I am pleased to report that IATA, your Association, is in solid shape. With your staunch support, IATA continues to be successful at delivering value to you, our members, and more broadly to the air transport sector itself.
We are an association of competitors—with different business models and diverse ownership structures—in an industry in which it is tough to turn a profit. Outside of IATA, you compete vigorously to please your customers with great products and prices; to employ winning teams that can manage the business and deliver quality service; and to keep the confidence of investors by generating adequate returns.
IATA is the common ground on which the airline industry gathers together to move forward in areas where there is mutual interest. Formally, the mission of IATA is to represent, lead and serve the airline industry. Practically, that means IATA’s job is to help you to be successful businesses. Global standards and best practices are at the core of what we do together. They are the focus of our strategic efforts:
- To support your financial health
- To advocate and encourage a positive operational and regulatory environment, and
- To create value-added products and services that support your success
We aim to deliver these activities with a value proposition derived from expertise, a unique worldwide perspective, strong partnerships and a well-motivated workforce.
Our Board Chair will provide full details of the Board’s review of IATA’s activities and performance. I will focus my remarks on a few key developments in the association and highlight priority areas where your continued support is critical to the success of industry initiatives.
Since my last report to the AGM, our membership has grown from 242 airlines to 257. In line with the Board-directed priority to attract a broader membership base, this is a positive development. And I will take this opportunity to recognize formally airlines that have joined our association since we last met .
As you can see, it is an impressive group, with carriers joining us from all parts of the world. In total our membership is based in 119 countries and comprises some 83% of global traffic. I know I speak for all of us in welcoming them to the IATA family of airlines
At the global level, we are the representative body of the airline industry. But we cannot take that position for granted. We must continue to earn your confidence by constantly enhancing the value of IATA membership and promoting that value to potential members. In that regard we have made special efforts with the fast-growing group of new-model airlines.
Many of these airlines already participate in our services and benefit from our activities. Several have joined, but they are under-represented among us. With that in mind, Azul, Germania and Vueling are particularly significant new members. They reinforce the fact that IATA membership delivers value across the spectrum of airline business models. I look forward to reporting on the further strengthening of our membership at our next AGM.
There are significant developments in the management of your Association which I would like to report.
- Kevin Hiatt, Senior Vice President for Safety and Flight Operations is leaving IATA for family reasons. In his brief tenure, he has faced some of the most extraordinary issues in safety and established the IATA Standard Safety Assessment which will provide a global safety standard for airlines not eligible for IOSA.
- After a 25-year career at IATA, Tom Windmuller, Senior Vice President for Airport, Passenger, Cargo and Security will retire at the end of August. He is a familiar face at AGMs, having acted as Corporate Secretary through six of them. Tom leaves behind a long list of contributions from his many years of industry service. His successor, when appointed, will be based in our Montreal headquarters. This change is part of our continuous effort to optimize the efficiency of our operations.
The search for their successors is under way. Again, on behalf of us all, thank you, Tom and Kevin, for all you have achieved for IATA and the industry. We wish you both well for the future.
Managing Your Money
I am pleased to report that the IATA Settlement Systems continued to manage your money efficiently—just over $388 billion in 2014. A major achievement in 2014 was with the IATA Clearing House which settled $57.8 billion— in full to the last cent 100% on-time .
I know that you are well aware of the vital role the reliability of IATA’s settlement systems plays in your day-to-day business. You may not be as familiar with the role that we play in working to ensure the safe delivery of funds which are outside our control—namely international remittances blocked by governments. This accounts for just over $4 billion of your money across 12 countries. We are campaigning in all these countries to get you your money. And we are most active in Venezuela which accounts for over 90% of the total—some $3.7 billion.
We are doing all we can to resolve this, including direct discussions with the Venezuelan government and a major media campaign. Our office in Caracas has had some success in preventing matters from becoming worse. But the amount owed has been unchanged since the beginning of the year.
Our message is clear. This must stop. The government is contravening its international obligations. This is airline money. It needs to be paid to them in full.
And even the country’s severely difficult economic situation is not an excuse to delay addressing the issue. I call on the immediate intervention of the Venezuelan government in three areas:
- To end differential exchange rates. Airlines should be able to sell tickets and pay their bills with the same exchange rate.
- To work with the industry to agree a payment plan that can be realistically achieved.
- And to consult with the industry before imposing any new regulations—financial or otherwise
IATA is happy to lead the charge on industry challenges—as we are doing in Venezuela. That is our role. Just as important to the success of many of our initiatives, is the time, effort and work that you, the members of IATA, dedicate. In my previous reports on IATA to the AGM I have spoken about the need to “help us to help you”.
Whether it is achieving the 35% Fast Travel target that you have set or meeting your expectation of 45% e-air waybill coverage by the end of the year, IATA is working hard to deliver the results you need by doing whatever it takes—developing standards, aligning partners, lobbying governments and so on. But there is no substitute for the heavy lifting from our members when driving important industry programs. Our goal is to make it as easy as possible for you---and please let us know of any areas where we could be doing more.
Let me illustrate the concept in two areas where your Association is enhancing its capabilities.
- The first is the area of cyber security. As an industry we face a rapidly evolving threat. At this moment, it is difficult to foresee a durable solution other than the constant vigilance of all industry partners working in cooperation with governments. We have benefitted greatly from the guidance of the Audit Committee on securing IATA’s own financial systems in line with global best practices. For the industry at large, the Operations Committee through the Security Group has provided the support needed to launch a Cyber Security toolkit which is helping to spread best practices across the industry. As with safety, security is not a competitive issue. And I encourage you to continue to use IATA as a vehicle to make us all stronger.
- The second concerns our advocacy efforts. Whether it is educating governments on the benefits of aviation, encouraging better infrastructure development or campaigning for smarter regulation, the voice of your Association stands a better chance of being heard if it is amplified and repeated through your own channels as well.
In the foyer of this hall, you will find an opportunity to work together on the issue of consumer protection. I invite you to have a look at the campaign materials prepared through the work of the Industry Affairs Committee . It is convincing messaging that will help governments and travelers to appreciate this issue better. That will only happen if the campaign moves beyond this room where we all believe it anyway! I urge you to use the materials in whatever way you can—in your lobbying efforts, on board your aircraft, in airline lounges, posters in airports and so forth.
In encouraging your work on these and other efforts, let me emphasize that I am in no way trying to shirk IATA’s duties. Your Association is here to serve your needs and add value to your business. But your support remains at the heart of IATA’s strength in delivering the results that matter to you.
To that end, I have another small but important “help us to help you” request. Last year I launched a formal membership satisfaction survey. Your responses indicated that IATA is doing a good job. We aim to do even better. The link for this year’s survey was e-mailed to you earlier this month. There are only a few key questions. Thank you for your support and taking literally two minutes of your time to complete the survey.
Member support has been a tradition since IATA was founded some seven decades ago by a group of airlines who could see the value that could be created by working together. Over the years that followed, the focus of the work and the operating methods evolved with your businesses. But the fundamental kernel of that vision—working together—remains at the core of your Association.
I will take this opportunity to express my appreciation and that of the entire IATA team for the confidence that you have placed in us through your active membership. In particular I would like to thank all those who participate in our governance structures—through the Board, committees and working groups. I can confirm that we are committed to keeping your trust and returning value for your contributions in everything that we do.
I would also like to express my thanks to the IATA team. The results that they deliver speak for themselves. You can count on their continued professionalism and dedication.
As we turn seventy, IATA is proud of the relevant role that it plays in your businesses and in helping to deliver the benefits of connectivity to the world. We are indeed flying better, together.