Dear colleagues, ladies and gentlemen, I am pleased to say that your Association is in very good shape—including its finances. Your Chairman (1) will provide a full report on IATA's activities under his leadership later this morning.

This will include details of important governance changes led by the Chair Committee (2) to improve the efficiency of how we work with our members. These changes reflect the determination of the Board of Governors (3) to ensure that IATA's governance continues to evolve in keeping with new challenges.

Before that, allow me to update you on some of the issues that I have followed particularly closely.

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Membership

Our greatest strength is you, our members. Today we are an association of some 290 airlines. Together they meet 82% (4) of the global demand for air transport services—both cargo and passenger.

Since we last met a long list of carriers joined the IATA fold. Let's take a moment to recognize them:

  1. Africa World Airlines
  2. Atlantic Airways
  3. Air Peace
  4. Batik Air
  5. Cambodia Angkor Air
  6. Cayman Airways
  7. China Express Airlines
  8. Cobalt Air
  9. Eastar Jet
  10. Evelop Airlines
  11. Hebei Airlines
  12. Jeju Air
  13. Jin Air
  14. SaudiGulf Airlines
  15. SCAT Airlines
  16. Somon Air
  17. Suparna Airlines
  18. UNI Air
  19. Vistara
  20. Volotea
  21. WDL Aviation


Welcome to IATA. These airlines add to the great diversity already present in our membership and give further strength to our activities.

IATA is open to all airlines. Already 10% are what we could call "new model" which means that they are doing successful business outside of the network model. Many new model airlines are among the new joiners….and we want to welcome even more.

Financial Systems

We know how important IATA's settlement services are to the business of our members. In 2017, the BSP (5), CASS (6) and Clearing House (7) settled $325.4 billion of your funds. We are determined to make this service cheaper, faster and safer with the launch of the New Generation of IATA Settlement Systems—or NewGen ISS (8). It is already operating in seven countries. Global rollout will be completed by the first quarter of 2020.

To achieve maximum benefit from NewGen ISS we created a Global Delivery Center (9) operating across four locations: Beijing, Madrid, Montreal, and Singapore. It is a massive change, impacting about a quarter of our total staff. The IATA team pulled out all the stops and I am happy to report the transition is running ahead of schedule.

In parallel, we launched the Transparency in Payments (10) initiative known as TIP. TIP aims to put airlines in control of payment methods used by travel agents to settle airline funds. No payment methods are barred, but their costs will be more transparent; and airlines are newly empowered to set individual commercial policies for the methods used by their appointed agents.

Why is this important? Because of the costs involved for the value delivered. When cash is moved through the BSP, the estimated transaction cost is about $240 for every million dollars of sales. But for agents using virtual cards, costs could skyrocket to an estimated $29,000 per million dollars of transactions (11). Since TIP became public, competition has been stimulated and some of these products have significantly reduced their prices.

Transparency is the objective. To help airlines develop the most appropriate policy for their business, IATA provides regular market development updates to participants in our settlement systems. Please do take advantage of this important information.

Perhaps the most exciting innovations in our financial services activities are pilot payment projects with Deutsche Bank and with financial technology company ipagoo (12). Regulatory changes in Europe have made possible instant payments directly from a customer's bank account to the airline. Several European airlines are doing this already. If successful, our pilot program will create an industry service that will potentially benefit all airlines.

For a deeper understanding of how IATA is staying ahead of the curve of financial service innovations, I invite you to meet our experts at the IATA booth in the exhibition area.

Advocacy

Over the course of the year, I have engaged personally with many of our members. All held high expectations for our advocacy efforts. Our campaign to inform governments about the risks of airport privatization is a direct result of your input. Later this morning you will be asked to endorse a resolution formalizing our industry stance.

Advocacy very rarely leads to immediate results. It takes time for ideas to influence complex political systems. But, over the last year we had some notable successes.

  • Our interventions in the US helped defeat a Senate amendment that would have resulted in significant added tax burdens for some non-US airlines.
  • Our lobbying efforts in India contributed to a decision by the Ministry of Civil Aviation to allow foreign airlines to self-handle their passenger and baggage operations.
  • In Canada, the government put airport privatization plans on the back burner—hopefully for a very long time. And the industry is working with the government to identify potential governance changes that would improve efficiency.
  • After intense lobbying in Europe, the latest draft of the EU's Renewable Energy Directive takes us a major step closer to achieving direct policy support for the production of sustainable aviation fuels, and
  • Our hard work on CORSIA is paying off as the final technical details are being ironed out. IATA is here to help if you are having challenges making your own preparations. As you know, all airlines must be ready to report their emissions from international flights by first January 2019. That's not far away.

These and other advocacy activities are noted in the IATA Annual Review. And they are also followed in our newly redesigned magazine which we now call Airlines. Thanks to the many CEOs who have lent their voice to the magazine in interviews. Explaining industry challenges through the experiences of its leaders is a powerful advocacy tool.

The premise of our messages to governments is that aviation is a catalyst for prosperity. I call it the business of freedom because aviation helps people to live better lives. To highlight this unique and vital role, we have launched a social media campaign. I would like to share a few examples with you….

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Building understanding of aviation's benefits is a critical enabler of our advocacy. As with any service industry, we take lots of knocks in the social media world. That keeps us on our toes and guides improvement. It's also important to remind people just how much safe, efficient and sustainable connectivity contributes to our world. Too often it is taken for granted.

If you like these vignettes, we can provide them in formats for your in-flight entertainment or social sharing.

I will also highlight two areas of intense advocacy activity.

Blocked Funds

The first is blocked funds (13). Total blocked funds fell by 7% compared to 2016. Still, at the end of 2017 some $4.9 billion of industry money is obstructed in some way.

The lion's share—$3.8 billion—is still in Venezuela. We're not giving up. But without a major shift in Venezuela's political situation it is difficult to see this resolving in the short-term.

In Nigeria, however, a $600 million backlog has been cleared. And we have made $120 million of progress from a peak of over $500 million in Angola.

To help prevent funds from being blocked in the first place, the IATA monthly repatriation report tracks key indicators that can help airlines manage selling exposure. I urge you to subscribe.

Airspace Modernization

Airspace modernization was another focus area.

The top-down approach to delivering a Single European Sky (SES) (14) has yielded little progress. But an innovative bottom-up approach is gaining traction. Poland, France (15), Spain, (16) Italy (17) and Bulgaria (18) have already signed agreements with IATA to develop national airspace plans aligned with the SES goals. We hope to announce more partners soon. And, more importantly, when the plans are implemented, you should see the benefits of efficiency in your European operations.

In China, along with seeking improvements to air space management we established a liaison desk to help sort issues in real time.

Tactics

We are also innovating our advocacy tactics.

  • IATA is doing more in the courts. In addition to our work in the offices of legislators, IATA has become increasingly active in formal legal cases where important issues of aviation law are being decided. This ensures that the airlines' position is fully understood.
  • And IATA is engaging regulators on future issues. Six workshops were held with key regulators based on IATA's Future Trends report (19). The objective is to collaborate with governments to identify and prepare for future challenges before they become problems.

Data

Preparations for compliance with the EU's General Data Protection Regulation—GDPR (20)—have challenged us all. I am pleased to report that IATA is well-prepared, and is devoting significant attention to addressing promptly any perceived issues. We also worked to help your preparations with common tools and templates. For example, the IATA GDPR task force developed a standard data protection notice for e-tickets and itinerary receipts.

To help the industry unlock the full potential of data—and to keep pace with regulatory requirements—IATA launched the Aviation Data Symposium in 2017 (21). The next edition will be later this month in Berlin.

Gender Diversity

Over the last few years the world has come to a new consciousness on diversity issues, particularly with respect to women in the workplace. As you can see from this room, we have work to do on gender balance.

IATA's diversity initiative—called Mosaic—is driving our own internal change. For example, we now insist on a gender-diverse list of candidates for new hires. And we are reviewing work policies to ensure that IATA fosters diverse talent regardless of gender, race, ethnicity, sexual orientation and so on.

Externally, we recently hosted a high profile event with the International Aviation Womens Association (IAWA) (22) on the sidelines of the IATA Safety and Flight Operations Conference. It featured the Right Honorable Julie Payette, Governor General of Canada (23). And we are pleased that IAWA organized a discussion on accelerating the progress of women in aviation here on Sunday which I hope many of you were able to attend.

Conclusion

I will conclude by recognizing those who have contributed to IATA's success this year.

First, thank you to our members for the valuable support that you provide for our activities. A formal outreach for feedback—the Membership Satisfaction Survey—was e-mailed to our members last week. I'll take this opportunity to respectfully ask our member CEOs to spare a few minutes to respond to five simple but important questions. Your responses will help keep IATA focused on what matters most to you.

I will say a special thank you to those members who serve on the Board, committees or working groups. Your service in our governance structures challenges us to deliver our best. And it provides invaluable help in doing so. We are determined to exceed your expectations.

Lastly, personally, and on your behalf, I would like to thank the global IATA team with whom I have the privilege to work every day. They serve the business of freedom with enthusiasm, passion and professionalism. And most importantly, they are not just open to change, they are eager to turn your challenges into opportunities to advance the industry's success.

Your association is at your service and looking forward to another great year ahead.

Thank you.

Notes:

1. Mr. Goh Choon Phong, CEO, Singapore Airlines and Chair of the IATA Board of Governors, 2017-18
2. The Chair Committee acts on behalf of and is accountable to the Board of Governors with respect to the duties and authority delegated to it by the Board. It is responsible for overseeing financial performance and governance of the Association. Board's rules and regulations (pdf)

4. IATA members represent 82% of total scheduled traffic (revenue tonne-kilometers, 2017). IATA members' total revenue passenger-kilometers 2017 (scheduled) – 6.0 trillion passenger-kilometers, of which 4.1 trillion passenger-kilometers were international.
5. IATA's Billing and Settlement Plan (BSP) is a system designed to facilitate and simplify the selling, reporting and remitting procedures of IATA Accredited Passenger Sales Agents, as well as to improve financial control and cash flow for its approximately 400 participating airlines. It is a worldwide system that operates in some 180 countries and territories. In 2017, IATA's BSP processed $236.4 billion with an on-time settlement rate of 99.999%.
6. Cargo Account Settlement Systems (CASS) is designed to simplify the billing and settling of accounts between airlines and freight forwarders. It operates through CASSLink, an advanced, global, webenabled e-billing solution. At the end of 2017, CASS was processing in 94 operations, serving over 201 airlines, general sales and service agents (GSSAs) and ground handling companies. The on-time settlement rate was 100%, settling a combined $32.2 billion.
7. The IATA Clearing House (ICH) provides a competitive, seamless and secure service providing efficient, on-time settling of accounts between the world's airlines, airline-associated companies and Travel Partners. Offsetting of mutual transactions can reduce hundreds of bilateral, multi-currency transactions for passenger, cargo, baggage, catering, ground-handling and other services to one single payable or receivable amount. $56.8 billion in billing transactions was processed by the ICH in 2017, with a settlement success rate of 100%.
8. NewGen ISS is the most extensive and ambitious modernization of the IATA Billing and Settlement Plan since it was created in 1971. On 8 March 2018, Norway became the first market to implement NewGen ISS. Rollout of across all BSPs is taking place in a series of waves and is expected to be completed in the first quarter of 2020.
9. IATA's Global Delivery Center (GDC) concentrates the back office functions of IATA's Financial Settlement Systems (FSS) in four locations: Beijing, Madrid, Montreal and Singapore.
10. Transparency in Payments is being introduced in conjunction with NewGen ISS. TIP reveals the different costs associated with each form of payment in the BSP. At present, airlines only see the settlement cost after the fact, if at all. No form of payment is barred by TIP but agents can only use those forms to which an airline has previously given consent. Importantly, TIP allows agents to use their own credit cards if an airline approves. 
11. An example is when a travel agent remits to the airline by using a virtual card (known as a "virtual account number" or VAN) in lieu of the credit card used by the customer to purchase a ticket.
12. Airlines to Test Consumer Payments That Bypass Credit Cards for Direct Sales
13. Blocked funds are money generated by a company's foreign operations that cannot be moved from one country to another because of because of one or more regulations in the country in which the money was generated.
14. European Air Traffic Management inefficiency is costing EUR 5 billion extra a year to airlines and passengers. The failure to make significant progress on the Single European Sky is causing wider damage to the European economy through delays.
15. DSNA and IATA to cooperate on French ATM Strategy
16. IATA and ACETA to strengthen Spanish air strategy with ENAIRE
17. ENAV and IATA to develop an Airspace Strategy for Italy
18. BULATSA and IATA to develop an Airspace Strategy for Bulgaria
19. Future of airlines 2035 study
20. EU GDPR
21. Aviation Data Symposium
22. https://iawa.org/
23. http://www.gg.ca/