Good morning. It’s a pleasure to be here.
I would like to commend SITA on the theme of this year’s event, with its focus on collaboratively driving transformation.
Aviation is built on partnerships -- it’s in our DNA. On average, some 5,200 flights worldwide will take-off in the next hour, or more than one per second. Each departure could not occur without the combined efforts of many different players.
In addition to collaboration, aviation relies on global standards. Airlines could not connect passengers and bags, exchange messages, and sell tickets in more than 200 countries and territories, without standards that are universally applied. And SITA and IATA have a longstanding partnership focused on helping the industry to implement the standards that make its operations safe, efficient and reliable around the world.
A few weeks ago, IATA’s 290-member airlines gathered in Seoul for our 75th Annual General Meeting and World Air Transport Summit, where we presented our economic outlook. Overall, we expect the industry will generate a profit of $28 billion this year, marking 10 years of being in the black. At the same time, our customers will enjoy fares that are 40% lower than a decade ago. And we will reward shareholders for a fifth consecutive year by generating a return on invested capital that exceeds the cost of capital.
Nevertheless, we have also run into strong headwinds this year; and profits are being squeezed compared to 2018. Passenger demand is rising, but the air cargo market is shrinking. Furthermore, costs are increasing, including fuel, labor and infrastructure.
Long-term, we are of course optimistic. We project a doubling of demand over the next two decades. This year we forecast 4.6 billion travelers. In 2037 we see 8.2 billion. China and India will account for 45% of that growth. Even more than today, the travelers of the future will come from all walks of life and economic means.
Meeting Future Growth
Meeting the demands of the future will test our industry's capabilities. Transformation will be necessary at the airport, airline and industry levels. Fortunately, we have a history of using technology to drive efficiency, simplify processes, and improve the customer experience.
- We converted to 100% e-ticketing, saving billions of dollars in costs while reducing our environmental impact and eliminating customer worries over lost or forgotten paper tickets.
- Self-service check-in and baggage kiosks enabled us to increase the productivity and throughput at airports without growing real estate, while reducing queueing times for passengers.
- Bar-coded and mobile boarding passes have transferred an enormous amount of processing activity off airports, while empowering air travelers to check-in at their convenience, from wherever they happen to be, using their mobile devices.
All of these innovations helped us to accommodate a 75% increase in passengers since 2008, within well-known airport infrastructure constraints.
As I look out over the coming years, I believe we must embrace far-reaching change in how we operate our businesses and serve our customers. This will be driven by data and digital transformation.
I would like to focus on three areas in particular where this is occurring: Safety, Distribution, and Airport Passenger Processes.
Let’s begin with safety, our highest priority. Global standards and collaboration, in conjunction with technology advances, have made air travel the safest form of long-distance travel. Despite yearly fluctuations, the long-term trend is toward safety improvements. For example, if safety in 2018 had remained at the same level as 2013, there would have been 109 accidents in 2018, instead of 62, based on growth between the years.
That same logic holds true moving forward. We must intensify our efforts on safety to ensure the accident rate stays disconnected from the growth in services. Data and partnerships will be critical to our efforts.
I’d like to highlight two initiatives where we are collaborating with industry stakeholders to drive industry transformation:
Our Global Aviation Data Management (GDM) initiative is one of the world’s most diverse aviation safety information exchange programs. GADM captures data from more than 470 different industry participants, through accident and incident reports, ground damage occurrences and flight data.
The result is a comprehensive, cross-database analysis. This supports a proactive data-driven approach for advanced trend analysis and predictive risk mitigation.
All GADM data contributors have access to applicable aggregated and de-identified reports and analyses, such as de-identified flight information from over four million flights in the Flight Data eXchange program.
Turbulence detection and avoidance is another area where we are using data to improve safety. Turbulence is one of the main causes of inflight injuries to passengers and crew. It also results in aircraft damage and diversions. Some scientists suggest that climate change will drive an increase in the number and severity of turbulence events.
IATA has launched Turbulence Aware, a global platform for sharing automated turbulence reports in real time. Turbulence Aware consolidates, standardizes and enables access to worldwide real-time objective turbulence datacollected from multiple airlines around the globe. This is data that onboard systems are already collecting.
Operational trials with 18 airlines, among them Lufthansa, Qatar Airways, Delta Air Lines and Cathay Pacific Airways, are being conducted this year, with full launch planned for 2020. Benefits will include a decline in turbulence-related injuries, significant reduction in fuel burn and improved operational efficiencies.
Safety systems are largely invisible to the passenger. A more visible area that is on the cusp of a digital transformation is shopping and order fulfilment. I’m speaking, of course, about the New Distribution Capability (NDC) and ONE Order.
NDC offers enhanced distribution with an XML-based data standard for communications between airlines and travel agents. This enables travel agents to have access to the same content and shopping displays that are available on airlines’ own websites--but that is not typically in systems used by agents and online travel sites today.
For passengers, NDC means the ability to compare the full value of an airline’s products and offers in one place. They also have the opportunity to be recognized through aggregator systems.
And because in an NDC-environment, the airline constructs the full offer, we believe NDC will result in true dynamic offer creation. Customers will be able to receive airline offers based on their own travel preferences, in the same way that they receive offers from Amazon or Netflix today.
Some 145 airlines and system providers are now on the NDC registry of companies capable of receiving and sending NDC messages.
In order to pave the way to achieving a critical mass of NDC transactions, IATA has set up an NDC Leaderboard. The Leaderboard is comprised of 21 airlines that aim to have at least 20% of their indirect sales coming through an NDC API by the end of 2020.
ONE Order is NDC’s younger sibling. It builds on the data communications advances introduced by NDC to complete the digital transformation that began with e-tickets. ONE Order will replace e-tickets, passenger name records, and electronic miscellaneous documents with a single retail, customer-focused order.
That means travelers no longer will need to juggle between different reference numbers and documents when checking-in or making changes to their itinerary. With a single reference number, they will be easily recognized by all service providers.
ONE Order will also result in significant cost savings to airlines by aligning with digital processes for fulfilment, servicing, delivery and accounting. And by eliminating legacy, paper-based processes, ONE Order will make it easier for network carriers to partner with LCCs, that always have been ticketless.
In terms of its transformative scope, ONE Order is even bigger than NDC, so it will not happen overnight. But with the support of stakeholders and partners, both these programs will liberate the industry from a century of accumulated legacies. Together, they will usher in a new world of digital retailing—creating value for customers and airlines.
Airport Passenger Processes
The third area of transformation and collaboration I’ll address is taking advantage of biometric capabilities to re-invent passenger processes. Today, airlines, border control, customs and screening authorities, have designed these processes around their own obligations and requirements, with little or no coordination between them.
This has resulted in repetitive steps for the passenger, such as having to present travel documents like boarding passes and passports at numerous points across their journey. This is time-consuming, inefficient and not sustainable in the long-term as traffic grows.
Our One ID initiative aims to replace this situation with a single biometric token that will reduce the hassles of constantly identifying yourself as you move through the airport.
This will boost efficiency from check-in to boarding—to the benefit of passengers, airports and the control authorities.
Air travelers have told us that they are willing to share personal information if it removes some of the hassle from air travel, as long as that information is kept secure and not misused.
In addition to benefits for travelers, One ID will make it hard for individuals to cross borders under a false identity, and thus help combat human trafficking and other cross-border criminal activities. It will help to reduce queues and crowds in more vulnerable airport landside areas. And it enables the possibility of risk-based assessment and differentiated handling at border and security checkpoints.
To make One ID happen we must work with governments to agree on global standards, harmonize approaches, sort out privacy issues, integrate with existing infrastructure and agree on the implementation process.
Airlines are strongly behind it. At the AGM, our members unanimously approved a resolution to accelerate the global implementation of One ID. We are working with a number of industry partners. SITA in particular has been an enthusiastic and valuable contributor to this initiative from its inception
The initiatives I’ve described will be critical to helping all stakeholders accommodate growth, while delivering a superior experience to our customers. But achieving them requires a team effort involving diverse stakeholders, including, in the case of One ID, governmental authorities.
We recently refined our strategic vision. It now says that we are: “Working together to shape the future growth of a safe, secure and sustainable air transport industry that connects and enriches our world.” Notice that we emphasize collaboration at the top of our vision. It’s how our industry has always worked, and how we must continue to work in the future.
I call aviation the Business of Freedom. It liberates us from the constraints of geography and distance. In doing so, it empowers us to lead better lives, and makes the world a better place. Without aviation, the inter-connected global economy as we know it would not be possible. And aviation would not be possible without the strong partnerships among all of us here today.