It is good to be here in Johannesburg. Today I am concluding a very successful trip to Kenya and South Africa. Aviation is important to Africa. And IATA is strengthening its presence here.

We have re-organised our work in the region to better deliver on our commitment to lead, represent and serve the airline industry. The process started with a global shake-up of IATA to meet the challenges of an industry in crisis. Since joining in 2002 we have changed 60% of our staff in order to serve our members better.

We needed new ideas, new approaches and new energy. Remember, we are an industry that lost US$36 billion between 2001 and 2004. An association that could change the industry fast was needed. Today IATA is a strong organisation that is leading the many changes desperately needed by the industry. We represent:

  • 94% of international scheduled traffic
  • 265 member airlines
  • of which 39 are based in Africa
  • globally IATA settles over 225 billion dollars
  • and our programmes touch all aspects of the industry from advocacy to safety

This year IATA is celebrating 60 years of history. Our first African member was South African Airways which joined in 1945. One of the reasons I am here today is to formally introduce to you a new and stronger structure for Africa. The leader is Vinod Chidambaram, former CEO of Air Mauritius, and our first Vice President for this region. Vinod is supported by two regional directors for Africa.

  • Darren Sack, who directs our settlement systems and
  • Daniel Galibert, our technical director

Johannesburg became our office for Africa last year. It will be supported by offices serving East, Central West and South-West Africa. We are replacing liaison offices for our settlement systems with country managers. They have an expanded role as local ambassadors for IATA. And they are bringing IATA face-to-face with our members, industry partners and governments with greater frequency and efficiency. A re-organised and strengthened IATA in Africa is delivering the results that the industry needs. In locating our regional office to Johannesburg, we strongly appreciate the support that South African Airways is giving to IATA and the industry.

Before getting into specifics on Africa, let me give you an overview of the global situation.

The industry remains in crisis. 2001 was the start of a series of crises that continue to challenge airlines globally. The bottom line tells the story. Despite impressive efficiency gains and cost reduction, today our US$100 billion fuel bill is killing our profitability. We expect another US$7.4 billion in industry losses this year. The only good news is traffic. Passenger traffic is growing at nearly 8.3% this year. Cargo is slower at 3.6%. And global load factors are averaging nearly 75%. African carriers are growing even faster:

  • 11% for passenger and
  • 8 % for cargo

So we are a growing industry that is bleeding red ink.

Change is critical

Our global agenda for change involves airlines, partners and governments. Today I want to set a four point agenda that covers our priorities for Africa.

  1. Safety
  2. Infrastructure
  3. Liberalisation
  4. Simplifying the Business

But first a word for African governments.

Efficient air services are critical to economic development. Aviation is a US$400 billion industry that supports US$1.3 trillion in economic activity worldwide. Airlines are the backbone of tourism which represents 11% of global GDP. We connect products to markets. Over 40% of the value of goods traded internationally are carried by air. African vegetables are on the European store shelves as a result of air transport. For developing economies air transport provides efficient links to many areas that rail or road cannot reach. I am fully supportive of efforts to help economic development in Africa. The G8 summit this year displayed great leadership on this issue. But the summit documentation had two major problems

  • There was no relevant mention of air transport in the documentation on specific plans for Africa
  • And the idea of making air travel more expensive with a development tax is nothing more than nonsense

In Africa, air transport infrastructure can be developed more efficiently than road or rail. The G8 declarations concerning Africa identified over US$30 billion in needed infrastructure products. It is truly disappointing that only US$800 million—less than 3% of the total—was identified for aviation related projects. Moreover, they mis-understood our role as a catalyst of economic activity.

A recent Oxford Economic Forecasting study shows that a 10% increase in air transport utilisation adds 1.6% to GDP. This is why the second G8 discussion—to make air travel more expensive with taxes—makes no sense when trying to help Africa. The reaction of many African governments, including the African Union was strong and clear. If wealthy countries want to push forward development in Africa, freer trade is the answer. Reducing trade barriers will do much more to promote development than any token air tax. I urge African governments to send a clear message to the G8 and others:

  • Pay attention to the role of air transport in achieving development goals
  • And do not limit it by making travel more expensive

Let's now move on to the Agenda for Africa

The first issue is the most urgent: safety

2004 was the safest year ever for air transport. Since 1998 the global hull loss rate dropped from 1.34 per million sectors to 0.78. Remember that this happened at a time when the airlines were suffering severe financial difficulty. And we are committed to a 25% improvement in the accident rate between 2004 and 2006. Africa has made some progress on safety. Cmpared to a 10 year average of 10.84 hull losses per million sectors, in 2004 African carriers achieved a rate of 5.2. This is progress, but it is still 6.6 times worse than the global average. 25% of accidents involving Western-built aircraft in 2004 occurred in Africa. If we add in eastern-built aircraft the figures for Africa are worse. And remember that Africa only accounts for 4.5% of global traffic.

Fortunately, IATA carriers are out-performing the rest of the industry on safety—in Africa and around the globe. But safety is not an issue of IATA or non-IATA. Our industry is built on safety. And we must do better in Africa. IATA is absolutely committed to working with government and industry partners to improve safety.

Before I discuss our special projects for Africa, let's look at the global picture. IATA is working to improve safety focus on a 6 point plan based on:

  • Infrastructure safety
  • Cargo safety
  • Cabin Safety
  • Data and Analysis
  • Training and
  • Auditing

Let me highlight two of these areas: auditing and infrastructure safety. In 2003 IATA's AGM committed to the IATA Operational Safety Audit—IOSA. IOSA is the first global standard for airline operational safety management. It's goal is to raise the bar on safety. IOSA standards were set in cooperation with ICAO and key regulatory authorities including:

  • the US FAA
  • Transport Canada
  • CASA Australia
  • and Europe's JAA among others

IATA manages the audit programme free of charge as part of our commitment to safety. 7 independent accredited audit organisations conduct the actual audits in a competitive commercial environment. IOSA complements the good work with states by ICAO's Universal Safety Audit programme. In fact, ICAO has encouraged states to make use of IOSA in their safety oversight programmes.

You will be aware of the current European discussion of airline blacklists. A number of African carriers have been affected including LAM Mozambique, Transairways, Camair, Central Air Express, International Air Tours Limited, Johnson Air Limited and Silverback Cargo Freighters.

Blacklists are not an effective tool to improve airlines' safety. But they are a political reality that we must be prepared to deal with effectively. IATA is discussing IOSA among European regulators as a transparent benchmark. IOSA is quickly becoming an industry standard.

By the end of the year we will have audited 140 airlines and already 62 are on the publicly available IOSA registry. Three African airlines have committed to completing IOSA by the end of this year:

  • Egypt Air is on the registry
  • South African Airways has done the audit
  • And Kenya Airways will be audited shortly

Meeting IOSA standards will be difficult for many African carriers. In June, IATA launched Partnership for Safety with a US$3 million investment. The purpose of the programme is to identify the gaps between IOSA standards and the current practice in airlines. With this knowledge we will work with carriers to lay down concrete plans—including training and consultancy—to bridge the gap. I am pleased to say that African airlines are IATA's first priority.

We are moving fast with concrete results. Partnership for Safety seminars have already been held in Nairobi, Johannesburg and Dakar. 19 airlines and 6 civil aviation authorities attended. As I speak, another seminar is being held in Lagos and another will take place in Libreville later this year. We are also conducting individual assessments with 12 African carriers to pinpoint areas needing improvement.

There is much work to be done. And US$3 million will not be enough. We are bringing strategic partners on board to help airlines access funding and other resources. We have some long-standing partners like CFM who have contributed for training in Africa. So I am confident that Partnership for Safety will attract similar cooperation. In the meantime, I challenge all of Africa's carriers to actively move towards IOSA by our next AGM in June 2006. And I encourage Africa's Governments to make good use of IOSA to enhance safety oversight

Infrastructure is another major issue for Africa

While South Africa has a well developed airport and air traffic management system, that is not true for all Africa. In many airports, runway pavement, airfield lighting, weather. formation, navigational aids, fencing, are not up to standard. IATA is visiting airports to address this on a state by state basis. Overall, we can observe some trends:

  • It is not always clear that taxes and charges on air transport are re-invested in the industry
  • And Governments are not making the strategic investments to support air transport and gain its economic benefits

Singapore, Dubai and Amsterdam are great examples to follow. Coordinated plans to develop efficient and reasonably priced infrastructure are at the backbone of local economies.

Compare that to Kenya. We have a great, privately run airline—Kenya Airways. But only now is the airport being modernised to support effective hub operations. We are happy that plans have been announced to re-develop the airport. Governments must pay closer attention to match demand and infrastructure in a timely manner.

On the air traffic management side, look at NAFISAT. We signed an agreement over a year ago to provide world-class ground to ground communications links from Cape Town to Cairo. ATNS South Africa would play a pivotal role. But we are stalled waiting for one state to sign.

Africa needs leadership with vision to carry forward these projects and other projects like RVSM. The benefits for safety, fuel efficiency and quality of service are desperately needed. We have enjoyed positive cooperation with ASECNA. But more needs to be done.

President Mbeki urged the strengthening of Africa's institutions—particularly AFCAC—to foster the healthy growth of air transport. IATA is here to help. And to urge Africa's governments to achieve continental solutions to the many infrastructure problems that exist.

Where governments have committed to solutions, they must follow-through. Let me speak of Yamoussoukro and liberalization.

Our industry needs change—and liberalisation is a big part of that change. Carriers need to be able to conduct their business like real businesses:

  • To serve markets where they exist
  • And to grow strong through competition

In 1988 regional liberalisation as conceived by the Yamoussoukro Declaration was visionary. It took 12 years—until 2000—to arrive at the Yamoussoukro decision. At ICAO's 5th Air Transport Conference in 2003 I highlighted this as a positive initiative. I am disappointed that we are still discussing this in 2005. It is time for action and results. The US and Europe are discussing an open aviation area that could help change completely the rules of the game for air transport. China has consolidated its airlines and is pushing forward with liberal air services agreements. The Middle East is moving ahead with regional liberalization. The world is changing—and in a global industry there is no place to hide.

IATA is not calling for change overnight. Nor are we looking for excuses not to change. Our job is to make sure that our members are prepared for the changes that the industry needs. It is important that airlines and governments around the world prepare for balanced progressive liberalization.

Regional liberalisation, with achievable targets is the way to start. Governments must not be afraid to challenge their carriers. And carriers should meet these challenges head-on. Our common goal is the development of a commercially competitive air services industry in Africa

In the same way, IATA is challenging its members to adapt industry systems to changing realities.

We call it Simplifying the Business. This is a programme of 5 core projects aimed at achieving US$6.5 billion in savings while making travel more convenient for the passenger. Using existing technology more effectively is at the core of

  • 100% e-ticketing by the end of 2007
  • taking the paper out of freight processing
  • radio frequency identification for baggage management
  • bar coded boarding passes and
  • common use of self service kiosks for check-in

Of these e-ticketing is the most important because it has a deadline. By the end of 2007, IATA will no longer print paper tickets. This will cut US$3 billion in costs for airlines. And it will open new doors for travel agents and travelers.

For many airlines the deadline may seem too soon. But for many others it is too late. To keep our global system working, IATA took the lead in bringing the industry to an achievable compromise. And we are investing US$10 million this year to ensure that we bring all carriers successfully along in the process.

We have 140 staff worldwide to push Simplifying the Business forward. As of today, globally 33% of the 340 million tickets IATA issues are electronic. In Africa, the market penetration is at 36.5%. But that statistic is misleading and cause for concern. SAA is responsible for almost 70% of that total. Kenya Airways working with KLM, have developed interline e-ticketing capability. A small number of airlines issue low volumes of electronic tickets directly to passengers. But they don't have the ability to issue them through travel agents. That leaves 34 carriers and a fast approaching deadline.

We are sparing no effort to ensure that all carriers meet the deadline. And we putting special effort into Africa where airline resources are limited and often out-of-date. To upgrade skills, IATA held electronic ticketing workshops in Johannesburg, Nairobi and Dakar. And we are providing individual consulting to help members make the transition.

I am determined to keep African air transport in the global system. What airline can afford to lose its interline revenues and connections? We must meet the deadline. Working together, I am confident that we will be ET ready by the end of 2007.

As an industry we have enormous global challenges

Africa shares these challenges—and there are many more specific to this continent. IATA is the global association. Nearly 15% of our membership is from Africa. We represent the big and the small—the developed and the developing.

IATA is leading the change that is critical for all our members. Vinod and his team will work hand in hand with our members and governments to realise our Agenda for Africa. Their immediate targets are to get Africa moving on Safety with IOSA and to meet the 2007 ET deadline.

To support this, IATA is investing well over US$3 million on projects in Africa alone. This nearly triples the dues we collect from our African members for which we also deliver essential industry services. IATA's efforts and money alone will not be enough—we need commitment. Everybody in the region knows that change is coming.

  • ET by the end of 2007 will be a reality
  • And Africa must do better on safety

Sitting on the sidelines is not an option. We need to see better results quickly. My message today to the industry is:

  • Africa must move fast to meet the 2007 ET deadline and
  • Africa must use IOSA to drive improvements in safety

And together, as an industry, we must shout loudly to remind governments that:

  • aviation is a catalyst for economic growth and that
  • we have a critical role in achieving the Millennium Development goals

So, Governments must

  • Develop policies and infrastructure that improve safety and facilitate growth
  • And move forward with progressive liberalisation

With a common vision, commitment and action we can achieve great results. I assure you that IATA is here to help with resources and expertise. Along with the entire IATA team, I look forward to working closely with Africa to achieve these challenging goals.

Thank you.

Agenda for Africa, Johannesburg