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Date: 5 June 2017

Director General’s Report on IATA

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Members of IATA, it has been an exciting and challenging nine months since taking office as the Director General and CEO. Your association is strong and IATA’s activities and initiatives are fully focused on creating value by meeting—and exceeding—your expectations.

Our Board Chair will report in detail on IATA’s work since the last AGM. This will include details of our finances, which I am pleased to say are in good shape.

My remarks will focus on a few areas of special importance to the current and future success of IATA—priorities, membership, innovation and partnership.

Priorities

IATA’s mission is succinct and clear—to represent, lead and serve the airline industry. To fulfill this mission, some things are essential:

First, IATA must be highly respected as the representative body of an important global industry.

Second, IATA must be the reference, authority, innovator and custodian of the global standards and significant amounts of data that facilitate your global business.

Third, IATA must be financially sound. The success of our commercial offerings gives IATA the capacity to invest in activities that support the industry. That’s why IATA’s products and services must create value for the industry— especially our members.

And finally, IATA must be fast. Nobody knows what the next big industry challenge or disruptor will be. Whatever it is, IATA must be able to respond with speed.

Over the last months I have worked with the Board and IATA’s management team to identify what we need to do to fulfill our mission. We arrived at the top ten list that you see on the screens.

  • Safety
  • Security
  • Environment
  • Infrastructure
  • Regulation
  • Innovation
  • Representative membership
  • Commercial discipline
  • Sound financial management
  • Competitiveness

There should be no surprises in this list. In fact, I referred to many of these items in my Report on the Air Transport Industry—including our work on safety, security, sustainability, infrastructure and regulation. Detailed information on all will be provided with the AGM documentation. And I will take this opportunity to highlight a few overarching themes.

Membership

The first is Membership which stands at some 275 airlines from 120 countries. I am pleased to welcome our new members since the last AGM. Their logos appear on the screens.

  • Air Caraîbes
  • Cemair
  • FlyEgypt
  • Guangxi Beibu Gulf Airlines
  • Iran Airtour Airline
  • Lao Airlines
  • Loong Air
  • Lucky Air
  • Malindo Air
  • Mauritania Airlines International
  • MNG Airlines
  • Neos
  • Overland Airways
  • Pegas Fly
  • SF Airlines
  • Thai Lion Air
  • Vietjet
  • VIM Airlines

These airlines join the IATA fold from all corners of the world. And each brings strength to our association. IATA membership now represents 83% of global traffic.

I am especially pleased IATA is attracting a wider range of members with very different business models, particularly the so-called low-cost carriers or new model airlines. It might surprise you to know that about 10% of our membership are new model airlines. And we would welcome more. Their views and experience enrich our work and ensure that we are truly representative of the whole commercial airline industry.

Thank you for extending a hearty welcome to all our new members with a round of applause.

Innovation

The second area is innovation.

Business challenges evolve very quickly as we clearly see in the area of distribution. Already 36 airlines are using IATA’s standards for the New Distribution Capability, or NDC, and 80 more will be on board in the near term (1). Product differentiation will become a much more meaningful feature in the competitive landscape as NDC will help airlines deliver much richer information to customers through travel agents. The challenge is to realize NDC’s full potential by driving up NDC transaction volume and overcoming the obstacles to achieving that vitally important objective.

IATA’s ONE Order initiative (2) will complement NDC by simplifying bookings and modernizing back office processes. The vision is to replace the multiple reservation records currently associated with a customer purchase with a single order number. ONE Order will be interoperable with ticketless travel. So there will be more opportunities for IATA and for airlines individually to work with new model airlines, many of which operate in the ticketless world.

We are also innovating our settlement operations. IATA Financial Settlement Systems processed over $400 billion in 2016. The Billing and Settlement Plan (BSP) is the largest settlement operation—managing transactions between airlines and travel agents. In 2016 a record was set for on-time settlement—virtually every penny of the $219 billion in the BSP was moved on time.

The goal of our settlement systems is to be ever more relevant, on-time, safer, faster, and cheaper. With that in mind we have launched a major modernization of the BSP that we call NewGen ISS. Among its most important improvements will be the Global Delivery Center focused on 24/7 customer service and agent risk management.

IATA’s view on innovation extends beyond current projects. With the Industry Affairs Committee, we have published The Airline Industry in 2035 (3), which analyzes the forces and trends that will impact our industry’s future development. It is a thought-provoking read that I highly recommend.

In the study, data emerges as a key driver. Over the years IATA has become the custodian of significant amounts of industry data. The Global Aviation Data Management initiative is a good example. We are combining data from many sources into a more valuable safety tool.

We are always mindful of legal requirements and security challenges. But there is more that we can do with data. And to help guide our future initiatives in this area, in November we will launch the Global Aviation Data Symposium.

Partnership

Along with innovation, partnership has and will continue to be instrumental in the success of your association.

For example, our partnership with governments—individually and through ICAO—is vital for safety, security, sustainability and much more. The presence at this meeting of Dr. Olumuyiwa Benard Aliu, President of the ICAO Council, demonstrates the trust and common purpose that drives our important work together.

We also partner with industry stakeholders. For example, last month we agreed with Aviation Information Sharing and Analysis Center (Aviation ISAC) to work even more closely to strengthen the industry’s cyber security. And our members can benefit directly with a new tiered access to Aviation ISAC’s offerings, including real time threat information.

Our main partnership, of course, is with our members. You rely on IATA to keep your money safe and to build many of the standards by which you do business. And you expect us to advocate globally and to drive programs that help you to profitably deliver safe, efficient and sustainable global connectivity.

As your association, we deliver the best results when we work together. And I will take this opportunity to highlight three areas where your active support is needed:

The first area is blocked funds. IATA spares no effort to ensure that airlines can repatriate efficiently your revenues from overseas sales. Unfortunately, a quick solution to the $3.8 billion of funds blocked in Venezuela looks improbable as the country descends into ever greater chaos. We do have good news from Egypt where the backlog has been cleared. And we continue our discussions in Nigeria, Sudan, Angola and Algeria, which together are still blocking over $1.1 billion of your money.

IATA will always do all it can to assist when your money is in jeopardy. And we are enhancing our early-warning ability by launching an online currency center. By subscribing to it you will receive event-driven reports. These can guide you in limiting your exposure by increasing the frequency of repatriation in potential trouble-spots.

The second area is Direct Data Service or DDS (4). We also need your help in building the DDS business intelligence product. Already half of the airlines represented on the Board of Governors contribute and release data from direct and indirect sales. Everybody will benefit from stronger competition from IATA among the providers of business intelligence. The more airlines that contribute and release data to DDS, the better the product will be.

And the third area is CORSIA (5). The historic ICAO CORSIA global market-based measure agreement will take some hard work to bring to implementation. IATA is working with ICAO to ensure a transparent and open process as the details are decided. You can help us to help you by getting your internal teams together to develop monitoring plans that must be submitted next year. IATA environment experts are at your service if you have questions or need help. And we are pressing for the on-time publication of the requirements by ICAO so that plans can be finalized.

In all the areas where we work together, your feedback is critically valuable. It helps us to help you. So I will take this opportunity to ask that our member CEOs spare a few minutes to respond to five simple but important questions in our Membership Satisfaction Survey which was sent out to the member CEOs last week. It will help keep IATA focused on what matters most to you.

Conclusion

In closing, I will say thank you to our members—particularly those who serve on the Board, committees and working groups—for your guidance and support during my first months at IATA. You have trusted IATA to deliver on challenging targets. We know they are important to your business success. And we will do our best to deserve your trust by delivering the results you need.

From me personally and on your behalf, I would also like to thank the IATA team of dedicated professionals who are committed to representing, leading and serving your amazing industry.

Your association is at your service and looking forward to a successful year ahead.

Thank you.

1. See: NDC section
2. See: OneOrder   
3. See: Future of airline industry report
4. See: Direct Data Services (DDS)      
5. See: CORSIA

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