top of page

IATA AGM – Willie Walsh Delivers an Optimistic but Cautious Speech

Compiled By Rob Russell


Willie Walsh presented his keynote speech, on the opening day of the IATA AGM. In his speech, whilst highlighting the many positive changes over the past year, and the growth of the airline industry post covid, he also mentioned the road ahead is not going to be an easy one for the industry.

Generally, airlines are en route to a safe, profitable, efficient and sustainable future. Despite economic uncertainties, people are flying to reconnect, explore, and do business.  The latest data show passenger traffic at over 90% of 2019 levels. Airports are busier, hotel occupancy is rising, local economies are reviving, and the airline industry has moved into profitability.  


Financial Performance

Margins are, however, wafer-thin. With $803 billion in revenues, airlines will share $9.8 billion in net profit this year. Put another way, airlines will make, on average, $2.25 per passenger.

The way ahead is far from smooth and easy and several significant problems exist. He spoke at length about OEM suppliers being slow in dealing with the supply and delivery of parts and materials, impacting airlines to keep aircraft serviceable and flying. He addressed the issue of airports and ANSPs shifting the costs of their inefficiencies to the airlines. He mentioned three such examples:

  • Schipol Airport has no shame. After a self-made operational disaster in 2022, the airport continues its three-year 37% charges hike—with 12% this year.

  • In South Africa, airports want a 38% charge increase, only to be outdone by ATC demands for a 63% hike.

  • In Europe, airlines are paying for a EUR1.9 billion addition to the air traffic management cost base in 2022, however, delays were triple what was anticipated. And capacity and environment targets were missed.

Safety

He spoke about the impressive safety record, being experienced. This year marks 20 years of the IATA Operational Safety Audit (IOSA). In September 2003, Qatar Airways was the first to join the IOSA registry. Today, over 400 airlines are on the registry. It is the global standard for managing operational safety.

He further stressed the importance of preventing future accidents by learning from accident reports. But, of the 214 accidents in the last 5 years, only 96 final accident reports are available. This is an inexcusable violation of the Chicago Convention and a disservice to the safety of our passengers and crew. Governments and their agencies must improve.

Efficiency and Implementation of Global Standards

As an industry connecting people and goods across jurisdictions, global standards are at the core of our success—starting with safety and permeating everything we do.


He went on to explain how consumers the world over appreciate the ability to purchase air travel in a single currency for any destination in absolute confidence. That’s achieved with the global standard processes of the IATA Financial Settlement Systems. With half a century of experience and global scale, they are cost-effective, safe and reliable. This experience also helps IATA to set global standards that make travel even more efficient….

  • The transformation to modern airline retailing is taking shape. The aim is to make buying air travel as easy as ordering from any online retailer.

  • Verifiable digital identity standards enabling all players in the supply chain to interact more efficiently and securely are being developed.

  • And, with biometric identification, standards for contactless processes are improving the security and efficiency of the airport experience.

He went on to highlight and mention some of the problems related to this. Unfortunately, that appreciation is not universal among our stakeholders, including governments. Fragmentation is growing because governments are either.

  • Not acting globally

  • Not implementing completely

  • Simply inventing local solutions.


Local solutions: Passenger rights

Over a hundred jurisdictions have developed unique regulations intended to protect air travellers. And at least a dozen governments are looking to join the group or toughen what they already have.  IATA recently surveyed 4,700 travellers across 11 markets to understand their experiences.

  • 96% were satisfied with their last trip

  • 77% said air travel was good value for money

  • 73% were confident they would be treated fairly by their airline in the event of operational disruptions

Every journey is not perfect. There are lessons to learn from rare but widely reported incidents where customers were not treated as they should. But governments are going beyond the realm of reasonability. Europe’s infamous EU 261 passenger rights regulation is a contorting contagion.  It penalizes airlines for disruptions—misunderstanding that the huge costs of not operating to schedule are already a major incentive. Meanwhile, the European Court of Justice continues to transform EU 261 from bad to absurd. Its latest judgement found that the death of a pilot, at an outstation, is not an extraordinary circumstance. Anyone with common sense would certainly wonder who the judges expect to fly the plane!

It should come as no surprise that, nearly two decades after the regulation came to be, consumers are paying more to cover the cost of compensation, and EU studies show no improvement in delays or cancellations.  At the same time, Europe conveniently excuses itself from modernizing air traffic management. The Single European Sky contains the tools to reduce most delays at their source and improve environmental performance.


He stated IATA expressed disappointment when the US announced that EU 261 will be the model for its punitive passenger rights regime. That closely followed Canada’s latest innovation on its 261-style regime where the airline is now guilty until proven innocent. He went on the say that IATA members must carefully watch because governments from Australia to Latin America and the Middle East are all thinking about their own innovations in this area, which could be a nightmare for airlines and their passengers.


He ended this topic, by saying the rotten tomato prize, however, goes to the “pay as you fly” initiative by the EU’s DG Justice. In a misguided initiative to protect travellers, airlines would only receive full payment when the journey is complete. The cash flow impact would be horrendous. And who’s interest will be served by the higher costs and higher fares that will result?


Implementing Global Standards

He went on the address the issue of the importance of fully implementing global standards. Problems also arise when global standards are not implemented as intended. He quoted two examples:


  1. Slots. The Worldwide Airport Slot Guidelines (WASG) underpin 43% of all journeys. And European data show they are effective with a 95% utilization rate and plenty of choice for consumers. Still, some regulators succumb to temptations to “toughen” the rules to be seen to be doing something. He went on to stress that Regulators should also insist on honest capacity declarations by all players—including airports, ANSPs, and border control. Inaccurate capacity declarations resulted in chaos at some hubs last year. A repeat performance cannot be permitted. He called for the need for rigorous attention on meaningful capacity declarations. Where known staff shortages and airspace restrictions exist, they must be planned into the capacities that airlines are scheduling against, not absorbed by delays or cancellations on the day.

  2. Noise control and the environment He went on to mention Schiphol airport. The Dutch government imposed a 12% capacity cut in a crude effort to manage noise. IATA won a court challenge because the government didn’t honour its decades-long commitments under the ICAO Balanced Approach to noise management. The consultation process was a charade and operational restrictions were the first choice, not the last resort as the Balanced Approach calls for. The Dutch government is appealing the court decision, and IATA will continue to challenge it for two reasons. An industry focused on safety cannot accept the politicization of technical discussions. Ignoring the rules-based order established by global standards is a slippery slope to confusion that we airlines can ill-afford and our customers will not tolerate.

The message is simple. Global standards are key. When fully applied, they improve safety and drive consumer benefits, operational efficiencies and sustainable efforts.

The Importance of Acting Globally: Sustainability

At the 41st ICAO Assembly in October 2022 governments agreed on a long-term aspirational goal for aviation to achieve net zero emissions by 2050—aligning governments with our net zero by 2050 resolution at the 77th IATA AGM a year earlier.


He highlights two significant issues.


Firstly, IATA has published a series of roadmaps to net zero by 2050. These roadmaps are the first detailed assessment of the key steps necessary to make net zero by 2050 an aviation success—covering technology, infrastructure, operations, finance and policy. They will, of course, evolve as we dig deeper to set interim milestones on the way to net zero. He highlighted the importance that roadmaps are not just for airlines. Governments, suppliers, and financiers cannot be spectators to the challenge.

Expert evaluation is essential. But too often even professional organizations contribute amateur assessments to this important debate. He highlighted such an example because it received widespread media coverage and is now often quoted, as a recent  Royal Society report on resource requirements for net zero aviation fuels. To underpin their research, they used fuel burn performance data for flights between London and New York for a Boeing 737-300, an aircraft that went out of production in 1999, flying between London and New York. As he said, he has flown the 737-300 many times as a passenger, so he knows a bit about it and what I know for certain is you cannot get the minimum of 21 tonnes of fuel that they estimated you would require into the fuel tanks. They can only take a maximum of 16 tonnes. So, if we know that that section of the report is rubbish what confidence can we have in the rest of the document?

Secondly, IATA published a global standard methodology to track progress toward net zero. The transparency that accurate tracking will enable is critical to holding ourselves and our stakeholders accountable—accountable for what is achieved and what is not in the quest for a truly credible net zero by 2050 target.


Temptations

He mentioned that Decarbonizing aviation is a serious issue and governments must not be allowed to use it to shore up exchequer finances. but several European states also want to tax jet fuel—in defiance of the Chicago Convention and almost every bilateral air service agreement and of course, undermining the CORSIA agreement that Europe promoted.

(The CORSIA agreement is the first global market-based measure for any sector and represents a cooperative approach that moves away from a “patchwork” of national or regional regulatory initiatives. It offers a harmonized way to reduce emissions from international aviation, minimizing market distortion, while respecting the special circumstances and respective capabilities of ICAO Member States.)

He then discussed the importance of developing Sustainable aviation fuel sources and the importance of them, they being the biggest contributor to zero emissions. Today’s SAF production is less than 0.1% of what we need for net zero. But the trend is positive. In 2022, SAF production tripled to 300 million litres. Whilst critics of our industry dismiss that figure as irrelevant, it’s important to remember that airlines used every single drop costing almost $350 million. With the right supportive policies, reaching 30 billion litres by 2030 is challenging but achievable. The biggest problem with SAF is the ability to produce it fast enough. He was also critical of politicians who have not made good on their COP 26 promise to stop financing fossil fuels. We’ve not seen a major shift of fossil fuel subsidies to green energy—certainly not for SAF.


He ended his speech by saying IATA has every reason to be proud of a profitable, safe, efficient and sustainable global air transport industry and our research tells us that people appreciate what we do:

  • 87% believe that flying is critical, and we must find a way to fly sustainably without restricting travel

  • 88% feel that air travel has a positive impact on society

  • 82% recognize aviation as a key contributor to the UN’s Sustainable Development Goals

  • 91% see air connectivity as a modern necessity and

  • 81% of travellers appreciate the freedom to fly more today than they did pre-pandemic

And we have lived up to the faith they place in us

  • Last year airlines transported goods valued at $8.5 trillion, supporting

  • This year we expect to safely enable 4.4 billion flyers to do business, reconnect with loved ones, explore our beautiful planet, fulfil something on their bucket list, or expand their horizons.

1,113 views

Archive

bottom of page