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Date: 2 June 2016

Director General's Report on IATA, Dublin

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IATA is strong and in a healthy state. 

The record attendance at this AGM is testimony to the support that you, our members, give to IATA. That support is critical to fulfilling IATA’s mission to lead, represent and serve the airline industry. With that firmly in focus, I can assure you that IATA continues to be fully committed to delivering value to its members.

Our Board of Governors Chairman will give a full report of the board’s deliberations and determinations. My remarks will highlight key developments in the association and priority areas where your continued support is critical to our success.

Membership

First, I would like to report on the growth and diversity of our membership. Since we last met, the IATA family has expanded to 264 airlines. IATA members come from 118 countries and together provide 83% of global traffic. We are truly the airline industry’s global trade association.

I would like to take a moment to recognize the 16 airlines that have joined IATA since we met in Miami. As you can see, it is a diverse group, reflecting the Board’s desire for IATA to be inclusive of the broad array of business models that exists among airlines. At least a third of these new members are not traditional hub-and-spoke operators. We are strengthening our stature and effectiveness by attracting—and keeping—airlines of all sizes, shapes, business models and ownership structures.

Please join me in a hearty round of applause to welcome all our new members to the IATA fold.

Management

The IATA Senior Leadership Team has also evolved over the last year. 

  • Nick Careen joined IATA as Senior Vice President responsible for Airport, Passenger, Cargo and Security issues,
  • Gilberto López-Meyer has been appointed the Senior Vice President leading the Safety and Flight Operations Division,
  • And Anton Grove is the newly appointed Vice President for our People, Performance and Development Department.

Our Regional Vice President for Middle East and Africa, Hussein Dabbas, has left IATA after four years of service during which he led the strengthening of our resources in that important region. A search is underway for his successor. I know that you will join me in thanking Hussein for his contributions and wishing him well in his future endeavors.

Managing Your Money

One of IATA’s biggest responsibilities is managing your money. In 2015 IATA’s financial systems processed some $363 billion—a sum that is roughly equivalent to the GDP of Norway. Virtually 100% of all funds were delivered on time. And unrecovered debt was less than 0.025% of funds handled in the IATA Settlement Systems.

IATA also works to help you to repatriate your money when it is blocked by governments. Total blocked funds now exceed $5.5 billion. And the top five countries involved are Venezuela, Nigeria, Sudan, Egypt, and Angola. 

The most severe example is Venezuela where some $3.8 billion is trapped. While we have not been successful in clearing the amount despite great effort, I can report two significant steps. Last month we petitioned to have airline funds included by law in the national debt calculation, which should prioritize payment when funds are available. Shortly thereafter we applied to the US Department of Transportation for antitrust immunity that would allow the airlines involved to discuss collective action with a view to finding ways to sustain viable air transportation to this very troubled country.

In the case of Nigeria, in April I went personally to meet with Vice President Yemi Osinbajo to communicate the concern among airlines that the amount of blocked funds is nearing $600 million.

In all cases, IATA will do all we can to facilitate full repatriation. This is usually guaranteed in trade and air service agreements, and I urge you to get your government to support you too, by insisting on those guarantees being met. On our part, we have strengthened our early alerting system so that airlines will have easy access to timely risk management information. 

Rebalancing the Value Chain

IATA continues its efforts to rebalance the value chain. 

A particular issue over the year has been in the Middle East. The lower oil price is tempting some governments to look for ways to make-up for lost revenues. We are fighting charges increases there and elsewhere. 

And where governments have looked for alternative solutions, including privatization, we are reminding them of the importance of effective regulation to avoid the mistakes that we have experienced elsewhere.

We have also moved into new territory by filing as a complainant asking the European Commission to ensure that original equipment manufacturers (OEMs) do not abuse their dominant position in the after-market for maintenance services and spare parts. The costs are big and it’s essential that you pay a fair price.

Those of you who were with us in Miami last year will recall a lively debate on this subject. It is clear that you—our members—want to be able to negotiate contract terms more effectively and with more options than much of the OEM community will entertain today. 

Our sole intention is to achieve clarity on the rules of the game for the future. The goal is a healthier relationship with some of our most important industry partners.

This is a good example of how IATA is doing everything in its power to protect your interests.

Help IATA to Help You

In recent years, I have made it a tradition to use this platform to bring to your attention areas where your help is critical to IATA delivering the results that you need and expect. I will continue that tradition this year.

  • ​​Cargo transformation: The processes supporting global cargo are remnants of the last century. The e-air waybill is spearheading a much-needed transformation of air cargo to paperless processes. The Board wants 56% penetration on legally feasible trade lanes by year-end. We are supporting that effort by working with airports to establish SOPs for implementation and regular operations. You can help-us-to-help-you by prioritizing e-air waybill conversion within your airlines and letting your partners in the value chain know how important it is to you.
  • Ground safety: We all agree that the cost of ground damage is too high. Standardization is the bedrock of improved safety performance. Working with you, we have developed the IATA Ground Operations Manual (IGOM) and the IATA Safety Audit for Ground Operations (ISAGO) to manage and improve performance. You can help-us-to-help-you by implementing IGOM as your minimum standard for ground operations; and recognizing ISAGO as the performance standard for your ground service suppliers.
  • Keeping your money safe: One goal of NewGen ISS is to improve the safety of the $230 billion of your money handled by the BSP system. I know that you are counting on improved intra-day agent risk reports and the implementation of EasyPay. You can help-us-to-help-you by impressing upon the global distribution systems just how important this is to you. Please encourage them to complete their required technical developments in a timely manner.
  • Improved business intelligence: We have worked together to make IATA’s Direct Data Solutions (DDS) a potent source of industry-owned business intelligence. It is powered by information covering more than 90% of indirect ticket sales. And direct sales data has reached coverage of 21%. You can help-us-to-help-you by contributing your data to this industry-owned solution and authorizing its release.
  • Early warning advocacy: IATA is at your side to contribute our expertise and global perspective on advocacy efforts. The resources of our country, area and regional offices are at your service. Although they are plugged in to the local aviation scene, you will certainly have more powerful local resources. You can help-us-to-help you by providing early warning of impending taxes, charges or regulatory issues so that together we can stop bad ideas from becoming law.

In asking your help, I am not passing the buck. Your association is engaged and working hard on your behalf. But we can do that most effectively when we join forces. IATA has a unique global perspective and expertise. And you, our members, have the greatest knowledge of the challenges that you face and the actions needed to resolve them. Combine the two and we have a powerful voice for change!

IATA is committed to working effectively with you and for your interests. Our annual satisfaction survey helps us to measure how we are doing. You have all received it. It will take less than two minutes to complete. And it will give us invaluable insight and direction. I urge you to complete it. Your responses will help IATA to become even stronger.

Retirement

I have had the privilege to lead IATA and serve its members since July 2011. It has been a challenging job. And I have been continuously motivated by the strong link between IATA’s work as your association and the industry’s success as a force for good.

To mention a few highlights:

  • Together, we have made the industry safer and more secure by addressing the issues of aircraft tracking and the overflight of conflict zones. 
  • Together, we evolved our commitments on climate change into a concrete proposal for a global mandatory carbon offset scheme. This places aviation at the forefront of industries in addressing its impact on climate change. In doing so, it also secures our license to grow.
  • Together, we have combined experiences and expertise to build and enhance the standards on which aviation depends. NDC is a great example. It will modernize the marketplace for air travel. Building on NDC, the next step is the ONE Order program which will simplify the customer order and delivery process.
  • Together, we upgraded IOSA from a snapshot of how a company manages safety into a system based on continuous monitoring. It is the acknowledged global standard for operational safety management. And we are working hard to ensure that its quality continuously improves.
  • Together, with your support we have restructured IATA to strengthen resources in the regions where they are closest to our members and can most effectively meet your needs.
  • In parallel I personally have focused on the relationships we have with governments and participants in the supply chain. Or course there are some issues where we don’t see eye-to-eye with our partners. In those cases, IATA works hard to protect your interests. But we have not let that block progress in all of the other areas where you count on IATA to deliver value that can only be achieved by working in partnership. 

The common theme running through all of these achievements is this: Aviation is a team effort. By working together and in unison as partners we can unlock much more value than we ever could individually. 

It has been a very busy and eventful five years. Now it is time for me to pass on the baton of leadership. 

As a result of your support, IATA is an even stronger association than I inherited. 

Your board has made a great choice in recommending Alexandre de Juniac, Chairman and CEO of Air France-KLM, as my successor. He will be a great Director General and CEO for IATA, continuing to find ways to make it even more relevant to your needs. 

Tomorrow you will have an opportunity to express your confidence in Alexandre by confirming his nomination. And we are planning a handover of duties on 1 September.

In the meantime, I remain firmly in the job and fully committed to leading IATA. May I use this rare moment when we are all together to express some heartfelt appreciation.

I thank you, our members, for the confidence and respect that you have afforded me and all my IATA colleagues. The same goes for our Board and committee members for their time and effort to ensure that IATA is well-managed, that our activities are properly focused, and that our results create value for your business. 

I extend my special appreciation to the five chairmen that I have had the privilege to work with: Peter Hartman, Alan Joyce, Richard Anderson, Calin Rovinescu and Andres Conesa. They are extraordinary leaders who gave generously of their very valuable time to make our industry stronger.

Thank you as well to our many partners across the industry and in governments. Aviation is a complex business. Working in partnership is the only way to do business successfully. 

Lastly, I would like to thank the IATA team personally and on your behalf. There is no shortage of enthusiasm, expertise or commitment among the women and men of IATA. Any and all success that I have had at IATA is shared with the team. 

I have said many times that aviation is a force for good in our world. I am speaking of the accomplishments and achievements of you, our members. And with your support and confidence, the IATA team is a force for good in aviation. If you will indulge me, I propose to conclude my remarks with a round of applause for the IATA team and the IATA members who have supported me so well.

Thank you.

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