IATA chief talks on key challenges to growth in Mena air tranport industry

Giovanni Bisignani, IATA's Director General and CEO, made the comments in a keynote address to the region's leaders at the 42nd Annual General Meeting of the Arab Air Carriers Organization in Jeddah, Saudi Arabia.

"The Middle East is an oasis of some good news for this industry. This is the only region that is growing. Over the first eight months of the year passenger demand expanded by 8%, outstripped by a capacity increase of 13%. But growth has not yet translated into profitability. Growth without profit is not sustainable," said Bisignani.

Bisignani focused his remarks on four key areas:

Safety: "Safety is our number one priority. But three tragic accidents in this region so far this year remind us that safety is a constant challenge. Through September, the region's accident rate was six times worse than the global average. Flying is safe, but this is a wake-up call. IATA member airlines have shown a strong commitment by achieving 100% IOSA registration in April this year. In 2006, the Arab Civil Aviation Commission made a commitment to require IOSA for all carriers flying within or to this region. Only Syria and Egypt have mandated IOSA. It is time for more governments to come on board," said Bisignani.

Cost Control: Bisignani noted the need for cost control to be an industry commitment across the entire value chain. A build-operate-transfer agreement with AIG to build a new terminal at Queen Alia International Airport in Amman, Jordan, brought special mention. "Commercializing some airports is changing the nature of the partnership. AIG, the concessionaire, can increase charges without a requirement to consult the airlines and 54% of the gross revenue goes to the government.

The regulator has become the business partner of the concessionaire. I am surprised that the government of Jordan, which has always had a progressive vision for aviation, has ignored the ICAO principle of user consultation. This must be changed," said Bisignani.

Liberalization: "The flag on the tail cannot secure the future of this industry. Aviation is not a diplomatic activity. We are businesses with bottom lines to protect," said Bisignani. "This crisis makes it absolutely clear that progressive liberalization with competition on a level playing field and global investment opportunities must mark the way forward. Our goal is to help governments develop effective tools to make this a normal industry capable of generating sustainable profits," said Bisignani. Next month, IATA will host its second Agenda for Freedom Summit with the intention to facilitate the signing of a Multilateral Statement of Policy Principles to facilitate normal commercial freedoms for air transport.

Environment: "The biggest challenge to growth is environment. How we deal with climate change will shape our industry's future," said Bisignani. The industry four-pillar strategy on climate change has saved nearly 70 million tonnes of carbon emissions.

In 2009, IATA's work in MENA helped six airlines implement best practices in fuel efficiency saving $80m on fuel costs, optimized seven routes and implemented performance based navigation at seven airports. Route optimization included a new route from Amman to Jeddah and Aden that saves up to 10 minutes per journey and 9 million kilograms of carbon annually.

"Now the region must think beyond national borders. Why not have a United Arabian Sky with seamless air traffic management and common technology standards? The time to invest is now, before the problems of growth become acute," said Bisignani.

Bisignani also urged carriers in the region to bring governments on board with the industry's forward looking approach to the environment at the UNFCCC climate conference in Copenhagen in December. Airlines are committed to improving fuel efficiency by an average of 1.5% annually to 2020, stabilizing emissions from 2020 with carbon-neutral growth and cutting emissions in half by 2050 compared to 2005 levels.

To achieve this, the industry is asking governments at Copenhagen to adopt a global sectoral approach that accounts for aviation's carbon emissions at a global level (not by state), ensures that aviation is accountable for its CO2 emissions (but only required to pay once) and gives the industry access to global carbon markets to offset emissions until technology can provide the ultimate solution.

"I have taken our united industry's approach to the UN Secretary-General Ban Ki-moon. He commended our efforts and held aviation up as a role model for other industries. As airlines, we must ensure that all national delegations to Copenhagen arrive with full knowledge of our industry's program. Our message is simple. Give us a global sectoral approach under ICAO and we will deliver on even tougher targets than those set by our regulators," said Bisignani.

"We are part of a wonderful industry that connects 2.2 billion people, brings 43 million tonnes of goods to market, supports employment for 32 million people and generates US$3.5 trillion in economic activity. The spectacular growth in MENA reminds us of the power of aviation to drive economic development. We also face some great challenges. The biggest for our long-term future is environment. With our impressive record of delivering results and ambitious future targets I am confident that we are on the right track. In fact, we are racing ahead of governments who must now catch-up," said Bisignani.