Director General and CEO's Message Alexandre de Juniac, Director General and CEO
Aviation is an amazing industry. I call it the business of freedom.
In 2018 the world’s airlines provided about 4 billion passengers the freedom to travel over a global network of some 22,000 routes. The average cost of this transport was half that of two decades ago. And since 2010 the carbon footprint per passenger has reduced by aboout 2.8% per year.
Last year, airlines also enabled the freedom to do business globally by transporting 64 million tonnes of cargo to markets around the world. This activity supported a third of global trade by value, generated 65 million jobs and underpinned $2.7 trillion of GDP.
In 2018 the world’s airlines earned a collective net profit of $30 billion. Industry revenues topped $812 billion and 8% return on invested capital was generated.
In each year since 2010 the airline industry earned an aggregate profit. And since 2015 that profit has exceeded the average cost of capital. While some airlines continue to face financial challenges, this nine-year profitability streak at the industry level marks a major shift from the sector’s historic boom-bust financial cycle.
The industry’s newly found financial resilience enables it to weather shifts in the operating environment without plunging into crisis. Nonetheless, we expect profits to be squeezed in 2019 as a result of oil price volatility, rising costs for labor and infrastructure, ever-increasing taxation, and a tapering of demand.
The threat of trade wars and protectionist activity also looms large. Globalization has made our world more prosperous. And aviation will play a central role in enabling a more inclusive globalization that spreads its benefits more evenly. But we must be firm in insisting on borders that are open to people and to trade, or the benefits of aviation will be severely curtailed.
Over the next two decades, the demand for air transport is expected to double. The ability to successfully meet this demand will require the industry to excel in several areas. And, as aviation remains a highly regulated industry, governments will play a key role. With the 40th ICAO Assembly scheduled for late in 2019 we have an important opportunity to engage government action at the global standard-setting level.
Air transport is the safest form of long-distance travel. And all involved with aviation are committed to making it ever safer. That was confirmed again in 2018 when the industry’s safety performance showed marked improvement on the ten year average. But two tragic crashes with the newly introduced Boeing 737 Max have knocked the industry’s heretofore impressive reputation.
We can be fully confident that a technical solution will be found to address the issues that have been identified. But there are critical questions still to be answered. What more can be done to ensure the safe introduction of new technology? How can we reinforce collective international confidence into state certification systems? And how can authorities and the industry coordinate better to maintain public confidence?
Security is an equal partner to safety. Flying is secure. But the level of international cooperation and information sharing by governments who have the primary responsibility for security continues to lag behind that of safety. Moreover, many states struggle to implement the baseline international security standards in Annex 17 of the Chicago Convention.
The industry strongly supports the development of the Global Aviation Security Plan through ICAO as a means of taking a major forward.
The October 2018 publication of a UN assessment of the world’s progress towards containing climate change to the Paris Agreement’s aims raised alarm bells. Aviation, along with all industries, is coming under even greater environmental scrutiny. In Europe, the pressure is particularly intense.
We must not forget that aviation was among the first industries, if not the first, to outline a plan to achieve carbon neutral growth (CNG). And we are committed to achieve it from 2020.
Preparations for CNG took a giant step in January 2019 with airlines beginning their emissions monitoring for the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). Agreed by the International Civil Aviation Organization (ICAO) in 2016, CORSIA was approved with the full support—indeed with the urging—of the aviation industry.
CORSIA is just one pillar of the industry’s commitment to stabilize net carbon emissions from 2020, and to cut its net carbon footprint to half the 2005 level by 2050. And science tells us that fulfilling this will be consistent with the 1.5-degree-goal of the Paris Agreement.
But there is urgent need to more concretely demonstrate the ambition of our commitments. And we must be relentless in our efforts to insist that CORSIA is effectively implemented, that strategic investments are made to commercialize sustainable aviation fuels and that the bottlenecks in air traffic management are sorted. Together with continued investment in greener technologies, these will deliver a significant reduction in aviation’s carbon footprint.
Meeting the demand for connectivity depends on availability of infrastructure. In many parts of the world we already struggle with the physical limitations of available airports and airspace. As demand grows that will only get more acute.
Reminding governments to work with the industry to build sufficient infrastructure at affordable cost will continue to be a long-term top priority. And in the short term there is enormous potential to deliver greater efficiency and a better customer experience with the infrastructure we currently have.
The industry agenda is broad. Travelers will appreciate the technology driven innovations such as the One ID program to smoothly move travelers through the airport with a single biometric token, and plans to enhance baggage tracking. Parallel efforts to modernize slot allocation rules, reform airspace management and find better means to fund infrastructure development will deliver less visible but equally important gains.
People are the key resource to take aviation forward. Our industry provides high quality jobs that add value to economies in which they are located. Aviation careers are attractive, but there is growing concern about how the industry will find sufficient technically skilled employees quickly enough to keep pace with demand.
There are no easy answers, but it is clear that increasing female participation in the industry is a tremendous opportunity. Finding ways to balance gender diversity in all job categories will provide huge potential to strengthen our business and ensure the people we need to sustain the industry.
The industry counts on IATA. Global standards developed by our members through IATA underpin day-to-day operations worldwide. Our efficient settlement systems now settle over $460 billion annually. And IATA’s products and services are tailored to help the success of our members while funding industry activities. As your trade association, IATA’s global workforce is fully focused on adding value to the businesses of our members.
IATA is proud to lead, represent and serve the airline industry as we address these and other issues with governments and industry stakeholders. Our vision is to work together with our almost 300 member airlines to shape the future growth of a safe, secure and sustainable air transport industry that connects and enriches our world.