IATA FLY­ING HIGH

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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

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