Thank you for inviting me to address the World Travel and Tourism Council Annual General Meeting in Bangkok - one of my favorite cities.
In representing IATA’s 265 member airlines, a big part of my job is explaining why aviation is so important.
Our story has compelling numbers. Every day 10 million people fly safely on 100,000 flights. In doing so, aviation supports 63 million jobs and underpins 3.5% of the global economy (roughly $2.7 trillion of economic activity).
Numbers, however, fall short of describing the value aviation creates. It is the business of freedom. Aviation helps people explore our planet, exchange ideas, expand their horizons, stay in touch with loved ones, find business opportunities, develop new markets, and much, much more. Aviation helps people to live better lives.
I know that I don’t need to convince you. Over half of the 63 million jobs underpinned by aviation are in tourism. Aviation and tourism are inseparable today. And our futures will be built on a common foundation. So I am a big supporter of the Global Travel Association Coalition or GTAC. Speaking with one voice is the most effective way to be heard clearly. That’s important, because we face many common challenges.
Aviation and tourism depend on borders that are open to people and to trade. But the current political rhetoric -- denying the benefits of globalization and pointing to a future of protectionism and more restricted borders – is growing in force. So we must make our point.
Globalization has lifted a billion people from poverty. That is undeniable and we can be proud of the role our industry has played. And many more people can still benefit from a growing aviation and tourism sector. For their sake, we must ensure that governments understand clearly that jobs and the economic advancement of their countries is at stake.
A recent visit to Tokyo provided a great example of the economic might of our combined forces. Japan is targeting visitor arrivals to grow from 24 million last year to 60 million in 2030. If achieved, tourism will account for $130 billion of Japan’s GDP. Putting this into perspective, that is an amount equal to Hungary’s GDP.
The biggest enablers of this phenomenal growth are at the top of the GTAC agenda—easier visa facilitation and infrastructure improvements. These are critical for growth, as are the other GTAC items—environmental sustainability and investment in people. And, if we were to put our work together, I would suggest Smarter
Regulation and reasonable taxation.
Let’s begin with facilitation. Governments are responsible for protecting their borders and their citizens.
Fulfilling that responsibility does not have to mean time-consuming inconvenience to bona fide travelers. As with almost all areas of activity, technology is transforming border control. We fully support e-visas and e-gates.
These are integral to IATA’s future vision for travel which should be much more seamless than it is today.
Current security threats, of course, factor into how governments defend their citizens. Terrorism is a real threat. And the attacks that we have seen on airports and tourist destinations prove the point. Intelligence is our most potent weapon. Unfortunately, governments are not sharing information to its fullest potential. That was clear in the misguided ban on large electronics. It defies logical explanation that an aircraft leaving the Gulf for the US poses a threat that is not present for one destined for Germany. As we have seen with the approach of Canada and Australia, there are alternative means to achieve the end that we all want—secure passengers and crew.
What does this have to do with border facilitation? Many governments have ‘known traveler’ programs. But they are not linked. The future vision should be for travelers who wish for their personal information to be shared to be able to access multiple e-gate programs. And if we can deal with the known travelers more efficiently, we’ll have more resources to focus where the risk is greater.
ISIS headlines are keeping security top of mind. Out of the headlines, however, an infrastructure crisis is looming. We see bottlenecks at hub airports in every part of the world. Unseen are the bottlenecks in the sky. Air traffic management in Europe, the US, China, and the Gulf needs major improvements. And we don’t see governments moving fast enough. Even if we agree on solutions today, it takes a decade or more to build an airport. And there are no instant silver bullet solutions for air traffic management either.
But the economic cost of insufficient infrastructure is real. Eurocontrol estimates that 12% of demand for connectivity in Europe will not be met in 2035 because of limited airport capacity. That means that airlines will miss out on 12% potential growth. And 12% fewer arrivals means less opportunity for travelers to spend money in hotels, restaurants, tourist attractions and so on.
Air Traffic Management is another concern. IATA commissioned research which revealed that failure to modernize European air traffic management will shortchange the European economy by 245 billion Euros a year in 2035.
As GTAC we must send a united message that government leadership is needed. And I hope that message can also clearly state that governments cannot pass the buck to the private sector—particularly for airport development. We have yet to see an airport in private hands that has been able to deliver on the airport’s critical role in the local economy while keeping “for profit” shareholders happy. Along with airlines, the tourism sector feels the brunt of underinvestment and falling service levels. And if your government is thinking of airport privatization, encourage them to look at the most successful airports in the most dynamic air markets and draw the appropriate conclusions. Seoul, Hong Kong, Singapore, and Dubai, for example, are all in public hands.
Of course we can only grow if we are sustainable—another GTAC topic. For aviation, it is a success story borne of speaking with one voice. Last year a landmark agreement was achieved at the International Civil Aviation Organization (ICAO) on a Carbon Offset and Reduction Scheme for International Aviation—or CORSIA. We are the first global sector to ask to be regulated in this way. And this global measure was fundamentally important to avoid the patchwork of taxes and charges that governments most certainly would otherwise have created.
As a result of industry unity we have an effective global scheme that places aviation at the forefront of industries on sustainability. We are well on our way to achieving carbon neutral growth from 2020. And we have the moral high ground in asking governments to sort out incentives for sustainable alternative fuels, more efficient air traffic management, and aligning environmental programs with the global agreement.
The future of our industry also depends on having the right people. So investment in people is rightly on the GTAC agenda. IATA is active in helping with the development of our next generation of leaders with IATA Training and the International Airline Training Fund. These provide support for capacity-building and specific skills. I also believe that we need to speak even more forcefully about the role of travel and tourism as a catalyst for job creation.
Together aviation and tourism support 63 million jobs worldwide. And roughly speaking, a million new flyers translates into 1,000 jobs. And these jobs generate real value. If you isolate direct employment by aviation, there are 9.9 million jobs that account for about 3.4% of total GDP—almost three times more than the 1.2% contributed by the automotive industry. If governments would simply remove barriers, aviation and tourism could be an even more potent job-making machine!
What barriers need to be removed? Taxes and bad regulation!
It makes no sense that many states spend millions of dollars to attract tourists. And then governments put short-sighted taxes that make travel more expensive. In the last year or so, Italy, Norway, Australia, Tunisia, some Gulf states, and Ecuador, added to the tax burden on travel. There has been no relief in the UK Air Passenger Duty and the German departure tax—two of the biggest taxes on mobility. But there has been some good news. In Brazil and West Africa, the industry has been successful in arguing against the imposition of various taxes. And Austria is abolishing its long-standing departure tax.
The economic arguments against taxing travel and tourism are sound. It’s an area where we can make even more compelling arguments to governments.
Similarly, we must carry the message of Smarter Regulation to governments. Our Smarter Regulation campaign asks government to focus regulations on areas where there is a clearly defined problem to be solved. And to act in consultation with the industry, align with global standards, perform rigorous cost-benefit analysis and minimize the compliance burden.
This is particularly important in the area of passenger rights. Too often we end up with governments using a sledgehammer to crack a nut. The result is messy and leaves little of value on the table. We have been fighting Europe’s ill-conceived passenger rights regulation—and more recently, the European Travel Package Directive—for over a decade. To be polite, I will simply say that these are quite the opposite of Smarter Regulation. Rather than protecting passengers or solving the causes of delays, they penalize airlines, confuse customers, and add costs to the industry.
That’s worrying enough, but now we understand that there are countries and organizations which are looking at copying these misguided regulations. We would urge them to think twice about doing so – and instead, adopt a regulatory framework conducive to competitiveness and growth. A sound basis for such a framework would be the ICAO principles for passenger rights. I call on everyone present to join us in these efforts, so we can ensure the economic and social promise of the travel and tourism industry can be realized.
I will conclude by saying a hearty thank you to the WTTC for being the GTAC catalyst. The interests of aviation, travel and tourism are 100% aligned. Although I speak of aviation as the business of freedom, that of course includes travel and tourism. We are a great industry that still has plenty of unrealized potential. Working together we can and must send a strong, proud and consistent message to governments that facilitating aviation, travel and tourism will deliver real economic and social benefits. And that is best enabled by borders that are open to people and trade with efficient processes, Smarter Regulation and low taxes.