It is great to join you in Montreal. Unfortunately we are meeting in the middle of a crisis. Airlines will lose US$5.2 billion this year and another US$4.1 billion next year. We are in a perfect storm of falling demand and rising fuel costs. Even with the recent relief in the oil price we still expect an industry fuel bill of US$186 billion this year. That’s US$50 billion more than last year. The fuel price is robbing airlines of their profitability and it is re-shaping the industry. Airlines are fighting for survival. Alitalia is the latest airline to go bankrupt, following Zoom last month. I thank those governments in this room that have responded to our fuel campaign with efficiency gains.
At the same time airlines face increased pressure on the environment. Our track record is good, improving fuel efficiency 70% in the last 40 years and 19% since 2002 alone. Our CO2 contribution is 2% of the global total - 670 million tonnes. And, like all industries, we must reduce.
Unfortunately governments are more focused on increasing revenue than reducing carbon. We see new green taxes in many places as well as the illegal and unilateral European ETS proposal.
It is difficult to keep up with what governments really want. On 8 July the European Parliament voted for the ETS proposal. President Sarkozy, Prime Minister Brown, Chancellor Merkel, Prime Minister Berlusconi and President Barrosso signed a G8 declaration in Tokyo. The declaration emphasized ICAO’s role in coordinating a global solution for aviation emissions.
It is good that governments are concerned at all levels about aviation emissions. Some consistency, however, would help the process as would an understanding that our US$186 billion fuel bill is the biggest economic incentive of any industry to improve environmental performance.
Every drop of fuel is critical to our financial survival and to improving our environmental performance. So we are challenging governments to help us to achieve fuel savings and real CO2 savings with our four-pillar strategy on climate change:
- Invest in new technology
- Operate planes effectively
- Build and use efficient infrastructure
- And implement positive economic measures
Our vision is to achieve carbon neutral growth on the way to a carbon-free future. We are delivering results. This year IATA will save 10 million tonnes of CO2 and US$3 billion in fuel.
But we cannot do it alone. Air traffic management must play an important role. The IPCC estimates that there is 12% inefficiency in air traffic management. Twelve percent of the fuel bill is US$22 billion and 12% of our emissions is 80 million tonnes of CO2. You must help us to deliver these improvements.
We are at a unique point in history. The fuel crisis and the environment agenda make fuel savings a priority. At the same time the US and Europe are re-designing their air traffic management systems. This is an opportunity that we cannot miss in Europe. The SESAR project is an important and long overdue step towards a Single European Sky. The technical work that SESAR is accomplishing is the basis for over EUR 5 billion in savings or 16 million tonnes of CO2, according to the European Commission.
We have talked about a Single European Sky for decades. There are no technical barriers. But we need political leadership. In June, Vice President Tajani, shortly after his appointment, achieved second package approval for the Single European Sky from the Commission. As an industry we encourage President Sarkozy to adopt the Single European Sky vision, push this through the political process by the end of the year and align national governments with a target date of 2012. With political will it is achievable.
On this side of the Atlantic the US NextGen project is also long overdue. The enormous delays that we saw in New York this summer are the result of an outdated and under-invested system. The Department of Transport’s slot auction proposal is not the answer. We must invest in NextGen. The economic downturn may provide some breathing space but it must not become an excuse to do nothing. NextGen must be a priority for the next US administration.
And now I come to the purpose of this meeting - harmonisation. The decisions that the US and Europe will make are of enormous importance to the global industry. All airlines have a critical interest in your success. Almost every country has aircraft flying into or through the combined airspace of the US and Europe. And let’s remember that airlines will be paying the bills. The cost of avionics for NextGen and SESAR could be US$40 billion. On top of that we will pay user charges for the investment and the operating costs. If you fail to harmonise, airlines will bear the cost and the environment will suffer.
As I said, this is a unique opportunity and we must get it right. To set the tone for global harmonisation in all regions - including Africa, Latin America and Asia Pacific - our vision must be fixed on global harmonisation.
I thank ICAO for organising this important event and for the great cooperation of all involved. I am very pleased and very honoured to be your host for lunch. But there is no free lunch, especially when the industry is in crisis. The airlines are counting on your decisions to reduce costs and improve environmental performance.
The pressure is on and IATA may seem pushy at times but the US$10 billion losses that we face - this year and next - puts this industry at great risk. It is IATA’s job to bring a sense of urgency of the need to deliver quick results. I know that the industry can rely on all of you - colleagues and friends passionate about aviation and fully aware of the pressures of the moment. Together we must take this opportunity to deliver an even safer, more efficient and environmentally responsible future for Air traffic management that is harmonised globally.