Partnering to shape commercial aviation’s next century

The International Air Transport Association (IATA) emphasized the importance of industry-government partnership as the industry embarks on the second century of commercial aviation.

“The most salient lesson of commercial aviation’s first century is the value of partnerships. Through partnership, industry and government made flying the safest way to travel. This is a good guide as we look ahead to aviation’s next century. No matter what the challenge, solutions built in partnership between industry and government are the most durable and yield the best results,” said Tony Tyler, IATA’s Director General and CEO, in his keynote address at the Singapore Airshow Aviation Leadership Summit.

In a keynote address, Tyler highlighted opportunities for partnerships in designing regulation, growing connectivity and planning for sustainability.

Regulation

Aviation needs a regulatory framework that supports its global activities.

“I am concerned about the negative impact of growing regulatory divergence and the proliferation of “unique approaches” to regulating the industry. While they were created with the best of intentions, they often come with the unintended consequences of complexity and bureaucracy,” said Tyler.

Tyler suggested five guiding principles for governments when developing regulations: (1) to consult broadly, including industry and consumers; (2) ensure a rigorous process for analyzing the costs and benefits of any new regulation; (3) ensure regulations do not conflict with global standards where they exist; (4) harmonize so that regulations are not at cross-purposes with a global industry; and (5) to think what is really going to deliver value to the passenger.

• Passenger Rights : The impact of the multitude of passenger rights legislation is a growing concern. “It is fully understandable that governments wish to set some minimum guarantees to protect passengers. But the absence of a global framework on passenger rights has seen some 50 countries implement passenger rights regimes. The result is becoming an unmanageable mess of conflicting and over-lapping rules. In some cases, regulations are becoming so prescriptive that airlines cannot go the extra mile for their passengers,” said Tyler.

At the 2013 IATA Annual General Meeting, airlines endorsed a set of principles for passenger rights. And at its last Assembly, the International Civil Aviation Organization (ICAO) was tasked to develop global standards for passenger rights regulations.

Connectivity

Industry, individuals and governments are united in the desire for global connectivity. Today the air transport industry operates a network of some 40,000 routes over which 3.3 billion people and 50 million tonnes of cargo will be carried in 2014.

“Our world is more connected than ever, but we are also nowhere near our potential. If the propensity to travel in Asia matches the level seen in developed markets, we would expect a market four-times the current size,” said Tyler.

Tyler noted that the expanding middle class in developing markets is the biggest growth opportunity for aviation. However, he warned that the opportunity would only be realized if governments understand aviation’s role as an economic catalyst and actively build a policy environment in which it can be successful. He highlighted taxation and infrastructure as two specific areas of concern:

• Taxation: “Aviation should pay its fair share of tax. But taxing aviation at levels equal to the ‘sin’ taxes applied to alcohol and tobacco makes no sense. Connectivity stimulates business that provides tax revenues, but a draconian tax like the UK Air Passenger Duty (APD) hurts the UK economy. Every family that forfeits a long-haul vacation because of the APD also impacts jobs in the destination countries. It may be a UK tax, but the impact is global,” said Tyler, who also highlighted the high fuel taxes in India, and proliferation of facility fees for substandard facilities and occasional over-built facilities across Africa.
• Infrastructure: Efficient infrastructure in sufficient supply is a critical building block for connectivity. This is largely understood in Asia which noted for its many world-leading airports. The region is also moving forward with a Seamless Asian Sky initiative aimed at ensuring sufficient airspace capacity to accommodate growth efficiently. “But there are challenges. The potential markets of Manila, Jakarta, Mumbai lack the infrastructure to support the economic benefits that aviation can deliver. In Europe, airports in general cannot be expanded fast enough, with the onerous approvals process often leading to projects being abandoned. And the advancement in the much needed Single European Sky is being prevented by state governments mired in a web of vested interests,” said Tyler.

Environment

Lastly, Tyler reiterated the industry call for a global approach to managing aviation’s climate change impact.

The aviation industry has established clear targets on the environment: to achieve a 1.5% improvement in fuel efficiency annually to 2020; to cap net emissions with carbon neutral growth from 2020, and to cut net emission in half by 2050 compared to 2005 levels. This will be achieved through a four pillar strategy involving better technology, infrastructure and operations and a global mechanism for market based measures. At the recent ICAO Assembly, governments agreed to develop a framework for a global market-based measure by the 2016 Assembly.

“Delivering a global framework for market based measures by the 2016 Assembly is no small task. Governments will need to work together and focus their efforts to move this forward. The resurrection of Europe’s plans to impose its regional Emissions Trading Scheme on aviation could distract governments and de-rail the process. Governments outside Europe made it crystal clear at the last assembly that a European regional scheme was unacceptable. The big prize of a global scheme is within grasp. Europe should focus on making that a success. It is what will drive the greatest benefit for the global efforts on climate change,” said Tyler.