Mobility is the Key to the Global Economy
By Giovanni Bisignani Director General and CEO, IATA
As one year ends and another begins, businesses are taking stock of their achievements and seeking new opportunities. People are planning holidays and looking forward to seeing family and friends. And our supermarkets and department stores are full of food and products from around the world.
The aviation industry and the mobility that it makes possible play a big role in all of this. Our reliance on aviation is so strong that it is taken for granted. But imagine how different the holiday season would be without it.
Last April’s volcanic ash crisis in Europe demonstrated the global impact when even a part of the industry shuts down. Sadly, despite this wake-up call, very little has changed to make the aviation business easier. In fact, as we look into 2011, some of the challenges we face look set to get even bigger.
The first is security, in light of October’s events in Yemen. There is hope. Department of Homeland Security Secretary Janet Napolitano has brought a new spirit of collaboration among those with a common interest in keeping flying secure. The reaction to the Yemen incident shows that this is more than words alone. Governments foiled the plot because of intelligence sharing and coordination with the airlines involved. Targeted temporary measures were introduced.
When the investigation concludes, we must avoid a knee-jerk, politically motivated reinvention of the air cargo security system. The combination of a supply chain approach, more effective technology, and using e-freight data to enhance intelligence, creates a well-developed basis for securing air cargo against dynamic threats. The challenge is to find intelligent solutions that will protect mobility by strengthening the foundations already laid.
Another growing challenge is taxation. The UK increased its Air Passenger Duty to $3.8 billion in November. From January, Germany will collect a further $1.36 billion (EUR1 billion) from aviation. And Austria will add a $136 million (EUR100 million) burden to the industry from April. There is no indication that Austria will be the last. Governments are strapped for cash. But aviation should not be the victim of short-sighted measures that can do broad and long-term damage.
Mobility is the basis for the global economy. Governments must understand that making mobility more expensive is costly in other ways. Lessons learned in the Netherlands are a case in point. Its $433 million (EUR318 million) departure tax cost the economy $1.63 billion (EUR1.2 billion). That tax was abolished. In 2011, we must shout politely but much louder to remind governments that burying the airline industry in taxes is not a wise way to solve their budget problems.
Finally, there is the constant challenge to turn a profit. In the past decade airlines restructured and slashed costs dramatically. IATA helped by bringing savings of $48 billion. But our 2010 margins were less than 2% and this will deteriorate in the coming year. It’s time to look beyond the crises, cycles, and shocks that dominate the horizon and to think big about a future with sustainable profits. IATA’s Vision 2050 will do this with the help of Professor Michael Porter of Harvard University, Singapore’s Minister Mentor Lee Kuan Yew and a group of industry leaders who will meet in Singapore in February 2011. I look forward to reporting some great ideas at our 67th AGM in Cairo this coming June.
In the meantime, I encourage you to take note of the enormous role that aviation will play in the business, religious, and private rituals and events that will mark the new year. The changes this industry needs can only be achieved with a true appreciation of the role we play in making our global village a reality. It’s a great story. We should not be shy about it.