Silence and irony in Seoul
IATA Annual General Meeting
The annual general meeting of the International Air Transport Association (IATA) is rarely an event that surprises. Editor Matt Driskill was in Seoul for the 2019 AGM in June, which did actually provide a surprise or two, not for what happened, but, ironically, for what was left unsaid in a couple of instances.
At IATA’s 2018 AGM in Sydney, Akbar Al Bakar, CEO of Qatar Airways and the outgoing chairman of IATA, aka “Mr Controversial”, was barely 10 minutes into his chairman’s role when he made comments widely perceived as insulting to women and the roles, or lack of roles, they play in global aviation. That led to a global outcry and an eventual apology issued by Bakar and Qatar.
At this year’s IATA Annual General Meeting in Seoul, Bakar was noticeably circumspect, i.e., silent, when a reporter asked IATA’s leadership panel if the association was doing enough to promote women in aviation. IATA’s director general, Alexandre de Juniac, took the lead and pointed to the fact that IATA “had one woman on the stage this morning” in the form of the association’s corporate secretary and said the association had two board members, but “it’s a long-term issue” and “we need to improve”. Bakar, looking more than a bit uncomfortable, declined to address the question directly, but did remind everyone in the room that Qatar Airways was sponsoring three IATA awards to recognise “leadership in diversity and inclusion”.
Those awards include: “Inspirational Role Model” that goes to a woman over 30 “who holds a senior position within the industry and who has had a significant impact on the aviation agenda through her strong contribution to business delivery, as well as her ongoing support of the gender diversity agenda”. This year’s winner was Christine Ourmières-Widener, CEO, Flybe.
The other two awards go to a “Young High Flyer” to recognise a woman under 40 “who has started to develop her career, and thought leadership in the industry through her inspirational work”. This year’s winner was: Fadimatou Noutchemo Simo, founder and president of the Young African Aviation Professional Association. The final award is the “Diversity & Inclusion Team Award” that is designed “to recognise an airline that has seen a tangible change in their diversity as a result of the work it has been doing in diversity and inclusion”. The winner this year was Air New Zealand. Each award category comes with US$25,000 in prize money, funded by Qatar.
Winning the irony award for the AGM, was IATA itself, which despite holding its AGM in Asia in one of the world’s most connected cities and with Asia-Pacific being the fastest-growing aviation market in the world, decided to leave Asia off the list of regions for which it gave specialised media briefings. The association had sessions on Latin America and the Caribbean, Europe, and Africa and the Middle East, but not one word was devoted to Asia.
When asked why IATA was silent on Asia, the regional vice president for Asia-Pacific, Conrad Clifford, said he didn’t know why the association had ignored Asia in its briefing line-up. A public relations official for IATA, when asked the same question, actually said it was “not necessary” to hold a separate briefing, adding Asia was “too big” and had too many issues to deal with in a single briefing. He later tried to walk back his “not necessary” comment and said the association was concerned about Asia and was holding private briefings on the region, but only with “Chinese press”.
Profit outlook downgraded
IATA announced at the AGM that it was also downgrading the profit outlook for the industry because of global trade problems and higher oil prices. The association said it expected the industry to bring in US$28 billion in profits, below its December 2018 estimate of US$35.5 billion and below the US$30 billion airlines earned for all of 2018. IATA said 2019 costs are expected to grow by 7.4 percent, outpacing a 6.5 percent rise in revenues. Profit per passenger will similarly decline to US$6.12 from US$6.85 in 2018.
“This year will be the 10th consecutive year in the black for the airline industry. But margins are being squeezed by rising costs right across the board — including labour, fuel, and infrastructure. Stiff competition among airlines keeps yields from rising. Weakening of global trade is likely to continue as the US-China trade war intensifies. This primarily impacts the cargo business, but passenger traffic could also be impacted as tensions rise. Airlines will still turn a profit this year, but there is no easy money to be made,” said de Juniac.
On the cargo front, the association demand growth slowed to 3.4 percent in 2018, a fall below the 9.7 percent growth posted in 2017. “It is anticipated to be flat in 2019 with cargo volumes of 63.1 million tonnes (63.3 million tonnes in 2018) because of the impact of higher tariffs on trade. Cargo yields are expected to be flat in 2019 after a 12.3 percent improvement in 2018, as cargo load factors fall further, and supply-demand conditions weaken,” the association said.
Passenger demand growth is expected to be more robust than for cargo. This is because global GDP growth is expected to remain relatively strong at 2.7 percent, albeit slower than in 2018 (3.1 percent). Governments and central banks have responded to slower economic growth with more supportive policies, which is providing an offset to trade weakness. But economic growth and household incomes will still grow more slowly, so total passenger demand, measured in revenue passenger kilometres, is expected to grow by 5 percent (down from 7.4 percent in 2018). Airlines have responded to the slower growth environment by trimming capacity expansion to 4.7 percent (ASKs), according to IATA.
Total passenger numbers are expected to rise to 4.6 billion (up from 4.4 billion in 2018).
IATA said there are many risks facing the industry, mainly in the form of “political instability” and conflict, which “never bodes well for air travel”. Trade wars, like that between the US and China, and hurting the cargo industry and “while passenger traffic demand is holding up, the impact of worsening trade relations could spill over and dampen demand”, the association said.
“Aviation needs borders that are open to people and to trade. Nobody wins from trade wars, protectionist policies or isolationist agendas. But everybody benefits from growing connectivity. A more inclusive globalisation must be the way forward,” said de Juniac.
For Asia-Pacific specifically, airlines there will earn a net profit of US$6 billion, down from US$7.7 billion in 2018. That represents a net profit per passenger of US$3.51 and a net margin of 2.3 percent. The region is showing very diverse performance. Accounting for about 40 percent of global air cargo traffic makes the region the most exposed to weakness in world trade, and that, combined with higher fuel costs, is squeezing the regions’ profits.
IATA Annual General Meeting News in Brief
New chairman takes over
Lufthansa Group CEO Carsten Spohr took the chairman’s seat for his on-year term and becomes the association’s 78th chair of the IATA Board of Governors. He has served on the BoG since May 2014. Spohr succeeds Qatar Airways Group Chief Executive His Excellency Akbar Al Baker, who will continue to serve on the BoG. Spohr has been chairman of the executive board of Deutsche Lufthansa AG since 1 May 2014.
IATA Annual General Meeting moves to Amsterdam for 2020
IATA’s next annual general meeting will be held in Amsterdam and hosted by KLM Royal Dutch Airlines on 22-23 June 2020. This will be the third time that the Netherlands will host the global gathering of aviation’s top leaders. Previous meetings were held at the Hague in 1949 and Amsterdam in 1969. KLM is a founding member of IATA and is celebrating its 100th anniversary this year.
Resolutions approved by IATA board
IATA’s board approved five resolutions dealing with the environment, slots, RFID for bag tracking, One ID and disabled passengers. On the environment, the board called on governments around the world to implement the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) as agreed through the UN’s International Civil Aviation Organisation (ICAO). On slots, the board reaffirmed the importance of a harmonised global airport slot system, and called upon governments to urgently address capacity shortages. On RFID tracking for bags, IATA resolved to support the global deployment of Radio Frequency Identification (RFID) for baggage tracking and called for the implementation of modern baggage messaging standards. On One ID, IATA resolved to accelerate the global implementation of the One ID initiative, which uses a single biometric identifier to move passengers through the airport, without the need for paper travel documents. Finally, on disabled passengers, IATA passed a resolution that aims to improve the air travel experience for the estimated 1 billion people living with disabilities worldwide.
IATA extends Star Alliance deal on documents
IATA and Star Alliance have renewed their collaboration on traveller document verification to improve the passenger experience. Star Alliance and IATA agreed that IATA’s Timatic AutoCheck solution will continue to power Automated Document Check (ADC) for Star Alliance member carriers. IATA Timatic AutoCheck enables Star Alliance customers checking-in at the airport counter or online to verify that their travel documents are valid and complete for the whole journey , including any transit point before travel begins.
Changi Airport Group signs deal on Busan
Changi Airport Group has signed a partnership with Busan Metropolitan City (BMC), Korea Airports Corporation (KAC), Eastar Jet, Jeju Air and SilkAir to promote trade, business and tourism flows between Singapore and Busan. The one-year partnership follows the allocation of traffic rights to South Korean airlines Eastar Jet and Jeju Air, as well as SilkAir, the regional wing of Singapore Airlines, to operate flights on the Singapore-Busan route.