Colleagues, ladies and gentlemen.
The aviation industry is in crisis.
Why else would the leaders of the industry that brings people together be meeting virtually?
Efforts to control the spread of the Coronavirus have resulted in the greatest de-connecting of people since the Second World War. Borders are effectively closed. Our freedom of movement has been severely restricted. And the impact on aviation has been catastrophic:
- International passenger travel is down 89%. Domestic by 43%.
- With just 1.8 billion people expected to travel this year, we are back at 2003 levels
- Cargo is a bright spot. But with volumes 8% below 2019 it’s hardly good news.
As leaders of the global air transport industry, you know the pain first-hand. The toll on finances has been devastating. And our thoughts are with the hundreds of thousands of aviation workers who have lost their jobs.
The story does not stop there. In total, 46 million jobs in aviation-related travel and tourism are in peril. Educational opportunities are put on hold. Families are separated. Vacations foregone. And once-in-a-lifetime events are missed. When people cannot fly, the human and economic costs could never be fully tallied.
But this is no time for despair. Today is a call to action. The freedom to fly is essential. And the top priority of your association is restoring it.
Since IATA’s founding 75 years ago, airlines have worked through their association to build a global air transport network that has connected and enriched our world.
Together we have experienced many crises. None rivals the scale of COVID-19. But all taught us resilience. Today, resilience depends on:
- Reinforcing our commitments to safety and sustainability.
- Re-opening borders, and
- Repairing shattered finances.
Safety is always the top priority.
A multi-layered approach for safe travel, called Take-off, was established to keep passengers and crew safe. This was published in record time, with the combined efforts of industry stakeholders, public health authorities and IATA, under the leadership of the International Civil Aviation Organization (ICAO). We must commend ICAO. It has been a very effective partner in this crisis.
The good news is that 86% of people currently traveling report that they feel safe with the new measures. But there are two challenges.
- First, implementation of the multi-layered approach is far from universal. Airlines and airports must continue to do their part. And we must bring governments on board, focusing on harmonization.
- Second, we need universal compliance with mask-wearing. Studies from Harvard and the US Department of Defense confirm that the risk of transmission on board commercial aircraft is low. That’s provided passengers wear masks. It reduces the potential for onboard transmission to rival the risk of being struck by lightning. Our crew do a great job reminding passengers of their responsibility—at times in the face of thoughtless defiance. It is important that governments give us the support to enforce this community responsibility.
Lastly, we must plan carefully with regulators how to safely ramp-up operations. Reactivating thousands of grounded aircraft, managing the qualifications and readiness of millions of licensed personnel and dealing with a major drain of experienced workers will be key to a safe re-start. From the earliest stages of the crisis we worked with ICAO and regulators on a framework to do this. And this work continues as the crisis drags on.
Aviation’s commitment to sustainability has also not wavered in the face of the pandemic. In fact, aviation’s resolve to fight climate change has been strengthened.
As a result of the historic Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) aviation’s net carbon emissions from international operations will not grow beyond 2019 levels. Amid the crisis, IATA worked with our industry partners through the Air Transport Action Group to map the way to our 2050 goal of cutting our net emissions to half 2005 levels. It will be a challenge, but we know it can be done. And we have growing confidence that the industry can go further and achieve net zero emissions globally.
We will, of course, need the support of our partners in government. They must not invent new taxes. These add costs to connectivity without reducing emissions. Instead, now is the time for them to invest in an energy transition to sustainable aviation fuels (SAF). Aviation will rely on liquid fuels to power operations out to 2050, especially for the long-haul fleet. SAF is the viable, carbon reducing option. Putting economic stimulus funds behind the development of a large-scale, competitive SAF market would be a triple win—creating jobs, fighting climate change and sustainably connecting the world.
You will be asked to endorse a resolution that confirms our commitments on safety and sustainability and calls on governments to support these, along with aviation’s overall financial viability.
That points us to the next big challenge—re-opening borders. People still want and need global mobility. The ICAO Take-off measures make flying safe. But border closures, movement restrictions and quarantine measures make travel impossible for most.
We must manage how we live with the virus. But that does not have to mean destroying aviation, risking millions of jobs, crippling economies and tearing apart the international social fabric.
A vaccine is the permanent solution we need. Recent news on progress is encouraging. And IATA is working with the World Health Organization (WHO), UNICEF, Gavi, and others in the COVAX initiative. This will ensure that aviation is prepared, literally, to deliver. Borders must be open for distribution, cold-chain logistics facilities need to be available with trained staff, and security measures must be air-tight. On top of that, passenger operations with belly capacity must be scaled-up. This will be the largest and most complex logistical exercise ever. The world is counting on us. And we will not disappoint.
As excited as we are about vaccine development, I must be very clear on one point. We cannot wait for vaccine distribution to re-open borders for travel. An immediate solution already exists. We could safely open borders today with systematic COVID-19 testing.
- We have the technology. Rapid antigen tests are delivering cost-effective results with over 95% accuracy, in 15 minutes or less. And new testing technologies under development could be even better.
- We have guidelines for a harmonized system. ICAO, with the help of WHO, published a manual on testing. And IATA supported this with an implementation guide.
- There is growing evidence that testing is effective. A soon-to-be-published European study shows that a high-performing test would miss as few as 5 COVID-19 cases per 20,000 travellers. That’s in low prevalence areas. Where prevalence is high, this could increase to 25. Both figures are dwarfed by current infection rates.
- We have solutions for test verification. In addition to publishing open source guidelines for this, IATA is developing an industry solution—the IATA Travel Pass (ITP). This app links passengers, airlines, testing facilities and governments with accurate information and privacy protected data management. And, it’s fully integrated into safe contactless travel processes.
- Last and most important, we have working examples. Travel bubbles are the building blocks to a harmonized global re-opening of borders with testing and without quarantine. The Hong Kong-Singapore bubble will start soon. Its success could be the example for others to follow.
The components are here. Now we must put them together with speed and action! We have a resolution calling for testing to open borders without quarantine. Your support will help us to deliver this vital message to governments.
Shoring-up Shattered Finances
The urgency of this message is emphasized by the industry’s dire financial position. We have been all but shut down for months. Any business would be stressed to remain financially viable.
IATA sounded the alarm early. Many others joined the emergency call. And governments came to the table with $173 billion of critical financial support this year. This was an investment in recovery—not just for airlines but for the whole economy. Every airline job supports 29 others. So a full economic recovery will be compromised without the catalyst of aviation.
This is not passing the buck to governments and asking them to solve our problems. Airlines worked hard and cut costs nearly in half. And a targeted effort by your association avoided about $20 billion of infrastructure charges and service fees.
Still, airlines will lose $118.5 billion this year. And 2021 is likely to see a $38.7 billion loss. It will be the fourth quarter of next year before we turn cash positive, at the earliest.
More financial support will be needed. And this must not further increase debt. It has already ballooned by $220 billion to over $650 billion.
We count on our suppliers too. Many—particularly infrastructure suppliers—will also need government financial support. And they contribute to airline cost reduction efforts. Between 2020 and 2021 airlines will have lost more than a full year’s revenues—over $800 billion. Every supplier needs to tighten their belt. We must all live within the means of dramatically reduced revenue.
Airlines will approach 2021 hobbled and on life support. There will be long-term consequences to this situation. The landscape of aviation has shifted. Many governments are now major airline investors. There are legitimate concerns about how long they will stay; and the risk of backsliding toward re-regulation and protectionism. There are also suggestions that new approaches to liberalization, or open access to global capital markets could help the recovery.
These merit serious discussion. But not now. When the house is on fire, you don’t pontificate about its future architecture. You throw water.
Our industry is in flames. And we must put every ounce of our energy into quenching the fire so we can get back to business. That means:
- Getting financial support from governments, and
- Doing everything in our power to re-open borders with testing
For the next months these issues will be at the very top of IATA’s agenda. And you can count on me and the IATA team to do everything in our power to achieve them. And we will do so with speed and velocity. Allez! Let’s go!
And when we are back in business, we can then take the time to address the important questions of how to build back better.
That will be a task for my successor. Yesterday my intention to step down as IATA’s Director General and CEO on 31 March 2021 was made public. It has been the privilege of a lifetime to serve the global air transport industry—the business of freedom—in this capacity.
Since 2016, I worked with the IATA team to meet your needs by re-focusing IATA around the core competencies of advocacy, standard-setting and commercial services. This included a major improvement in IATA’s customer service and a dramatic strengthening of our advocacy capabilities.
I thank the Board of Governors for its unwavering support and the IATA team for its professionalism and determination in this transformation.
I will continue to proudly lead IATA until I handover to my successor Willie Walsh. He will inherit an organization that has served the industry well in this crisis, that has been restructured to face the future with confidence, and that has a clear strategy to support the industry towards recovery. And, most importantly he will inherit a team that he can count on to get the job done.
Absence makes the heart grow fonder
In bringing my report to its conclusion, I want to share three points of pride for aviation that have come into sharp focus with the COVID-19 crisis.
- First, the value of air cargo is front and center. At least 46,000 special cargo flights delivered1.5 million tonnes of medical equipment to fight the disease. The second chapter of this story will unfold when the biggest airlift in history delivers COVID-19 vaccines.
- Second, we have unequivocal proof that a world without the freedom to fly is a sadder and poorer place. Nearly 40,000 repatriation flights brought over 5.4 million people back home. But still, too many family reunions, weddings, funerals, vacations, educations and business development opportunities were put on hold or completely missed.
- Third, we know that real beats virtual. We have all struggled to master Zoom, Teams and other virtual meeting technologies. Each experience, even this AGM, reminds us that there is a significant qualitative difference between real and virtual. Real is better. And aviation makes real happen.
These examples illustrate why our agenda for recovery is so critical.
- We will never compromise on safety or sustainability.
- We must safely pry open borders with testing, and without quarantine.
- And we need the financial support of governments to survive until the business revives.
The months ahead will challenge us as never before. But resilience is in aviation’s DNA. We will re-connect the world. Our mission is unchanged. We are the business of freedom.