Port Louis, Mauritius -The International Air Transport Association (IATA) urged Mauritius to take a leading role in air transport liberalization, efficiency and environment issues.
“Air transport brings enormous economic benefits. Nowhere is that more evident than in Mauritius where air transport is the backbone of the tourism industry. As a result, Mauritius has taken a leadership role in global aviation,” said Giovanni Bisignani, IATA’s Director General and CEO in a speech to key policy-makers and the business community. Bisignani noted the need for change to support effective approaches to the financial and environmental aspects of sustainability.
After losses of US$42 billion between 2001 and 2006, the airline industry returned a US$5.6 billion profit in 2007, equal to a 1% return. IATA forecasts the industry will post a global loss of US$5.2 billion 2008. The return to the red is a result of extraordinarily high oil prices in the first three quarters of the year, and fall-off in demand beginning in July-August. Last week IATA announced global traffic figures for September showing a 2.9% decline in passenger traffic and a 7.7% drop in cargo. “What we are gaining from lower oil prices, we are suffering in reduced revenues as the credit crunch evolves into a global economic crisis,” said Bisignani.
At the IATA Annual General Meeting held in Istanbul in June, IATA’s 230 member airlines issued a declaration calling for broad change in all aspects of the industry, to match airline efforts that have seen a 19% improvement in fuel efficiency, an 18% drop in non-fuel unit costs and a 25% decrease in sales and marketing unit costs. The Istanbul Declaration urged labor to understand the need for change, monopoly service suppliers to improve efficiencies and governments to regulate monopolies, improve infrastructure and expand commercial freedoms.
Bisignani noted the leadership role that Mauritius is playing in key aspects of change:
Liberalization: “Mauritius brought a great story to our Agenda for Freedom summit this past weekend. The courageous decision of the Government in 2006 to open its aviation market invited new competition that boosted tourism and strengthened the national carrier. This shows that carefully planned liberalization can deliver broad economic benefits even in the case of isolated island nations where the national carrier plays a critical role in national development. Mauritius brought a unique perspective to the meeting and is a great example for other governments to follow,” said Bisignani.
The Mauritius delegation at the ground-breaking summit was led by Vice Prime Minister Duval. The summit started a process of working towards increased commercial freedoms in the areas of market access and ownership while maintaining a level playing field for airlines to compete fairly. The goal is to modernize the 60-year-old bilateral system that governs international air transport to create a stronger industry that can even better fulfil its role in economic development.
Efficiency: “Mauritius has played a leading role in IATA’s Simplifying the Business (StB) programme. On 4 October 2008 the IATA e-freight programme went live between Mauritius and London. Mauritius is the first African state to take such a leading role modernizing cargo processing by driving paper out of the processes,” said Bisignani. IATA e-freight will deliver US$1.2 billion in savings by replacing paper with electronic documentation. Air Mauritius is bringing the benefits of StB to make Mauritius a more convenient and more competitive destination for both cargo and passenger traffic. “Air Mauritius met the e-ticketing deadline in June, it is using bar coded boarding passes. And it is looking at implementing common-use self service kiosks for check-in,” said Bisignani.
Environment: “Environment is the greatest political challenge facing the planet. Aviation is 2% of global carbon emissions. Aviation is a small part of the problem and we are determined to be a part of the solution,” said Bisignani. IATA’s four pillar strategy to address climate change focuses on technology, operations, infrastructure and positive economic measures. “Too many governments only see a pot of green gold in their approach to environment issues. So we get tax after tax with no coordination.
For island nations dependant on tourism this can have serious negative impacts. When the UK doubled its long-haul Air Passenger Duty to GBP 40, vacations to Mauritius become more expensive. Even as the UK contemplates further increases, Europe finalized plans to bring aviation into its Emissions Trading Scheme commencing in 2012 at a cost of EUR 3.5 billion.
IATA is not against emissions trading. Economic measures are part of our four pillar strategy. However, this is a global issue that needs a global solution. In line with the Kyoto Protocol, I look for Mauritius to support a global solution brokered through ICAO and its Group on International Aviation and Climate Change (GIACC),” said Bisignani.
“The aviation industry is in a crisis and change is critical to build a sustainable future. That means commercial freedoms, efficiency, realistic taxation and an effective approach to environment. Mauritius is playing a role on the world stage in helping to drive many of these changes. At the same time I urge the government to re-consider the costs that it is adding to the industry with taxes and charges, including the Maurice Ile Durable tax and the State Trading Corporation transfer fee charged on fuel. Together they are nearly a US$12 million disincentive for tourism,” said Bisignani.
“With the right policy framework, aviation is a sustainable development mechanism. In Africa, aviation supports 430,000 jobs and US$9.2 billion in economic activity. And for every 10% increase in air transport utilization, there is a 1% boost to GDP. I look forward to aviation continuing to play a strong role in the sustainable development of this great country - Mauritius,” said Bisignani.