Thank you, Jeff. Good morning. This is my first time joining the IATA Legal Symposium and it is a pleasure to be here. I would like to add my thanks to our host airline United and our other sponsors. They make this event possible.
Aviation is a global industry that depends for its smooth functioning on a globally harmonized set of standards and best practices. Underlying many of these standards is the Chicago Convention – international aviation’s foundational document.
The Convention was the work of diplomats, representing some 52 countries, and many of them were lawyers by training. Right from the beginning of modern aviation, the legal profession has played a key role.
It is important to remember the time in which the Convention was agreed — December 1944. Even as World War II raged, these far-sighted delegates recognized that civil aviation would “help to create and preserve friendship and understanding among the nations and peoples of the world.”
Those words, from the preamble to the Convention, demonstrate the importance that governments attached to international air travel. They knew it wasn’t merely about transportation; aviation across borders had a higher purpose.
We celebrated the 75th anniversary of the Convention last December, and in two months, we will commemorate another important date for our industry: On 19 April 1945, airlines came together and created IATA.
In the nearly 75 years that followed, IATA has sought to represent, lead and serve the airline industry with the goal of supporting safe, efficient and sustainable air services. That mission is as relevant today as it was in 1945.
That is why IATA is a tireless advocate for the implementation of global standards and best practices— encouraging governments to construct their aviation laws and regulations in harmony with each other and in the best interests of aviation providers and users alike.
Let me illustrate the importance of this in a few examples, some of which are in the news these days.
The first area is climate change. Aviation’s contribution to manmade carbon emissions is 2%—a figure that has been stable in relative terms to other polluters despite the rapid growth of aviation.
In absolute terms, however, aviation’s emissions will grow with demand for air travel. And so we committed to cap aviation’s net emissions with carbon-neutral growth from 2020. This was a major step for a carbon intensive industry with no alternative energy source.
And early on, we recognized that achieving this would require the industry to work together with common goals.
One of those was to get governments to implement a single global economic measure to supplement our own activities in improving technology, operations and infrastructure, because we realized these would not be sufficient. And we also knew that our progress would be seriously compromised if a patchwork of environmental regulations, taxes and charges emerged.
We were successful. CORSIA—the Carbon Offsetting and Reduction Scheme for International Aviation—was a landmark agreement reached by governments at the ICAO Assembly in 2016.
Governments must now keep their commitment.
Too many are inventing taxes in the name of the environment but that do not actually help the environment. They merely siphon money that we could invest in sustainability projects.
And they undermine the effectiveness of CORSIA and the political consensus on which it was built. We were unsuccessful in fighting one of these rogue taxes in France. But we will remain vigilant for other opportunities to legally challenge governments as part of our advocacy efforts.
Looking beyond legal battles and carbon neutral growth, we have a very tough 2050 goal—to reduce net emissions to half 2005 levels, irrespective of growth.
Here too global standards have a role to play. Sustainable aviation fuel – or “SAF” – is the biggest hope but we cannot do it alone.
I find it simply astonishing that governments have not rallied to support much wider production of SAF, given that aviation has no choice but to use carbon-based fuel for the intermediate term and that SAF can reduce carbon lifecycle emissions by up to 80%.
Aviation has done virtually all the heavy lifting to validate SAF. It is long past time for governments to step up to their environmental obligations and set a regulatory and legal framework that stimulates the sustainable aviation fuels industry—the same way that governments incentivized the development of the wind and solar power sectors.
Infrastructure is another example where a globally harmonized, consistent legal framework is essential to a smooth, efficiently run industry. We face an infrastructure crisis. Demand for air travel is outstripping capacity. And global standards are helping to manage the limited capacity that we have.
As with environment, the industry is united. IATA, Airports Council International, and the Worldwide Airport Coordinators Group worked together to modernize the Worldwide Slot Guidelines. The document is now called the Worldwide Airport Slot Guidelines (WASG).
By engaging policy makers together, we are bolstering the value that this proven system provides—in allocating airport capacity for airlines to serve the needs of their customers in a competitive market that creates opportunity for new entrants.
A consistent, transparent, fair and free slot allocation system is the goal. And that rests on everyone involved in the process—our industry partners and governments—applying the same slot rules at both ends of any route.
We are confident in the ability of the WASG to support beneficial competition among airlines, even at congested airports. And we particularly welcome its adoption in the Latin America region as stakeholders look to manage significant demand and capacity challenges there.
The regulatory harmonization around aircraft certification is a third area where alignment on global standards is vital.
The situation with the Boeing 737 Max has raised important questions about the certification process. From a safety perspective, it is essential that we learn from what happened and apply that learning to make flying even safer.
Boeing is working to provide regulators with the information they need to enable them to make the decision on when to allow the aircraft back into service.
The Federal Aviation Administration is the regulator in the country of manufacture, and so its blessing is obviously essential.
But each national regulator has the responsibility for validating the airworthiness of those aircraft registered to airlines based in its own territory. From a public confidence perspective, therefore, the greater the alignment of approvals and timelines among regulators the better.
Looking ahead, we must keep this in mind when considering any changes to the way that aircraft are certified. Regulators must be able to trust and mutually recognize their certifying colleagues around the world. If not, what is the public supposed to think? After all, they use air transport to fly from one jurisdiction to another. Surely it must be considered as safe where it lands as where it takes off.
Rebalancing the Value Chain
Not every global standard is the outcome of an extended multilateral negotiation among governments.
Sometimes, things happen on a smaller stage yet change the playing field and a new de facto standard emerges.
That was the situation in 2018, when thanks to the hard work of Jeff’s Legal team working closely with IATA’s Legal Advisory Council and our Safety and Flight Operations Division, we achieved a landmark agreement with CFM International, maker of the CFM56 and LEAP-series engines.
As many of you know, the aviation engine and component markets have become highly concentrated and the maintenance, repair and overhaul (MRO) aftermarket is largely dictated by a small group of very large OEMs. The result has been an increase in market power, reduction in competition, higher repair costs, and less flexibility for our members.
Under the agreement between IATA and CFM – a classic win-win -- the engine maker adopted a set of pro-competitive “Conduct Policies” that enhance the opportunities available to third-party providers of engine parts and MRO services on the CFM56 and LEAP series engines. We expect that this agreement will result in significant savings for our members.
Following the success of the CFM agreement, IATA is working with several other OEMs to adopt similar pro-competitive principles in their arrangements with the airlines and the MRO community. We certainly hope this becomes the new gold standard for the broader MRO aftermarket.
My final example comes from today’s top headlines: containing the coronavirus, or COVID-19 as it is now called. It should come as no surprise—and give great reassurance—that we have a global framework to help contain outbreaks of this kind. These are the International Health Regulations (IHR)—built under the leadership of the World Health Organization (WHO).
The global mobility that aviation creates is a factor in virus spread. So we work closely with the WHO with the objective of being able to operationalize what public health authorities need us to do.
Aviation has developed extensive experience in dealing with viruses.
IATA is working very closely with the WHO, the US Centers for Disease Control and Prevention (CDC) and ICAO. We have defined industry standards to keep passengers and crew safe and healthy. They have been endorsed by WHO and in some cases included in the IHR.
Here in the US, the CDC is requiring airlines to provide contact information for their passengers. The airlines certainly want to assist in this effort -- and they will. But they also need to be mindful of strict privacy regulations in the many jurisdictions they serve – most importantly the GDPR in the EU.
IATA and Airlines for America have been robustly engaged with the CDC to prevent airlines from being placed in a no-win situation between the demands of the US and the legal obligations airlines face elsewhere with respect to their passengers’ privacy.
You will not be surprised to hear that COVID-19 is affecting financial performance. Brian Pearce, IATA’s Chief Economist will speak in detail about this tomorrow. But allow me to steal a bit of his thunder today….
Our initial analysis suggests that we are facing a 4.7% hit to global demand. That could more than eliminate the 4.1% growth we forecast for 2020 in December. In fact, the resulting 0.6% contraction for the year would be first since SARS in 2003.
That would also knock global revenues by $29.3 billion--$27.8 billion of which will hit carriers in the Asia-Pacific region. For them we would expect to see a 13% fall in demand compared to forecast and an 8.2% contraction in 2020 traffic compared to 2019.
It is very clear that airlines are struggling.
Our economic analysis should help governments to understand their circumstances—which are severe for carriers most exposed to China. And it is great to see that the government of Singapore has recognized this and included cost relief as part of their measures to mitigate the impact of the virus. We encourage others to follow.
Brian will present a fuller picture on COVID-19 tomorrow. Before I leave you, however, I’d like to bring up a situation where a global standard is not necessarily possible or desirable, to remedy a specific problem.
This is an issue that is unique to this country, and that’s the carriage of so-called emotional support animals (ESAs).
As some of you may have experienced, US airlines have been required to permit passengers to bring on board a menagerie of dogs, pigs, miniature horses, ducks and turkeys, among others. In many cases these animals are untrained and represent a hazard both to other passengers and to legitimate service animals.
Recognizing things had gotten completely out of hand, the US Department of Transportation recently issued a Notice of Proposed Rulemaking (NPRM) to eliminate the requirement for US airlines to accommodate ESAs in the cabin.
The NPRM proposes that only dogs can be service animals, and it defines a service animal as a dog that is individually trained to do work and perform tasks on behalf of a person with disabilities. I would like to express our deep thanks to DOT for taking this much needed step.
The aviation world has changed a lot since 1945. That year, some nine million people traveled by air. Today, on average, we transport nine million people every 18 hours. Yet certain things have not changed.
Like the authors of the Chicago Convention, we believe in global standards for the safe, secure and efficient operation of the global air transport network.
And I hope that we agree with them that aviation still has the potential to create and preserve friendship and understanding among people and nations.
I call aviation the business of freedom, because it liberates us from the constraints of time, distance and geography, to pursue our dreams and fulfill our hopes.
This freedom rests on the foundation of aviation law and regulation to which many of you have devoted your professional careers. I congratulate you for that, and I wish you a successful conference.