IATA FLYING HIGH
While revenues are increasing, earnings are being squeezed by rising fuel, labour and maintenance expenses. Finding alternative means to keep flying secure without the inconvenience of the current laptop ban, combating human trafficking, implementing the Carbon Offset and Reduction Scheme for International Aviation (CORSIA) and modernising air cargo processes were some of the serious issues on which 73rd IATA AGM deliberated at Cancun (Mexico) in the first week of June 2017. Anil Tyagi, Editor, and Anish Gandhi, Consultant Foreign Affairs, of gfiles flew to Cancun to understand the frank and daring deliberations of International Air Transport Association’s (IATA) 73rd AGM.
CANCUN is a beautiful destination where people travel to celebrate honeymoon, marriage anniversaries or relax during summer vacations, but the International Air Transport Association (IATA) decided to hold its 73rd Annual General Meeting (AGM) to deliberate the challenges of the aviation industry for two days in the hot summer of June. The way leaders of aviation industry appear to be worried on the challenges and squeezing of profit, it appears they want the political leadership of the world to understand the enormity of the lifeline of the society. The aviation leaders appeared to be perturbed by some sudden announcements of reckless legislations by the respective nations even without consulting or informing the aviation industry, which has a size of $2.7 trillion of economic activity and delivers a third of global trade. The 73rd IATA AGM and World Air Transport Summit present a glimpse of the World Air Trade and indicate how the economy of the world will progress. IATA’s Director-General and CEO, Alexandre de Juniac, in his inaugural speech was forthright in pointing out the issues concerning the industry. The first order of business was electing Aeroméxico CEO, Andres Conesa, as President of the AGM. The IATA announced that Goh Choon Phong, CEO of Singapore Airlines, will be the new Chairman of the IATA Board of Governors (BoG) for a one-year term, effective from the conclusion of the 73rd IATA Annual General Meeting (AGM) in Cancun. Goh is the 76th Chair of the IATA BoG, and the third CEO of Singapore Airlines to hold this position. The IATA organised a panel discussion on ‘The end of globalisation? What would this mean for us?’ The panelists were Tina Fordham, Managing Director, Chief Global Political Analyst, Citi Research, Emilio Romano, President and CEO, Bank of America Merrill Lynch, Mexico, Simon Evenett, Academic
Director MBA Programs, University of St Gallen, Switzerland and Ann Pettifor, Director of Policy Research in Macroeconomics, PRIME Economics. Everybody was surprised to know the views in which they expressed that for most of the past 25 years, globalisation has been regarded as an unstoppable juggernaut. But today, there is a palpable uncertainty about the state of our world, with many commentators suggesting that this juggernaut may finally come to a halt.
ANOTHER interesting panel discussion was on ‘Disruptive Innovation’, which has created new markets and a high value net- work. But what disruptive innovations have helped to maintain that network? Tripadvisor, for instance, started with an idea conceived in a little room above a pizza shop and involved how to connect consumers directly to the travel process. Today about 400 million people visit the site per month. Innovation needs open mindedness, creativity and flexibility, the panel members agreed. According to Christoph Mueller, chief digital and innovation officer at Emirates, disruption in the airline industry is not necessarily coming from other airlines, but rather from other industries. In his view, the airline industry is about to have to compete with companies like Apple and Spotify. “The real user experience consumers want is the wake-up call the airline indus-
For most of the past 25 years, globalisation has been regarded as an unstoppable juggernaut. But today, there is a palpable uncertainty about the state of our world, with many commentators suggesting that this juggernaut may finally come to a halt
try is facing,” explained Mueller. In his view, the airlines that will survive will be the ones making their business model more customer-based in the way of adding to the value chain. Yet, one of the challenges for airlines, when it comes to innovation, is its lack of agility in this regard.
ANOTHER member of the panel was Jeremy Wertheimer, founder of ITA Software, which is now a travel industry software division of Google. “When the stakes are raised and it should be as easy as buying something with your thumb print, the airline industry is often limited by the intermediary system that has been its way of doing things for a long time,” said Wertheimer. “Now, as new entrants and new industries are entering the travel space, consumers increasingly want an airline to be a partner in their trip, communicating with them all along the trip. There lies tremendous opportunity in this area.” Entrepreneur Gillian Morris, founder of travel app Hitlist, fore-
sees that the introduction of driverless cars would make consumers even favour such a mode of transport—like a driverless Uber taxi instead of flight journeys of under five hours and thus avoiding airport security, not being able to take a laptop and other perceived inconveniences they associate with taking a flight. According to Wertheimer, airlines have to look at their customers more closely and integrate information more tightly. Yet, there seems to be a kind of disconnect from consumers and changes happening in the industry. The consumer must actually want what you are trying to give them. IATA adopted a resolution to accelerate the modernisation and transformation of the air cargo industry. The resolution builds on the momentum created by the entry into force of the World Trade Organisation’s (WTO) Trade Facilitation Agreement (TFA). The TFA commits governments to making trade faster, cheaper and more efficient. To ensure that air cargo is ready to benefit from the expected $1 trillion boost in trade growth arising from the TFA and the improving global economic environment, IATA need a major overhaul of industry processes. And there is no time to lose; our customers already expect the efficiency of electronic documentation,” said Alexandre de Juniac.
ON the proposal to privatise Air India, Alexandre de Juniac, evaded questions while observing that this was the second time such an announcement had been made. Maintaining that “we don’t have a position on that (privatisation)”, de Juniac said, “The government can do whatever they like with the airline, provided they do something which is competitive or competition-oriented. If there is no distortion in the market, it’s okay. Then do it.” While the IATA has said that the Air India’s privatisation process should not “distort” competitiveness in the aviation market, the Star Alliance, of which Air India is a prime member, has said the ownership and control should not affect its network or lead to the “backdoor entry” of an airline into the grouping. Other important development for India is that Jet Airways chairman, Naresh Goyal, has been reelected to IATAs Board of Governors. This would be the fifth successive tenure for Goyal at the IATA Board of Governors. There were only two airlines’ representatives from India, Naresh Goyal and Air India’s Pankaj Srivastava, Director Commercial and Board Member. Next year’s AGM will be held in Sydney, Australia. (gfiles was not hosted by IATA for this article)
The airlines that will survive will be the ones making their business model more customerbased in the way of adding to the value chain. Yet, one of the challenges for airlines, when it comes to innovation, is its lack of agility in this regard
IATA’s Board of Governors pose for the shutterbugs
Signing of the Buckingham Palace Declaration