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Ayşe Akalın

IATA Executives Gathered with Global Aviation Media in Geneva

March 06, 2020
IATA Executives Gathered with Global Aviation Media in Geneva

IATA’s Annual Global Media Days event took place at IATA’s executive offices in Geneva on 11-12 December, 2019 where Aviation Turkey magazine’s Editor in Chief, Ayse Akalın was also in participation.

In addition to the opportunity to hear from Alexandre de Juniac, IATA’s Director General and CEO, this year’s event featured an extended format that includes a special focus on Environment—one of the top issues facing the industry. The agenda also included briefings on 2020’s economic and traffic outlook, aviation safety and security trends, disabled passengers, infrastructure and airline industry retailing, among other subjects. In addition, there was a deep dive into air cargo, which has a unique set of challenges in the face of trade tensions and tariff wars.

Alexandre de Juniac, Director General and CEO of IATA delivered an opening speech saying,” This year, over four-and-a-half billion passengers and 61 million tons of freight will travel across a network of more than 22,000 unique city pairs connected by air”. He also stated that as the world focuses on cutting carbon to avoid a climate calamity, they committed to improve fuel efficiency by an average of 1.5% annually between 2009 and 2020 and they are achieving a 2.3% reduction as of 2019. He underlined that IATA supports $2.7 trillion in economic activity, equivalent to 3.6 of global GDP.

Brian Pearce, Chief Economist of IATA delivered a speech and mentioned that the strongest growth has been in the domestic Chinese market with a 8.5% growth and other emerging markets such as Eastern Europe and within Asia have grown 7-8% so far as of 2019. He also stated that the surge in aircraft deliveries will challenge capacity and even if demand growth picks up in 2020, there is a threat that supply could rise even faster, given the 2,100+aircraft that are scheduled to be delivered once, the B737 Max returns to service.

Gilberto Lopez Meyer, Senior Vice President, Safety & Flight Operations, IATA mentioned from January to June 15, there were a total of 20 accidents worldwide, of which 3 resulted in jet hull losses and1 turboprop hull loss. There was a total of 3 fatal accidents which accounted for 201 fatalities. The first half of 2019 has seen the overall accident rate decrease over 2018. Most regions experienced a decline while both Sub-Saharan Africa and North America saw increases.

He also stated that IATA held two 737 MAX summits to facilitate discussions regarding returning to service and related issues. The key takeaways from the summits were “public and employee confidence in the B737 MAX is critical” and “mutual recognition of the aircraft is critical not only for 737 MAX but for all future aircraft.”

Industry steps up efforts against rogue lithium battery shipments

Nick Careen, Senior Vice President, Airport, Passenger, Cargo and Security took the floor and mentioned the biggest security threat is Lithium Batteries. He mentioned that the IATA focused on that area via 3 initiatives; a new incident reporting system, an industry awareness campaign on the dangers of shipping undeclared and mis declared lithium batteries and the facilitation of a joined-up industry approach. It is stated that much of the focus of the campaign is on the air cargo sector as lithium ion batteries cannot be carried as cargo on passenger flights and it is better to pack lithium powered devices and accessories into passenger carry-on bags. He stated that cybersecurity is top of mind in aviation and Airlines and governments need to continue work together to understand threats and vulnerabilities. The IATA aims at building capacity, improving efficiency and driving optimization in security systems.

“Dangerous goods, including lithium batteries, are safe to transport if managed according to international regulations and standards. But we are seeing an increase in the number of incidents in which rogue shippers are not complying. The industry is uniting to raise awareness of the need to comply. This includes the launching of an incident reporting tool so that information on rogue shippers is shared. And we are asking governments to get much tougher with fines and penalties,” said Nick Careen, IATA’s Senior Vice President, Airport, Passenger, Cargo and Security.

It is stated that governments must also play their role with much stricter enforcement of international regulations to ensure the safe transport of these vital shipments. The four trade associations urge regulators to follow through with significant penalties for those who circumvent regulations for the transport of lithium batteries.

After a Challenging year, improvement is expected in aviation for 2020

IATA forecasts that the global airline industry will produce a net profit of $29.3 billion in 2020, improved over a net profit of $25.9 billion expected in 2019. Overall industry revenues are forecasted to reach $87.2 billion and passenger numbers are expected to reach 4.72 billion with an average net profit $6.20 per departing passenger. Freight tons carried are expected to recover to 62.4 million, a 2.0% increase over 61.2 million tons carried in 2019 which was the lowest figure in three years.

Performance drivers for 2020

Economic Growth: GDP is forecasted to expand by 2.7% in 2020 (marginally above the 2.5% growth in 2019). World trade growth is expected to rebound to 3.3% from 0.9% in 2019, as election year pressures in the United States contribute to reduced trade tensions. Growth is supported by actions from central banks as well as easing fiscal policy.

Fuel Costs: Slower-than-expected global economic growth in 2019 contributed to lower energy demand, with crude oil prices averaging around $65 per barrel (Brent), compared to $71.60 in 2018. Oil supply is also plentiful, boosting inventories. As a result, oil prices are expected to dip further in 2020 to $63 (Brent). Jet kerosene prices are also expected to dip, averaging $75.60 per barrel versus $77 per barrel in 2019. The expected industry fuel bill of $182 billion will represent 22.1% of expenses, down from $188 billion or 23.7% of expenses in 2019.

Labor: Total employment by airlines is expected to reach 2.95 million in 2020, up 1.6% on 2019. Productivity (ATKs/employee) is expected to rise 2.9% over 2019 as capacity growth picks up. Unit labor cost ($/ATK) is expected to be virtually flat at $0.12, as better productivity offsets increasing wages.

Passenger: Passenger demand (RPKs) is expected to grow 4.1% in 2020, in line with 4.2% growth in 2019. In fact, this masks a GDP-growth-driven pick-up since the underlying growth rate fell to less than 4.0% in 2019. However, whereas passenger capacity (ASKs) rose 3.5% in 2019, it is forecast to grow 4.7% in 2020 – as aircraft deliveries rise significantly, causing load factors to slide to 82% from 82.4% in 2019. This will maintain pressure on yields, which are expected to slide 1.5% after falling 3.0% in 2019. Passenger revenues, excluding ancillaries, are expected to reach $581 billion (up 2.5% from $567 billion in 2019).

Cargo: Cargo traffic turned negative last year for the first time since 2012. The 3.3% annual decline in demand was the steepest drop since 2009 during the Global Financial Crisis. Freight carriage, meanwhile, slipped to 61.2 million tons from 63.3 million tons in 2018. Cargo traffic is expected to rebound moderately with 2.0% growth in 2020, with tons forecast to reach 62.4 million, which is still below the 2018 result. Yields will continue to slide with a 3.0% decline forecast for 2020, an improvement from a 5.0% decline in 2019. Cargo revenues will slip for a third year in 2020 with revenues expected to total $101.2 billion, down 1.1% from 2019.

The 2020 average return airfare is expected to be $293 where air freight rates are expected to be 1,66/kg. The number of unique city pairs served by airlines is forecast to grow to 23,162 in 2020. The value of trade carried will reach $7.1 trillion dollars, up 5.1% over 2019. Airlines are expected to contribute $136 billion to government coffers in tax revenues.

European carriers are forecast to report a $7.9 billion net profit in 2020 as airlines in the region benefit from the opposite pattern of the developments expected in North America. Economic growth is forecast to pick up and, as a result of substantial cuts in expansion plans, capacity growth is expected to be moderate, helping to improve the supply-demand balance. The net profit per passenger is expected to $6.40. This relatively good aggregate performance for the region hides a long list of airlines just breaking even or making losses, which is why there were a series of European airline failures in 2019.

One ID- “Seamless” journey

Nick Careen, Senior Vice President, Airport, Passenger, Cargo and Security gave a comprehensive information of IATA One ID concept. One ID introduces an opportunity for the passenger to further streamline their journey with a document-free process based on identity management and biometric recognition. Passengers will be able to identify themselves at each airport touchpoint through a simple biometric recognition. The objective is to achieve a truly interoperable system coordination between airports, airlines and governments.

In order to reduce repetitive identity checks and create a seamless flow, One ID seeks to introduce a robust, integrated identity management across the end-to-end passenger process that allows an individual to assert their identity online or in person.

Passengers: seamless experience with one single identification: One ID will provide a “seamless” journey and improve the overall passenger experience. Passengers will no longer need to juggle between different documents. With a single identification, they will be easily recognized by all service providers. This will eliminate repetitive processes, resulting in less queuing. Ultimately, it will enable passengers to arrive at the airport ready to fly in nearly every travel scenario.

Airlines/Airports: cost-effectiveness & efficiency:One ID will improve staff productivity by reducing time spent on manual ID checks. It will also provide real-time visibility of where passengers are in the airport process, possibly allowing smart queuing. This all will help optimize airport space efficiency. Ultimately airlines will benefit from all the passenger process improvements with happy customers, which is likely to translate into commercial opportunities.

Governments: enhanced security: One ID will enable improvements in border, aviation and airport infrastructure security. It will help combat human trafficking and other cross-border criminal activities by reducing the possibility for individuals to cross borders under a false identity.

NEXTT- New Experience Travel Technologies

Alexandre de Juniac, Director General and CEO of IATA underlined their approach on this program and he said “While One ID presents a huge opportunity to smooth out the passenger journey, more needs to be done to accommodate expected growth and evolving customer expectations. To address the challenges of future airports, we have partnered with Airports Council International (ACI) to create the NEXTT or New Experience Travel Technologies initiative. Together we are exploring important changes in technology and processes to improve the efficiency of what our customers experience when traveling. This includes examining options for increased off-site processing, which could reduce or even eliminate queues. We are also looking at employing artificial intelligence and robotics to more efficiently use space and resources. A further crucial element is improving data sharing among stakeholders”.

After his brief information at the opening speech, Anne Carnall, Program Manager, Future Airports talked about the program.

NEXTT (New Experience Travel Technologies), is a joint initiative by IATA and Airports Council International that creates a common vision for the future of air transport. The vision of NEXTT is to improve and streamline travel journey elements at the airport and beyond by means of coordinating the adoption of new and emerging technologies. This shared vision examines the elements that will likely transform the complete end-to-end journey over the next 20 years. Global passenger and cargo volumes are both expected to double in the next 20 years. If the industry approach remains fundamentally the same as today, capacity will not match the predicted pace of growth, highlighting the need for a unified approach to airport infrastructure and operational efficiency improvements. Ensuring that all who need and wish to travel can do so, and that goods are delivered faster and with greater predictability, requires industry transformation which makes best use of new technologies.

Objectives are to create industry level consensus of the concepts for future airports, to determine R&D, standardization or regulatory developments needs and to roll-out work streams to facilitate making the concepts a reality NEXTT provides a vision rather than a project and will not create a single product to be deployed at airports.

Turkish Airlines and Pegasus Airlines joined 25by2025, IATA’s Gender Balance Campaign

At the afternoon session of IATA Global media days event, Jane Hoskisson Director, Learning & Development made a speech on about the 25 by 2025 program.

25by2025 is a global initiative to change gender balance within the aviation industry as an initial step to making the aviation industry more gender balanced. 25by2025 is a voluntary campaign for IATA member airlines to improve female representation in the industry by 25%, or up to a minimum of 25% by 2025.

Within the campaign, the airlines will report annually on key diversity metrics, increase the number of women in senior positions and under-represented areas and female nominations from their airlines for IATA governance roles to a minimum of 25% and work with IATA to increase the number of women appointed to IATA governance roles to a minimum of 25%.

IATA commits to create a forum for sharing best practices and collate industry metrics in an annual update, will increase the number of women in top senior positions, participating at events, panels and conferences to and appointed to IATA governance roles to a minimum of 25%.

Initially 3 airlines; Qatar Airways, Lufthansa and China Eastern joined to the program in September 2019. As of December 2019, 59 airlines covering Turkish Airlines and Pegasus Airlines have joined the campaign which seeks to address gender balance in civil aviation. These 59 airlines that have currently committed to 25by2025 represent 30.24% of passenger traffic, covering both traditional and low-cost airlines. The initiative has resonated around the globe, with signatories coming from all continents; Europe (36), followed by Asia-Pacific (10), the Americas (7) and Africa & Middle East (6).

The next phase of the campaign will focus on collecting data on the key areas signatories have committed to: the number of women in senior positions (as defined by the airline), the number of women in underrepresented areas within the airline (e.g., Pilots, Maintenance & Engineering), and the number of nominations and appointments to IATA governance groups. IATA is also measuring and reporting on the number of women in senior positions, and the number of women represented in industry meetings. The findings will be shared during IATA’s Annual General Meeting and Air Transport Summit in Amsterdam in June 2020.

Carbon emissions per passenger have decreased more than 50% since 1990

Much of the improvement has occurred because the industry has achieved an annual fuel efficiency improvement of 2.3% over the period since 2009, some 0.8 percentage points ahead of target.

This progress is a combination of investments in more efficient aircraft and operational efficiencies.

“Cutting per passenger emissions in half is an amazing achievement of the technical expertise and innovation in the aviation industry. But we have even bigger ambitions. From 2020 we will cap net emissions. And by 2050 we will cut emissions to half 2005 levels. Accomplishing these targets means continued investment in new technology, sustainable fuels, and operational improvements,” said Alexandre de Juniac, IATA’s Director General and CEO.

Airlines have invested some $1 trillion in new aircraft since 2009, and in addition have signed forward purchase agreements for sustainable aviation fuel (SAF) amounting to approximately $6 billion. In addition, the introduction of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) will ensure carbon-neutral growth on international flights from 2020 and raise around $40 billion in climate finance.

Alternative measures are inefficient and fail to cut carbon

Analysis from IATA shows that efforts to deliberately suppress air travel through punitive passenger taxes are inefficient and largely ineffective at reducing carbon.

The CORSIA scheme’s effectiveness lies in its global scope. It is estimated it will reduce emissions by around 2.5 billion tons over the lifetime of the scheme. But global goodwill towards implementing CORSIA is being compromised by governments introducing a patchwork of carbon taxes. A series of decisions or proposals have been made in recent months to levy air passenger taxes, including in France, Germany, the Netherlands and Switzerland.

“Taxation aimed at stopping people from exercising their freedom to fly will make travel more expensive but do very little to reduce emissions. It is a politician’s feel-good solution, without taking responsibility for the negative impact it has on the economy or the mobility restrictions it imposes on people with lower incomes,” said de Juniac.

Long-term, aviation is aiming to reduce emissions with cleaner technology. This will require a financially sound airline sector capable of funding the significant investments that will be needed to make flying sustainable.

“Governments must focus their efforts correctly. Flying drives prosperity. It is not the enemy. Cutting carbon must at the forefront. And government leadership is needed to incentivize the commercialization of sustainable aviation fuels, drive efficiencies in air traffic management and support research into next generation low-carbon energy sources,” said de Juniac

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