entire industry’s profits for 2012, airlines retained about $2.50 for every passenger. And African airlines have been hovering around break-even for a decade or more. Even a small tax or charge can turn an operation from profit into loss. Even if services are maintained, they will not grow connectivity as robustly—limiting economic growth potential.

I would like to commend the Government of Ghana for giving us an example of leadership in this area. Ghana is focused on keeping its costs competitive with a series of measures. The latest was a major restructuring of fuel charges that eliminated a subsidy paid by aviation to other fuel users. And the boom in Ghanaian aviation that started in 2009 continues.

So I would propose that governments keep the costs of connectivity competitive. Plan to pay for infrastructure based on volume growth—where everyone pays a little. And re-invest into the industry—both in physical infrastructure and in training to develop the skills and talent necessary to grow connectivity.

And the stronger that we are able to make the aviation business in the continent, the better prepared it will be to attract the financing for fleet expansion. Over the next two decades, the African industry will need in the range of 1,000 aircraft requiring some $130 billion in new capital. That won’t come if the industry’s finances are not in order. I will not go into detail on that. It is a complex subject and there will be an expert panel to focus on it later today.

Liberalization

But this thought does lead me nicely to the last point that I want to address today—liberalization. Aviation is a highly regulated industry. And the hand of government—for various historical reasons—extends to regulating market access in ways that are not applied to any other industry.

Africa’s economic development needs connectivity. People need to meet in order to do business. Products need to be shipped to buyers. Remote locations need access to global markets. The continent is too big and the thirst for fast connectivity is too strong for road or rail to satisfy. Africa’s many rivers are physically unable to function as trade routes. Eventually we will see land infrastructure develop. But building a road gets you from A to B whereas laying a runway connects you from A to the world.

Ironically, connectivity from Africa to other continents is more developed than connectivity within the continent. Lagos is one of the better connected cities in Africa. There are daily flights to Atlanta, but not to Dakar or Abidjan. And there are more flights to London than there are to Nairobi.

Even as African economies grow, we are seeing an almost perverse trend in connectivity. So far this year, international traffic to/from West Africa is up about 8%. But traffic amongst the 18 countries in the region is down by over 10%.

Africa has a visionary framework for growing connectivity across the continent in the now epic story of the Yamoussoukro Declaration which started in 1988. There has been some progress. But it is far from being transformational as intended. It is interesting to see that African governments find it somehow easier to expand bilateral arrangements with long-haul trading partners than invoking Yamoussoukro to develop connectivity within the region.

I am not suggesting that Africa should have over 50 hubs—one per country. But, if we look at Africa as a whole there are major connecting hubs in the North (Cairo) the East (Addis Ababa and Nairobi) and the South (Johannesburg). There is certainly scope to develop greater hub connectivity in West Africa.

This idea seems to have been picked up by the Economic Commission of West African States (ECOWAS) which is now working with AFCAC on implementing Yamoussoukro more fully in this part of Africa.  Every ECOWAS country could not support its own hub. But opening up regional markets will be a key step in establishing hub connectivity that could provide the entire region with enhanced connectivity.

Conclusion

I am on optimist on African aviation. I believe that we are facing a great moment in the industry’s development. The Abuja Declaration brings together the political will—as never before—to tackle the African safety problem once and for all. There are some good examples emerging across Africa of governments that understand aviation’s potential to contribute to development and are making the investments needed to achieve it. And the robust economic growth in Africa is generating demand for connectivity—both across Africa and with the world.

The way ahead will be challenging. But if industry and government work together as partners with a common purpose and strong vision for economic development fueled by aviation connectivity, I am confident that we will achieve great things as an industry.

Nigeria, as I am sure we will hear from the Honorable Minister of Aviation Princess Stella Adaeze Oduah, will certainly play a leading role in that future. The Aviation Master Plan is the kind of joined-up thinking that we need to see across the continent. And the leadership of Nigeria—the largest country in South West Africa—is being recognized not just in the region but at the global level. Three years ago Dr. Harold Demuren was the focus of the ICAO Assembly when he served as the Assembly’s chair. And Dr. Olumuyiwa Bernard Aliu could easily be the focus of the Assembly as he is very likely to be elected the next President of the Council of ICAO.

IATA will continue to be a strong partner to Nigeria, all of the countries in South West Africa—and indeed across the continent. Under the leadership of Hussein Dabbas, IATA has a strong team in the region. And that includes Adefunke Adeyemi, our former Area Manager who has just been appointed Head of Member and External Relations. And she has passed the baton for Area Manager to the very capable Samson Fatokun.

IATA’s vision is to be the force for value creation and innovation driving a safe secure and profitable air transport industry that sustainably connects and enriches our world. We are committed to that vision and what it means for Africa. I believe that this continent has the greatest potential to gain from an expansion of connectivity. This is my first visit to South West Africa. But it will not be my last. I shall continue to monitor closely developments as we work together to make African aviation safer, more competitive and an even bigger contributor to Africa’s growth and development.

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