Good morning and thank you for the invitation to address this important summit. I am pleased to be in Abu Dhabi, IATA’s home in the GCC countries.
Before beginning my prepared remarks, I wanted to take a moment to discuss the continuing search for MH370. Our thoughts are still with the families and friends of all those on board. And as we gather here, cooperative efforts continue on an unprecedented scale to find the aircraft, understand what happened and make sure that it does not happen again.
Accident investigation takes time. And speculation on the cause will not provide any solutions. But, as I discussed with a group of the industry’s top experts in operations last week, even before the investigation begins, some challenges have already come to light. We must never let an aircraft go missing in this way again. And we are launching a task force that will by the end of the year establish an industry position on how to improve aircraft tracking, so that we know where to look for it should something unfortunate happen.
Safety is our top priority. And every accident re-dedicates industry and governments to making flying even safer. That has been at the heart of the industry since its very inception. And that will not change.
Centenary of Scheduled Commercial Aviation
I would like to begin addressing the theme of this summit by recalling that this is a very special year for the air transport industry. 2014 marks the 100th anniversary of the birth of scheduled commercial aviation. In 1903 the Wright brothers launched the era of powered, heavier than air flight. Flying started with a partnership of two brothers. And a decade later its commercial potential was recognized by a small team:
- Thomas Benoist, who built the aircraft
- Tony Jannus, who piloted it
- And Percival Fansler, who saw the commercial potential
There was even a hero—Abram Pheil—who became the first commercial passenger with a 23-minute flight across Tampa Bay, Florida.
In the century that followed, aviation opened up possibilities that enriched people’s lives and turned our big planet into a small world.
The industry’s economic footprint is impressive—supporting jobs for 57 million people and facilitating $2.2 trillion in economic activity. This year we expect airlines to safely transport 3.3 billion people and 50 million tonnes of cargo over 40,000 routes with nearly 100,000 flights a day. It’s hard to believe that it all began with one company, one plane, one route, and one passenger.
Fortunately we are marking the centennial in a profitable year. We expect a collective airline industry profit of $18.7 billion. That’s a record in absolute terms. But the average margin—2.5%—indicates how difficult it is to make ends meet.
The Gulf Success Story
Airlines in the Middle East are expected to contribute $2.2 billion to the global profit. That is also a record. The fast-growing Gulf area is at the center of the region’s success. And the UAE is a great example of just how powerful the aviation industry can be as an economic force. Including the impact of aviation-related tourism, over 430,000 UAE jobs are related to aviation and 14.7% of GDP is linked to it.
With numbers like that, there can be no doubt in the wisdom of the governments in this region that saw aviation as a strategic asset and created a policy environment to facilitate its success. And that success is making its mark globally. In just over a decade the region’s share of global traffic grew from 4% to 9%.
From 1-3 June we will host the world’s airline community in Doha for the IATA Annual General Meeting—a great platform to showcase the Gulf success story. It includes respected global airlines—Etihad, Emirates and Qatar among them. No frills airlines are making their mark. Many of the region’s airlines are integrating with the global industry through alliances, strategic partnerships and equity investments. And airline operations are being facilitated by airport partners who themselves are undergoing a massive investment program.
There is a third ingredient in the success story about which I am concerned—air traffic management. Airspace is finite. So capacity can only grow with efficiency. Each country has invested in impressive technology. But effective management needs regional and international teamwork.
There are some challenges. For example, between 40% and 60% of the airspace is reserved for the military. So we are trying to squeeze the fast growing civil aviation component into a fraction of the airspace. One solution is developing partnerships and trust with the military to open more flexible use zones. That is happening progressively—but it is not keeping pace with demand for air travel.
And over time, we have made management of the airspace more complex. Historically there was one Flight Information Region or FIR for the Arabian Peninsula—Bahrain. From the early 1980s it began to be fragmented and today there are six FIRs. For an airline, the important thing is to get from point A to point B as smoothly as possible. The challenge for the air navigation service providers is to work together to make that happen as seamlessly across six FIRs as if there were one.
I am pleased to see that several regional working groups are trying to build a common vision for working together. Congestion is a real and rising problem. And it grows with each aircraft that is delivered. Unless it is dealt with quickly, the efficient hub operations which are supporting the region’s success will begin to unravel.
Learn from the mistakes of Europe. The single aviation market created enormous demand for air connectivity. But this was not matched with a Single European Sky. And the result is an inefficient and fragmented air traffic management system that is a burden on European competitiveness.
Aviation in the Gulf is a great success story and air traffic gridlock should not become its Achilles Heel. The players in the region need to buy in urgently to a vision for seamless airspace management in the region and then work together in a team effort to make it happen.
In addition to regional cooperation, I wanted to introduce one further concept to think about as the Summit unfolds—global standards. Global connectivity is possible because of global standards. IATA is a staunch supporter and defender of global standards. We make industry commercial standards in some areas and we support the International Civil Aviation Organization (ICAO) which has the same mandate from governments.
Global standards provide a way for industry partners to work together. They form a common language, so to speak. And I would attribute a large part of the success of aviation in the Gulf to the importance that the stakeholders in the region—governments and industry—have placed on them.
I urge you to stay the course and resist the urge to fragment global standards with local variations. Be it passenger rights, requirements for advance passenger information or the adoption of important treaties like the Montreal Convention, the more that we can place global standards at the center of regulations, the more solid is the foundation for everybody’s success.
Global standards are not just for governments. We have seen how the hard work of converting to e-ticketing has benefited everyone in the travel value chain including the passengers. There are plenty of other commercial standards which could provide broad benefits as well.
- The IATA Fast Travel program helps airlines, airports and others smooth the passenger journey with self-service options.
- On the security side, we are working with Airports Council International to promote Smart Security—a risk-based approach that will improve effectiveness and the passenger experience at airport security checkpoints.
- And in the cargo part of the business, the e-freight project promises broad benefits throughout the supply chain with better customer service, shorter transit times and more efficient processes. On this Dubai is a global leader, having mandated the e-air waybill.
This region is uniquely placed—due to its rapid growth—to benefit as a leader in early adoption. That will need collaboration between industry players. But the result will be the competitive advantage of being at the forefront of efforts to promote efficiency and customer service.
From these remarks, you can easily anticipate my response to the panel discussion question of whether partnerships and collaboration can lead to an increase in returns across the aerospace industry. I am eager to engage in the discussion.
A strong vision for aviation’s future supported by cooperation and global standards has laid the foundation for a very successful air transport sector. That foundation becomes stronger the more that we work together as partners. I am absolutely confident that the Gulf region will play an even more crucial role in aviation’s second century.