As the head of IATA, I represent some 240 airlines. Our members are the major contributors to the dense web of 40,000 routes which facilitate global connectivity. These airlines operate in integrated markets, domestic markets, and bilaterally agreed markets. Their mission is to meet the demands of businesses and people for connectivity.
This year we are celebrating the first 100 years of commercial aviation. In this anniversary year we expect airlines to deliver some 50 million tonnes of cargo and carry more than 3.3 billion passengers. In doing so, we support the livelihoods of 57 million people and transport goods equal in value to a third of world trade. So it is hard to believe that just a century ago commercial aviation consisted of a single airplane, one route and one passenger.
The thirst for connectivity underpins aviation’s rapid growth. Today we take for granted the ability to traverse the world safely in a few hours. What has made that possible is a complex series of partnerships among industry players and with governments. So I am honored to join governments here in discussing how to facilitate an even more successful future for aviation by removing barriers, integrating markets and providing effective regulation.
Time is limited and I am eager to engage in the discussion. So I will keep my remarks to four points for your consideration.
First, this business is about taking people and goods from one place and bringing them to another. As much as possible, the rules of the game should be the same at either end of the journey. That’s why global standards are at the core of aviation. Their greatest success is demonstrated in aviation’s safety record.
But I am concerned that some governments are starting to chip away at the global framework. I would like to explain with a few examples starting with passenger rights regulations. I fully understand the desire of governments to provide some simple guarantees for passengers. But over recent years we have seen at least 50 governments develop passenger rights regulations. These are not coordinated. Increasingly they overlap. Sometimes they conflict. And often they come with unintended consequences.
- The US tarmac delay rule has such draconian penalties that tarmac delays have virtually disappeared. Airlines are cancelling flights instead. But if you were a passenger, would you prefer to be late...or not to fly at all?
- The EU’s Regulation 261 on passenger rights places the burden of compensation on the first carrier of a journey. At first glance, this may seem to have some logic. But, put yourself in the position of a regional carrier that provides a short link to a hub airport from which the passenger flies to the other side of the world. It would not take many missed-connections for the interline service to be deemed a financial risk. So passengers may be “protected”, but at the expense of losing regional connectivity.
The point in raising these issues is to support the ICAO decision to develop global standards and recommended practices. The industry has already developed some principles which we hope governments will find useful in the process. And I should emphasize that we fully respect the role of the regulator in setting rules. But we usually end up with better rules when they are developed in consultation with the industry. And whether you are creating a regional “single market” or just developing rules for your country, where global standards exist or can be developed, they should be at the heart of the regulatory framework.
My second point is a continuation of that thought. Where there are global issues, ICAO is the place to find global solutions. The most salient example of this is how we are approaching the issue of managing aviation’s carbon footprint. Governments and industry are aligned in our goal of achieving carbon neutral growth from 2020. The ICAO Assembly committed governments to developing a global market-based measure that will be critical to achieving that goal by the 2016 Assembly.
My concern is that Europe continues to pursue a regional scheme—a move that the world clearly rejected at the ICAO Assembly in last October. The lesson is that, as with safety, the big prize for aviation’s sustainability is being able to deliver a result globally.
And the next point that I would like to make is the need for governments to focus on ensuring sufficient capacity. Yesterday the Singapore Minister noted that it is the responsibility of governments to ensure sufficient capacity in the air and on the ground.
With some exceptions, Europe is not providing a good example in the providing sufficient capacity for either air traffic management or airports. The Single European Sky is decades delayed. And recent studies point to a potential 12% shortfall in airport capacity by 2030.
And there is no room for complacency in ASEAN either. There are discussions around a Seamless Asian Sky that will help deliver efficiencies in the current framework. But if with the growth that the region is expecting, the discussion will need to move fairly quickly beyond the current scope in order to handle projected growth.
And I would make similar comments with respect to airports. Asia is well-known for its world-leading airport infrastructure in some markets—Singapore among them. But the Philippines and Indonesia are far behind. And even the capacity constraints in markets that need to be connected to ASEAN could impact growth. I have already mentioned the problems in Europe. And the shortfalls in key Indian markets such as Mumbai could negatively impact connectivity as well.
I am optimistic. But that optimism needs to be supported by a long-term policy vision backed-up by concrete action.
And finally, when we are talking about markets, air transport is unique in its bilateral approach to allocating traffic rights. Europe’s Single Aviation Market delivers tremendous value to European integration. And the ASEAN liberalization plans have similar potential. That potential will only be realized if states implement what they have committed to do.
On liberalization in general, I don’t believe that there is any appetite amongst governments for a big-bang shift to global liberalization. But initiatives such as the one being pursued in ASEAN are the building blocks for the industry’s future shape and form. And we support this fully in this effort.
As the rules for ASEAN’s single market are being developed I hope that governments will keep in mind the need for harmonized regulations, industry consultation, respect for global standards, support for global solutions and provision of sufficient capacity to meet the thirst for growing connectivity.
With these comments, I look forward to an interesting discussion.