Ladies and gentlemen, it is a real pleasure to be here in Azerbaijan. Thank you for the very warm welcome.
Having started our Billing and Settlement Plan operations here in December 2011, IATA is relatively a newcomer to Azerbaijan. But only a few days ago we celebrated our 68th anniversary as an organization. We were founded in 1945 by a group of 57 airlines from 31 countries. Today IATA’s membership consists of 240 airlines from 115 countries. Together they comprise some 84% of total air traffic. They have given IATA a mandate to lead, represent and serve the airline industry. And we carry that out with a vision to be the force for value creation and innovation driving a safe, secure and profitable air transport industry that connects and enriches our world.
The air transport industry is critically important to the global economy. We have calculated that globally the industry supports some 57 million jobs and $2.2 trillion in business. Even more importantly, aviation provides vital connectivity. Connectivity brings people to business, delivers products to markets and reunites families and friends. With a few kilometers of tarmac the most remote region can be connected to the global community. And that could mean jobs selling products in global markets or welcoming tourists; access to vital sources of health care and emergency assistance; or opportunities for education, exploring the world or creating business. Every flight brings with it enormous possibilities to make our world a better place and generate wealth—both material and of the human spirit.
Clearly the government of Azerbaijan has understood the importance of aviation to its economic development. As a reminder, I am pleased today to be releasing a study commissioned by IATA on the economic benefits that aviation brings to this great country. Aviation supports some AZN 395 million of business. That is about 0.8% of Azerbaijan’s economic activity which provides employment to nearly 28,000 Azerbaijanis. If we add to that the impact of aviation related tourism, the number rises to AZN 878 million—or 1.8% of GDP—and a total of 66,100 jobs.
As you know, the Azerbaijan economy is expected to grow in the 5-6% per annum range for the next years. And air traffic has been growing---and is expected to continue to grow—at double that pace.
Aviation is a natural catalyst for economic growth and development. We have witnessed that time and again in many economies around the world. And it is evident that it is playing the same role here. But that critical role should not be taken for granted. Aviation has realized its greatest potential in driving economic growth in markets where we have forged a positive partnership between industry and government. These include:
- Singapore where aviation and related tourism account for nearly 9% of GDP
- South Korea, a much larger economy, but where aviation accounts for 2.2% of GDP
- Chile at 3.0% of GDP
- Or the United Arab Emirates at nearly 15% of GDP
There are some great success stories to guide the industry’s development. And I very pleased today that we have signed a Memorandum of Understanding with the Government of Azerbaijan to forge a partnership for the successful development of aviation.
There is enormous potential for aviation to develop and make an even more significant contribution to the growth and development of Azerbaijan. As you know, aviation is a global industry. We connect the planet. And global standards are the foundation on which it is built. IATA and the International Civil Aviation Organization (ICAO) are the custodian of those standards. IATA and ICAO are located across the street from each other in Montreal. And we share a long history of cooperation that continues to this day.
I would like to share with you some thoughts on key issues for the future the development of aviation in Azerbaijan.
The industry’s top priority is safety. It is the cornerstone of our cooperation with ICAO and I believe that it is at the top of our agenda for cooperation with Azerbaijan. Flying is safe. Last year the industry had its safest year ever with one major accident for every five million flight on Western-built jet aircraft.
As a condition of IATA membership, airlines must successfully meet the 900+ standards that form the IATA Operational Safety Audit (IOSA). AZAL, as an IATA member since 1997 has completed the audit and proudly holds a place on the IOSA registry since 2008. And there is a clear distinction in the safety performance of airlines that are on the IOSA registry compared to those that are not. In 2012 IOSA carriers’ rate for all accidents was 77% better.
That is why IOSA is at the heart of a cooperation agreement that IATA signed with the Interstate Aviation Committee of the Commonwealth of Independent States (CIS) in April 2009. As aviation grows, managing and regulating safety will become even more of a challenge. It is a manageable challenge. But to assist in a successful outcome, I would encourage the government to make IOSA a formal requirement. Bahrain, Brazil, Chile, Costa Rica, Egypt, Lebanon, Madagascar, Mexico, Panama, Syria, and Turkey have already done this successfully.
And I would also encourage the government to promote safety on the ground with the IATA Safety Audit for Ground Operations (ISAGO). It is the global standard for ground operations and it is playing an effective role in helping to address the billions of ground damage that the industry incurs each year. I would encourage Azerbaijan to consider making ISAGO a requirement for any company providing ground services at Azerbaijan’s airports.
That will ensure that safety is maintained as the country’s airport infrastructure continues its impressive development. Over the last decade both Baku and Nakhchivan airports have been completely re-developed and modernized. In addition the new airports in Ganja, Zakatala, Lankaran and Gabala have been open to provide air connectivity across the 87,000 km2 of Azerbaijan.
And I commend the government on building the international terminal here in Baku in full compliance with IATA’s recommended facilitation practices. I am confident that on my next visit I will see a world class facility fully aligned with global standards.
And looking to the future, I would encourage a continuing partnership between the government, the airport, the operator and the airlines that will use the facilities. The airport will no doubt develop and grow. And if there is a clear understanding by the airport of what airlines need to meet customer demand—in terms of physical infrastructure, service levels and costs—then air transport can develop successfully.
And, in fact, this is aligned to ICAO’s guidance on charging which calls for airport charges to be set based on user consultation, transparency, non-discrimination and cost-relatedness. And the same applies to air traffic management (ATM). It is critical that Azerbaijan Air Navigation Services (AZANS) consults with the industry—and IATA is happy to play the coordinating role that it does in many countries.
We have a mess in European ATM which we are trying to sort out with the Single European Sky. The project is taking decades because of the vested state interests that are involved. I understand that there is good cooperation among the CIS states on ATM issues. I encourage that to continue so that we have a common focus across the region on safety and efficiency as the industry continues to develop.
And, in fact, safety and efficiency should be the guiding factor as Azerbaijan continues to develop the regulatory framework for aviation in the country. On this, I would like to highlight two issues.
The first is an immediate need for Azerbaijan to ratify the Montreal Convention 1999. The Convention sets common standards on liability. And it is also the basis for the recognition of electronic documentation for freight shipments. Both are important. But the latter is critical to one of IATA’s major programs to boost the efficiency of air cargo.
Just as we eliminated paper tickets a few years ago for passenger travel, we want to modernize cargo processes with electronic documentation. To ensure that Azerbaijan is able to gain the benefits of this program, I ask the government to move forward with ratification of the Convention and alignment of related laws. Russia and Kazakhstan—two of your most important trading partners—will have the Convention in place by the end of 2013. I hope that Azerbaijan will be able to keep pace.
The second point that I wanted to address is the Civil Aviation Authority (CAA). I understand that there is a work stream in place to clearly delineate the functions of the CAA and ensure an arms-length relationship with AZAL. This is in line with global standards and an important step in the right direction as Azerbaijan prepares for continued growth of it aviation sector.
Aviation is quite a unique industry. And there is a critical need for specialized knowledge in the CAA. As the process moves forward, retaining and growing expertise should be a top priority. The role of the National Aviation Academy will be pivotal. IATA has a solid relationship with the National Aviation Academy and our expertise in training is well-known throughout the industry. Each year, we train some 35,000 aviation professionals worldwide—including from civil aviation authorities. We would be very happy to cooperate with the Academy and CAA to help in capacity-building as the industry develops here in Azerbaijan.
Lastly, I would like to share some thoughts on aviation and the environment. The industry’s license to grow is contingent on many things. Ensuring the safety and security of those traveling is of course a top priority. So too is sustainability. On the one hand, financial sustainability is critical for airlines to be able to invest and expand their operations. And I am sure that the government, through its forward looking policies on liberalization, tax and costs will enable this. On the other hand, there is an imperative for environmental sustainability. Aviation is a global industry. Environment is a global issue. And the solutions must be equally global.
That is why Europe faced so much opposition to it misguided unilateral plans to include international aviation in its emissions trading scheme. And the extra-territorial aspects of its plan very nearly caused a trade war. Fortunately, Europe “stopped the clock” on implementation in November last year. That was good news. But the necessity to find a global agreement to manage aviation’s emissions has not gone away. The focus now is on the ICAO triennial Assembly which will take place this year starting in late-September.
The aviation industry is committed to environmental sustainability. Our goals are to improve fuel efficiency by an average of 1.5% annually to 2020; to cap net emissions with carbon-neutral growth from 2020 (CNG2020); and to cut net emissions in half by 2050 compared to 2005. I am proud to say that aviation is the only global industry to have set such goals. And, even more importantly, we are united in our commitment to achieve them.
We are progressing well on the fuel efficiency target through a combination of technology, infrastructure and operational improvements. And I am convinced that these will provide the long-term solutions for the other targets as well. But to achieve CNG20202, we will need access to market based measures. And it is critical that we have a globally coordinated approach to managing them. The alternative is a patchwork of measures that would be impossible to manage and do little to improve aviation’s environmental performance.
That is why we are doing everything possible to support an agreement at ICAO. I know that Azerbaijan is an active participant in the ICAO process. And I hope that it will be strong supporter of an agreement on market based measures at the Assembly later this year.
I have covered a lot of ground in a short space of time. I hope that you can see how passionate I am about aviation. It is an industry that is a force for good in our world. And it is impressive that the government of Azerbaijan is taking the time to focus on the successful development of aviation at this very high level.
IATA’s presence in Azerbaijan is relatively new. But we see tremendous potential for aviation to play a much bigger role in the development of Azerbaijan—and indeed across the whole of the CIS. The industry has only just begun to connect this culturally rich and economically important region internally and with the rest of the world. That will be a critical enabler of future growth, development and prosperity.
Aviation supports 1.8% of Azerbaijan’s GDP and employment for 1.5% of the work force. You can count on IATA as committed partner in helping to grow these benefits further with the safe, secure and sustainable development of aviation.