Remarks of Philip Goh - Regional Vice President, Asia Pacific, IATA at the Aviation Day in Colombo, Sri Lanka on 14 July 2023
It gives me great pleasure to be in Colombo today for Aviation Day Sri Lanka. IATA is delighted to partner with the Civil Aviation Authority of Sri Lanka to organize this event. The theme of Aviation Day Sri Lanka is Positioning Sri Lankan Aviation for Growth – it is an important idea to expound upon, especially as the aviation industry emerges from the devastating impact of COVID-19.
The last three years have been the most challenging in the history of aviation. Never have we seen governments shut their international borders and for such extensive periods. We have never seen so many airplanes grounded and parked at airport tarmacs all over the world, going nowhere. And almost overnight, the disappearance of passenger traffic at international airports.
Between 2020 and 2022, the global airline industry recorded massive losses totalling about $180 billion. Airlines in our region, the Asia-Pacific, accounted for about 40% of worldwide losses – or over $70 billion.
Fast forward three years. The good news is that a strong recovery is underway. As of May 2023, total global passenger traffic has reached 96% of 2019 levels, led by domestic traffic recovery which has already exceeded pre-pandemic levels. International traffic has lagged domestic recovery but is still very encouraging, having reached 90% of May 2019.
The reopening of international borders in the Asia-Pacific region lagged the other regions, so does our recovery. In May, international traffic for the Asia-Pacific region was at 69% of pre-pandemic levels whereas traffic for the Middle East and North American regions have already exceeded pre-COVID levels.
We are slower in recovery but moving in the right direction. We expect the global airline industry to record a cumulative profit of $9.8 billion in 2023. But, profitability for Asia-Pacific carriers will not come early - we expected the region’s airlines to report a collective loss of $7 billion this year.
Blueprint for Sri Lankan Aviation
Sri Lanka’s aviation sector was not spared from the impact of the COVID-19 pandemic. In April, passenger numbers were at 71% of 2019 levels. We project that Sri Lanka’s passenger numbers will only recover to pre-COVID levels in 2025.
Aviation is a key contributor to a country’s social and economic development. Before COVID, Sri Lanka’s aviation sector supported some 700,000 jobs and contributed about 9% of the country’s GDP. This has the potential to increase to over 1 million jobs contributing nearly $30 billion to the country’s GDP by 2038. As the industry emerges from COVID-19, we believe aviation and connectivity can play an even bigger role in Sri Lanka’s economic development and social advancement.
But because none of this will happen by chance, we urge the government and all industry stakeholders to collaborate on developing a blueprint to support and shape the development of Sri Lanka’s aviation industry.
Facilitating Growth
An aviation development blueprint must facilitate the growth of the aviation industry.
Having an updated airport masterplan is a first step. Work is underway to expand Bandaranaike International Airport. I urge the government to embark on a consultative approach involving airlines so that the industry’s input can be factored into the masterplan. That is the best practice.
Facilitating growth also includes digitizing processes. Many of today’s passenger and cargo processes are paper based. As passenger traffic grows, there just isn’t enough resources or space to handle the increase in passengers. IATA’s One ID initiative will be able to improve the handling capacity at airports while enhancing the travel experience, efficiency, and at the same time maintain the security of data and processes. This same digital transformation can be made for cargo through IATA’s One Record implementation.
Keeping costs low will also help facilitate growth. Airlines pay more for jet fuel in Sri Lanka than at other major airports in Asia. With fuel costs accounting for the lion share of an airline’s operating costs, around 30%, high jet fuel prices will have adverse impact on operating costs, ultimately affecting airlines’ financial viability. We urge the government to review and consider placing limits or capping the amount that CEYPETCO can mark up for supplying fuel at the airport.
Growing Safely
It is also important for Sri Lanka’s aviation sector to grow in a safe manner. The global aviation industry has a good safety performance. In 2022, we saw a reduction in the number of fatal accidents and the fatality risk, compared to 2021 and to the five year average from 2018-2022.
Safety is not something we take for granted. The IATA Operational Safety Audit (or IOSA) is the global standard for managing operational safety. IOSA is helping to improve safety, and there are currently more than 400 airlines on the IOSA registry, including Sri Lankan Airlines. In 2022, IOSA registered airlines outperformed those not on the registry by a factor of four. I urge the government to explore how IOSA, as well as the IATA Safety Audit for Ground Operations (or ISAGO), can be used to contribute to greater aviation safety in Sri Lanka.
IATA is doing our part to support Sri Lanka’s safety efforts. Utilising the International Airlines Training Fund, IATA will support the industry in Sri Lanka by conducting safety related training in August for the CAA of Sri Lanka and Sri Lankan Airlines.
Growing Sustainably
As the industry gets back to a growth trajectory, it needs to grow sustainably. Airlines resolved in 2021 to achieve Net Zero carbon emissions by 2050. Last year, at the 41st ICAO Assembly, the 193 ICAO member States agreed on Long Term Aspirational Goal to achieve the same target of net zero emissions by 2050.
IATA has recently published a series of roadmaps to achieve net zero by 2050, which are the first detailed assessment of the key steps needed to make net zero by 2050 a success. It covers technology, fuel infrastructure, operations, finance and policy.
The journey to net zero is not just for airlines. Governments, suppliers and manufacturers, financiers, all have a role to play. Each must deliver the products, policies or investments needed to decarbonize our industry.
I am delighted to note that net zero carbon from aviation by 2050 is one of the stated policy goals of Sri Lanka’s sustainable aviation environment policy. The policy also stated the goal to ensure the availability of sustainable aviation fuels (SAF) in the country. SAF is critical to our decarbonization efforts as it is expected to abate more than 60% of aviation carbon emissions by 2050.
My team and I at IATA look forward to working with the government on your net zero efforts. We would like to encourage a comprehensive consultation process that involves airlines and other aviation stakeholders as the government develops sustainability policies, whether for SAF or other environment sustainability aspects including noise and waste management.
Conclusion
The discussions and ideas from today’s Aviation Day Sri Lanka can form important catalysts for evolving an aviation development blueprint.
IATA hopes that we will all collaborate to move from discussion to action and ensure that the aviation community in Sri Lanka – airlines, airports, government, regulators, and other partners – is prepared for sustainable growth, and chart a pathway forward that will deliver social and economic benefits to the country.
Thank you.
