Thank you for that kind introduction. I’d also like to thank the U.S. Chamber of Commerce for the opportunity to address this important Summit.
Since this is my first visit to Washington in my current position, I would like to talk briefly about how I see IATA before moving on to the main subject of my remarks.
First and foremost, IATA promotes safe, efficient 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 advocate for borders that are open to people and to trade. 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 recent developments that point to a future of restricted borders and protectionism. These deny the benefits of globalization—a product made possible by our industry.
There are those who argue that the tide of globalization has left some behind. It would be a mistake not to acknowledge their view.
Nonetheless, it is undeniable that in totality the world has grown much wealthier through trade and travel. That has helped to raise over a billion people from poverty. Aviation is proud of the role it plays in making this happen. And IATA will be a strong voice in favor of the power of connectivity and trade to better people’s lives.
Second, IATA has a uniquely global view. We must, because aviation is a global industry. We could not function if we needed to develop different systems for each airport or destination. The 100,000 flights that are operating today can do so only because the rules are basically the same across their networks.
Third, IATA is involved in the global air transport business. Like all trade associations, we advocate for our industry. But we do much more.
- With our 265 member airlines we build global standards and facilitate their implementation.
- On behalf of the industry we efficiently provide critical services such as our financial settlement systems.
- And to support the industry we provide products and services such as training, consulting, and business intelligence on a commercial basis.
Now I’d like to turn to the subject of my remarks:
Technology, Innovation and the Future of Aviation
A bright future for aviation depends on technology advances and continuous innovation. Demand for air travel will double by 2035. That’s great news for airlines and the global economy. But in order to deliver the benefits of an ever safer, efficient and sustainable air transport system, we must innovate—constantly and quickly!
We cannot do it alone. Aviation is a complex eco-system operating to global standards. All the players must be aligned in a common vision for industry-level innovation. That includes governments, which play a particularly important role as partners and regulators. Their actions can either incentivize value creation or bind the industry in knots of red tape.
Let me give three examples where airlines and governments need to innovate together:
Let’s begin with safety. It’s the top priority. That’s why flying is the safest way to travel. And we are determined to make it even safer.
Innovation plays a role. And it is most successful when industry and government work together. The IATA Operational Safety Audit or IOSA is an example. Now in its 14th year, IOSA is the global safety assessment standard for airlines. All IATA members must achieve the IOSA standard. And many more do so voluntarily.
But, IOSA today looks much different than IOSA at inception. It is the product of constant innovation. The industry works with regulators to make sure that the latest global best practices and technology advancements are incorporated into IOSA’s 900-plus standards.
Regulators around the world have included IOSA in their safety oversight programs. That includes the Federal Aviation Administration (FAA), which uses IOSA in the approval process for code-share operations with non-U.S. operators. We have worked closely with the FAA over the past year to ensure that their trust in IOSA audits is justified.
Of course an IOSA registration is not a guarantee that an accident will not occur. But the numbers show that airlines on the IOSA registry consistently outperform non-IOSA airlines in terms of safety. IOSA is an invention that continues to make flying safer.
We are challenged to replicate our success on safety in security. Airlines face real security threats. I know this first hand. My former airline—Air France—was clearly identified on ISIS websites. The risk is real and constantly evolving. The number of passengers is growing. And business-as-usual for security is not an option.
We must innovate to be more effective and more efficient. As we saw with the frustration of travelers in the U.S. in the spring of 2016, there is little tolerance for lengthy wait times at checkpoints. In fact, considering all that is spent on intelligence and the pace of technology advances, passengers rightly expect innovations that will lead to better security and a better experience.
Understanding that, we partnered with Airports Council International (ACI) to promote Smart Security. Passengers at U.S. airports are starting to experience its benefits as the TSA rolls-out “innovation lanes” based on Smart Security concepts. And I am confident that the MOU we signed last year with Hartsfield-Jackson Atlanta International Airport will set an example of Smart Security-inspired creativity for other airports to follow.
The industry is playing a role in security, but let me be clear: Security is the responsibility of governments. This was emphasized in a UN Security Resolution last year.
Partnership with governments is critical for the success of Smart Security. And collaborative innovation is the only way to stay a step ahead of those intent on doing aviation harm. It is the only way to secure our vulnerabilities—landside, overflying conflict zones, insider threats or with our IT infrastructure.
Innovation also has a role to play in how airlines serve customers. We are on the cusp of fundamentally changing the way people purchase air travel.
Airline websites offer a lot of choices. Passengers can buy fare packages and ancillary products. If they choose to identify themselves with their frequent flyer number they often receive information on special services reflecting their loyalty. They can complete their transaction with a clear picture of what they will get for their money.
But it is a different—and less transparent—experience when buying through a travel agent. Schedules and fares can be compared efficiently. But not all the options. Why not? Because pre-internet technology is still prevalent in distribution through travel agents. And the data standards on which that is built simply cannot convey and compare all the information that is available on an airline’s website.
The New Distribution Capability—or NDC—is an initiative that will bring greater transparency to the shopping experience when using a travel agent. Based on XML, NDC standards are enabling airlines to deliver much more information about their products through the agency channel. And for passengers that choose to identify themselves, personalized offers will also be possible.
It’s exciting. But an initiative in the last days of the Obama Administration could lock consumers into the old and less transparent distribution mode. That’s the unintended consequence of a proposed regulation requiring airlines to display certain ancillary information through the travel agent channel.
I hope that Secretary of Transportation Elaine Chao will take a fresh look at whether the U.S. government should be dictating to airlines how and where they must display their products. The Airline Deregulation Act of 1978 unleashed competition and spurred innovation by letting market forces drive commercial decisions. And today consumers benefit from more travel choices than ever. Deregulation has benefited travelers, the U.S. economy and the competitiveness of its airlines. I hope that the Trump Administration will keep that in focus.
This Summit is taking place at a time of great change in Washington. Aviation is a highly regulated business. So political change in a country that has had such profound influence on how the global industry has evolved is being watched very closely. There is a lot at stake. It is important that the industry’s views are well articulated so that change leads to positive innovation.
So let me take the opportunity to leave you with some hopes for advancements to come. They are premised on the global standards that enable global connectivity and supported by our industry’s collective global experience.
The first hope is for innovation in how aviation is taxed. Specifically, the tax burden needs to be reduced. Airlines for America estimates that taxes account for more than a fifth of the cost of the average domestic ticket. In a country as big, beautiful and full of opportunity as the U.S., why have a taxation policy that discourages travel? Travel stimulates the economy with tourism dollars and business development. We hope that the Trump Administration will create jobs by dramatically reducing the tax burden on travel.
The second innovation would be in infrastructure. We welcome the Trump Administration’s intention to invest $1 trillion dollars to improve transportation infrastructure. America’s infrastructure struggles today. Without investment it will not be able to cope with the nearly 500 million more people expected to travel by air in the U.S. in 2035. So we fully agree that airports and air traffic management need serious attention.
The air transport system is vital to the American economy. The right investments must be made. And those decisions need to be informed by airline experience through effective consultation.
For example, airlines (and their passengers) suffer the impact of the unpredictable federal budget process on the FAA’s provision of air traffic services. The U.S. is falling behind in the introduction of new and more efficient technology. Airlines have also experienced air navigation services north of the border, where the corporatization of air traffic control enabled NAV Canada to leapfrog the FAA in deploying new technology.
Now is the time to move forward with transformation in the U.S. IATA supports the creation of an independent, corporatized non-profit entity to manage U.S. skies. IATA hopes that this will be one of the achievements of the Trump Administration and the 115th Congress.
On airports, the challenge is to ensure high quality, efficient airport capacity without driving up airline costs – and thus airfares – to excessive levels. When governments turn to the private sector to support infrastructure development—one of the considerations that is being explored here—I get concerned. With the possible exception of San Juan airport in Puerto Rico, we have not seen a privatized airport fully deliver on expectations—anywhere in the world.
Airports are monopolies. When they are in private hands, the pressure to maximize shareholder returns too often outweighs the core objective of delivering user/consumer benefits. Private sector involvement in funding infrastructure improvements needs to be balanced by regulatory innovation to protect national and consumer interests.
The last ask for today concerns the environment. Five months ago an innovative Carbon Offset and Reduction Scheme for International Aviation (CORSIA) was agreed by governments, including the U.S., at the 39th Assembly of the International Civil Aviation Organization.
It was an historic ground-breaking achievement led by industry. And it is vital that the Trump Administration supports the successful implementation of CORSIA for international aviation. Airlines cannot operate with multiple and conflicting environmental regimes. CORSIA is the global solution that is in everybody’s best interest.
The Business of Freedom
I will close my remarks by noting that we all have a stake in aviation’s success. In the U.S., the aviation sector contributes $680.1 billion dollars to GDP and supports 6.2 million jobs. This is the world’s largest single aviation market. Aviation is inextricably linked to this country, from the first flight in 1903, and the first airline in 1914. And it has always been about partnerships and innovation. Aviation is the business of freedom and we must continue to work together to make it so.