Thank you for the kind introduction. It is an honor to present to the European Aviation Club.
This is my first visit to the Club, so I will start by describing how I see IATA. And then I will share some thoughts on Charting the Right Course for Aviation in Europe.
First and foremost, IATA promotes safe, efficient, economical and sustainable global connectivity by air. That’s reflected in our mission to represent, lead and serve the airline industry. And to achieve that, we seek borders that are open to people and to trade. It is natural. Otherwise, the positive impact of connecting people, goods, markets and ideas through air transport cannot be realized.
I believe that aviation is the business of freedom. Air travel liberates people to live better lives and makes our world a better place.
So we are deeply concerned with the current political rhetoric. It points to a future of restricted borders and protectionism. We see it in travel bans, border walls and trade agreements being called into question. These deny the benefits of globalization—a product of our industry.
Durable peace, prosperity or security have never been achieved through provocation, exclusion and division. The world has grown wealthier with people traveling and trading. That has helped to lift over a billion people from poverty. Aviation is proud of the role it plays in making this happen. And IATA will be forceful in the face of any challenges to this truth. Ensuring aviation’s power to connect people has never been more important.
Second, and linked to the first, IATA has a unique global view. And we bring this to all issues that we face, including at the regional level. Take Brexit as an example. Air transport has flourished in Europe with the single market. That has been good for everyone involved—on the continent, in the UK and well beyond. As the leaders of Europe and the UK work out their future relationship, the best result for everyone would preserve the connectivity that exists today and facilitate growth in the future. That will support prosperity for all parties.
Third, IATA is involved in the global air transport business. Like any trade association, we advocate for our industry. But we do much more.
- With our 265 member airlines we build global standards and facilitate their implementation. Our safety audit programs are a great example of this.
- On behalf of the industry we operate services that are critical for a global business. The obvious example is our industry settlement systems which facilitate global distribution.
- And to support the industry we provide commercial products and services. These include training, consulting, and business intelligence. All these help our members individually to do business better. And we invest any surplus generated in programs to support common platforms for the industry’s growth and development.
The work that we have done on sustainability gives the clearest picture of this. With our members we agreed a global strategy and set targets to manage aviation’s climate change impact. With our industry partners we built support through global advocacy. And we help our members with platforms to benchmark performance.
All this contributed to an historic result! Last October governments agreed to CORSIA (Carbon Offset and Reduction Scheme for International Aviation). They did this under the leadership of the International Civil Aviation Organization (ICAO) with the full support and encouragement of the industry.
CORSIA also illustrates the last observation that I want to make: IATA works in partnership with many stakeholders, in particular governments. As we are in Brussels, I want to highlight five recent successes in our work with the European Commission.
- On the topic of the environment, the importance of the EC proposal to continue the “stop-the-clock” provisions of the EU ETS cannot be over-estimated. It will enable a constructive dialogue at ICAO as the details for CORSIA implementation are worked out. And, related to that, we hope that Europe keeps its efforts focused on ICAO. There is no need, for example to define a European standard for carbon credits when that is already on ICAO’s “to do” list
- One-Stop-Security agreements with Canada and the US make better use of resources and improve the travel experience for 8 million passengers annually. We look forward to more success in the EC’s discussions with other like-minded countries
- The Payment legislative package is bringing benefits and relief in transaction charges for airlines and consumers
- We eagerly anticipate the Commission’s excellent initiative to warn passengers about the illegal practices of “claim farms” which purportedly help passengers with their rights under EU Regulation 261. And, of course we hope that a way around the “Gibraltar block” will soon be found so that the critical revisions to Regulation 261 can move forward
- And last but not least, the European aviation strategy recognizes aviation’s economic and social contribution to the continent. There are areas where we would like to see a more ambitious approach. And having an articulated strategy allows those discussions to take place.
The important point to draw from these examples is that the industry and the Commission are a force for positive change when we work together. And that is enabled by open dialogue, transparency and consultation—a working relationship that I hope to continue and enhance.
As the head of the global association for airlines, and the recent former head of a European airline group I must also say that there is much work still to do.
Europe is not an easy or cost-efficient place to do business. As global competition further intensifies it is only going to get more challenging—potentially costing European jobs, hindering European growth and reducing the European quality of life. That’s why today’s topic is so important—Charting the Right Course for Aviation in Europe. From my perspective the focus areas are clear:
- Regulate smartly
- Reduce costs
- Reinforce security, and
- Remove infrastructure bottlenecks
After lunch is not the time for an exhaustive and detailed discussion. But let me give you a flavor of what that could look like.
To begin the discussion, what does Smarter Regulation mean? For our members it includes important principles like solving real problems, demonstrating a cost-benefit, minimizing the compliance burden, and lots of consultation to avoid unintended consequences.
To put that into concrete terms, one development that we would like to see is the reform and empowerment of the European Aviation Safety Agency (EASA). Safety is the top priority for aviation. EASA should have a clear focus on implementing standardized safety regulation across the EU. We know that safety improves with global standards. And everybody will be a winner with an efficiently functioning EASA.
We’d also like to see European regulations make the most of technology. The way people travel has changed radically. We use e-tickets, check-in online and board using our cell-phones. These are real improvements built on IATA global standards. Passengers value them because they are fast and give them control of their journey.
Passengers in 20 countries can also print their bag tags at home. European passengers, however, cannot yet take advantage of this technology. We are working out how to make the system comply with the rules of the European customs union. But what’s preventing home-printed bag tags for flights to destinations outside of Europe? We hope that the EC can urgently reconsider its position on this.
The next area of focus is cost reduction. Europe is an expensive place to do business. Taxes are a big component of that and we know that this is a battle to fight at the national level. But EU regulations also play a role. In some cases they add costs unnecessarily. In others, they miss opportunities to control the costs of monopoly suppliers. In both cases they damage the competitiveness of European airlines that need to compete globally.
To illustrate the potential power of regulation to help reduce costs, let me return to the issue of the environment. Having discussed the importance of CORSIA, I must also say that it is one element of a bigger strategy that also includes innovations in technology, operations and infrastructure. The long-term solution—agreed by industry and governments—is cleaner technology. With that in mind, we would like to see Europe be more ambitious with its Renewable Energy Directive. Sustainable alternative fuels for aviation have tremendous potential. But we need the right policy incentives to scale-up production and get costs down.
And now for a bit of controversy. I am pleased to see that the EU has heard airline concerns that the Airport Charges Directive is not living up fully to its promises. Europe’s airports include some of the most expensive in the world. And there is insufficient regulation to challenge airports on cost efficiency.
Since 2000 the cost of air travel reduced by 45%. Over the same period airport costs increased by 29%. Those are global figures, but the trend in Europe is the same. And the gap is probably greater given the rapid expansion of budget carriers. The result is that airport charges are a problem for European competitiveness. And the solution is a stronger airport charges directive.
I know that gets our friends in the airport business excited. But having run an airline and paid airport charges, I know that it is an important issue for our members and for consumers. It must be solved. It is not, however, a topic to discuss over dessert. IATA will contribute vigorously to the expert discussion in the review of the Airport Charges Directive. And in parallel we will continue to work with airports on a range of issues where our interests are aligned.
One of those issues is security, the third focus area I would like to discuss. Like safety, it is a top priority for everyone—governments and industry.
The first point is that airlines understand the need for passenger information to power government intelligence efforts. But there is room for efficiency gains in how we collect and transmit vital information to European governments. We are at risk of piling up processes for API, PNR, ETIAS and Entry-Exit. This is at the expense of efficient and interoperable data exchange systems. We must not waste valuable resources where standardized and streamlined processes are possible. The aim should be a single window for harmonized data requirements.
I also believe that we must pay even more attention to security issues. The threats are real and evolving. Tourist destinations in my home country, France, have been attacked by terrorists. Air France was specifically mentioned on the ISIS website. Through tragedy, this city knows first-hand the landside vulnerabilities at airports. Our industry lost an aircraft and 298 lives over-flying a conflict zone. Insider plots have been stopped. And cyber-security threats are constant.
IATA is not alone in appreciating the challenges we face. The UN Security Council passed a resolution on aviation security calling on governments to reinforce existing measures and address evolving threats through ICAO. The aim is essentially the development of a global aviation security strategy and implementation initiative. You will see IATA becoming even more active in security. We are beefing-up our resources and fully supporting ICAO’s efforts. And we look forward to working with the EC and national governments in the process.
Flying is secure. Managing the risks to keep it that way is a constant challenge that we all must take even more seriously.
Removing Infrastructure Blocks
The last priority that I want to discuss is infrastructure. When airlines look at infrastructure we need three things—affordability (as discussed earlier), efficiency and capacity. And if we look at the big picture of what is happening with air transport infrastructure in Europe—airports and air navigation services—we are headed for a crisis…or possibly there already.
Of the 175 airports worldwide where capacity does not meet demand, 102 are in Europe. Eurocontrol predicts that by 2035 European airports will not be able to accommodate 12% of the passengers who need to travel.
A recently circulated ACI paper suggests that airlines are blocking capacity expansion because they benefit from “scarcity rents”. I can assure you that is not the case. Our business depends on growth. And we certainly do not want to forsake 12% of our business. We must work together to ensure sufficient airport capacity to meet growing demand.
The capacity crunch extends to air traffic management. Strikes have become unbearably frequent—with an embarrassing concentration in France. The frustration multiplies exponentially because these strikes are essentially in resistance to modernization.
Europe’s skies are safe. But they are far from efficient. By 2035 we estimate the annual economic cost of European airspace inefficiency will be EUR 245 billion. After decades of discussing a Single European Sky, there is nothing that I could add to the discussion except “sort out the politics and get on with it”!
I will, however, share two ideas:
- First, we cannot continue with the chaos and uncertainty of strikes. Governments must find an urgent solution for service continuity.
- Second, on the Single European Sky there has been little progress with a top-down approach. So we are proposing to build a solution from the bottom up. The strategy is to work with European government to build and implement national airspace plans.
I am a staunch believer in Europe. Like any institution, Europe must evolve with the needs of its constituents. Working with the Commission—our long-suffering compatriot in the quest for ATM modernization—the vision is to realize the economic, social and environmental benefits of airspace modernization. If successful it will become a symbol of what can be achieved by European states working with a common agenda.
The Business of Freedom
These are the top items on IATA’s very broad agenda for aviation in Europe. I hope I have left you with the clear message that there is a lot that we have to do! You can expect me to be a frequent visitor helping the cause. And IATA’s Brussels team, led by Monique de Smet and Giancarlo Buono, are here and fully focused on driving results.
I will close my remarks by saying that we all have a stake in aviation’s success. Everyone in this room is part of something amazing. In the EU, 8.8 million jobs are linked to aviation, as is EUR 620 billion in GDP. Aviation in the EU accounts for nearly 20% of global demand with some 650 million passengers a year rely on aviation to get them where they need to be. Aviation links Europe together and with the rest of the world. It is important that we work together to chart the right course for its future.
Aviation is the business of freedom. That should inspire us all!