Good morning and thank you for the invitation to be with you. I am very pleased to join this important meeting of the Association of Asia Pacific Airlines (AAPA)—my first Assembly of Presidents. I would like to give special thanks to China Airlines for their generous hospitality.
IATA and AAPA work closely together for a common goal—to contribute to the success of your airlines. And I know that your expectations of both organizations are high. And we will not let you down.
For IATA’s part, I can assure you that IATA will:
- Fulfil our mission to represent, lead and serve the industry.
- Earn the respect we need to represent your interests.
- Be the trusted reference, authority, custodian and innovator of global standards and data that facilitate your global business.
- And we will maintain strong finances.
This last point is absolutely essential as the success of our products and services creates value for our customers and enables us to invest in critical industry programs.
On top of all that, I promise you that IATA will act with speed. IATA will be a step ahead of your needs—even faster and more innovative.
This year we are honored and fortunate to have one of this region’s top leaders—Mr. GOH Choon Phong, CEO of Singapore Airlines—serving as Chairman of the IATA Board of Governors.
The numbers for the industry look positive. Globally we expect airlines to make a collective profit of $31.4 billion this year. Passenger traffic is strong. Cargo demand is expanding robustly after years of stagnation—good news for this region. But there is no “easy money” to be made—competition is fierce.
As you continue the individual and day-to-day struggle to fill your planes with enough people and cargo to make a profit, there are also some big long-term areas where we need to work together as an industry. Today I would like to address three that I see as most pressing:
On environment, we have ambitious goals. We will cap net emissions with carbon neutral growth from 2020. And we will cut our net emissions to half 2005 levels by 2050.
It has been a year since the historic ICAO agreement on the Carbon Offsetting and Reduction Scheme for International Aviation—or CORSIA. It is critical to achieve carbon neutral growth. And it places aviation at the forefront of industries managing its climate change impact.
But, airlines have just over 14 months before they must begin reporting emissions. There is lots to do.
We urge more governments to join from CORSIA’s voluntary period. We are working with ICAO to clarify the scheme’s technical details. And we are helping our members to prepare. I hope that you have your teams and processes ready for CORSIA. There is no time to lose. And if you need assistance, please call on the environmental experts at IATA and AAPA. We work very closely together and would be happy to help!
I know that the carriers based in Taipei are eager to be covered by CORSIA. IATA is not a political organization and has no sway in this matter. We encourage dialogue between the parties concerned to find a solution that will facilitate the application of CORSIA to these carriers’ international flights.
CORSIA is an important pillar in our climate change strategy. But the long-term solution to climate change is improvements in technology, operations and infrastructure.
That includes our high expectations for Sustainable Aviation Fuels (SAF). A decade ago there were huge doubts whether SAF could technically do the job. Now, 140 flights operate daily using SAF from sources that will not in any way deplete natural resources or negatively impact the ecological balance.
There would be more flights if SAF were available in greater quantities and at cheaper prices. The two conditions go hand-in-hand. And governments must take a more proactive role in providing the right incentives to unlock SAF’s potential. There is lots of government support for solar power, electrical vehicles and automotive biofuels. But government efforts on SAF fall far short of the mark. And that needs to change quickly.
There is also much more that governments could do to facilitate better environmental performance with more efficient infrastructure. The problem is acute in the US, Europe and the Gulf for reasons including lack of investment and ineffective regional coordination.
In many ways Asia-Pacific is doing well. The region is home to some of the world’s most celebrated airports. Major hubs like Tokyo, Incheon, Hong Kong, and Singapore all have robust expansion plans.
But there are challenges…
- You don’t need me to tell you that Bangkok, Jakarta and Manila need major upgrades.
- Or that China has not yet been able to replicate its success in building airports with solutions on air traffic management. It is indeed improving, but not keeping pace with growth.
- And India’s experience in funding airport development with private capital eased congestion, but burdened the industry’s development with high costs.
And globally, I believe that we are headed for a major infrastructure crisis. It will only be averted with coordinated efforts to address deficiencies.
The size of the challenge for Asia Pacific is huge. Our 20-year growth forecast expects this region to produce an additional 2.1 billion annual travelers in 2036---more than double today’s volumes. And that accounts for more than half of projected global growth.
The economic and social benefits of this will be powerful in this region. But governments need to get the right message on how to prepare.
First, we must remind governments of our basic infrastructure needs….
- Sufficient capacity to meet demand.
- Quality and technology in line with our operational requirements.
- And, affordability
These are common-sense. But they come under threat as governments struggle to fund infrastructure investments—particularly for airports. Many see privatization as the solution.
We have no issue with injecting private sector mentality into the operation of an airport. But our second message to governments on infrastructure is that airports perform better in public hands. That is the conclusion of three decades of largely disappointing experiences with airport privatization.
The primary focus of airports should be to support local and national prosperity as an economic catalyst. But in private hands, shareholder returns take top priority. And we struggle with costs at privatized airports as far flung as Paris, Sydney and Santiago.
Robust regulation is needed to balance national and private interests. But to date we have not seen any long-term success stories. So our last message to governments on airport privatization is to be cautious and to consult the industry before making any decisions.
The last infrastructure issue that I want to address is regional cooperation to promote efficient air traffic management. This is a real challenge for Asia Pacific. There are no formal regional structures for cooperation to galvanize and initiative and move it forward. None-the-less, the solid progress being made towards an international nodal approach to flow management is a major step forward. We fully support it and hope to see it expanded.
The engagement of the airline community is key to making sure that the system evolves in line with airline needs. And, looking at the amazing growth that is predicted for this region, we need to help governments find ways to exponentially increase the pace and breadth of progress.
That leads me nicely to the final area that I want to speak about which is regulation. It is great to see the progress of liberalization of air services across the region. A denser net of air links between the major markets of China, India, ASEAN, Japan, Korea and Oceania is driving economic prosperity.
Today aviation supports 34 million jobs and $700 billion of economic activity in Asia Pacific. And that will expand as we grow to meet ever-increasing demand.
In growing it is critical to remember that global standards are key to maximizing the efficiency of the region’s connectivity. But governments across the region are implementing them in different ways. One of the top priorities of our work in Asia Pacific is advocating for regulatory harmonization that would be a win-win for passengers, governments and the industry.
The good progress on the nodal approach to air traffic management is an example of what we need to achieve. We have also seen progress on the implementation of global standards with Thailand’s ratification of the Montreal Convention 1999. And we are hoping for Bangladesh, Cambodia, Sri Lanka and Vietnam to join the convention’s 129 signatory states.
But there are still too many examples of states in this region not complying with global standards. The wheel is being reinvented in the region on issues as wide ranging as developing punitive consumer protection, ignoring just culture in accident investigations and making non-standard security requirements.
I don’t want to pick on China, but there is a worrying trend of non-standard developments. Recently, and without any consultation, China issued new and unique requirements for the handling of Portable Electronic Devices (PEDs) and China is also considering major deviations from the Worldwide Slot Guidelines.
The US and UK PED ban earlier this year demonstrated why consultation and compliance with global standards is critical. The intention was to mitigate a security concern but it created a safety hazard.
IATA led the global engagement with the US Department of Homeland Security supported by other industry associations. We proposed alternatives. And many were eventually accepted as the PED ban was withdrawn. The lesson learned is that chaos could have been averted with advance consultation.
So what does this mean for regulatory harmonization in Asia Pacific? Nobody wants or needs a new bureaucratic structure that will slow things down—especially in a region that is growing so fast. And diversity in the maturity of regulatory structures across the region is wide.
The goal is to improve efficiency with seamless operations across the region. And to do that governments must focus on harmonization and work together in partnership with industry.
We are eager to work with governments on harmonization. In promoting harmonization we ask that governments keep global standards such as MC99 and MP14 top of mind, learn from the IATA Operational Safety Audit and other industry best practices, and consult with industry because we know what works from our operational experience, which crosses many jurisdictions.
Our regional harmonization initiative is part of our global Smarter Regulation campaign which emphasizes global standards, rigorous cost-benefit analysis, effective and transparent industry consultation, and minimizing the compliance burden.
The Business of Freedom
Regulation is critical to aviation. But it is not a great topic to end a speech! So I will close with a reminder of why we are in this challenging industry.
Profitably is hard won. Surprises are many. Weather, volcanoes, pandemics and politics are among the factors that can change the business in an instant. Safety and security need a constant razor-sharp focus. And any misstep in the careful coordination needed to get planes loaded, in the air and safely back to land could mean disaster.
Yet each day we manage 100,000 flights that take 11 million people safely to where they want to be. And every airport arrivals lobby tells thousands of daily stories of why our business is so captivating. We make the world a better place by bringing people together.
This should send a strong message to governments about the benefits of borders that are open to people and trade. We are the business of freedom. And nothing should stand in the way of the good we do!