IATA pushing Asia leadership role

4th Apr 2007

The International Air Transport Association has urged
Asia to take a greater leadership role in shaping the global aviation
industry.“Asia is a big part of the aviation world.  By 2010, intra-Asia
traffic will be the largest market in the world, accounting for one third
of the world’s traffic.  Critical mass comes with
leadership responsibilities,” said Giovanni Bisignani, IATA’s Director
General and CEO.

Speaking at the Asia Pacific Aviation Media Association’s (APAMA)
Aviation Lecture in Singapore, Bisignani identified three opportunities
for Asian leadership in the aviation industry (1) technology, (2) policy
and (3) the environment.  He also announced the revised industry profit
forecast of US$3.8 billion for 2007. In the three major regions, this
breaks down as follows:

*      North America: US$ -600 million (+4.4 bill if restructuring
costs are excluded)
*      Europe: US$ +2.4 billion
*      Asia-Pacific: US$ +1.7 billion

Technology: While labour costs have traditionally been a competitive
advantage for Asian carriers, European and North American carriers have
reduced their labour costs over the years.  Labour now accounts for 27% of
costs for European and US carriers, and 15% for Asian carriers.  “As the
labour cost gap narrows, technology is the key to competitiveness,” said
Bisignani.  He highlighted electronic ticketing, which will save the
industry US$3 billion.  While China is at 95% ET penetration, well above
the global average of 78%, the rest of Asia is the same level as Africa at
68% due to the slow uptake of ET in Japan and Malaysia.  “We will make our
100% target by the end of this year, but it will require a major effort by
some carriers to catch up,” said Bisignani.

Bisignani also suggested better use of technology to simplify passenger
travel and improve air traffic management.  While some Asian countries are
already using biometrics for immigration processing, these
programmes are targeted at local residents and are not linked
systematically.  “Effective systems are needed to handle the additional
250 million passengers passing through Asian airports in 2010.  Asian
governments have an opportunity to link their systems to make Asia a world
model for a new way of travel,” said Bisignani.


He also urged Asia to lead air traffic management by implementing
cost-effective technologies that are in line with global standards.
Focusing more on aircraft capabilities, we can reduce the need for
expensive and labour intensive ground based facilities, while improving
both safety and efficiency, thus increasing airspace capacity.

Policy: Bisignani called on Asia to develop a regional policy approach to
industry issues, such as safety and liberalisation.

“Governments are responsible for safety.  However, not all governments in
Asia are at the same level in safety oversight.  Global standards need to
be maintained by all.  Asia’s governments need to start
incorporating the IATA Operational Safety Audit (IOSA) into their safety
oversight programmes in order to drive the accident rate down,” said
Bisignani.  The 2006 accident rate for Asia Pacific carriers was on a par
with the global average of 1 accident for every 1.5 million flights. But
the industry target is a 25% improvement by 2008.

Airlines need commercial freedom to operate as true businesses.  “The
future is yours to shape,” said Bisignani. “Don’t repeat the
short-sighted mistakes of Europe and the US. While the recent US and
Europe open skies agreement was a step in the right direction, it fell
short of the fundamental change that the industry needs. They have lost
the vision that made them natural industry leaders. It’s Asia’s turn. But
you must think bigger and faster to implement a staged approach to
liberalisation that can keep pace with the needs of a dynamic industry.”

Environment: The average age of the Asian aircraft fleet is 10 years
compared to the global average of 12, making Asia’s aircraft more fuel
efficient and environmentally friendly.  “The challenge for Asia is to
avoid the crisis in Europe and communicate more effectively on the
environment, and to continue to invest in fuel efficient technology as the
industry grows. Asia also needs to join the rest of their industry
partners in pushing governments for more efficient infrastructure,
manufacturers for more efficient equipment, and oil suppliers for
research into alternative fuels,” said Bisignani.

“Asia’s growing importance is clearly defining a new leadership role in
all aspects of the industry. Asia must develop a leadership framework to
drive a common regional approach with innovation on all fronts: from the
technical issues to fundamental policies. Aviation is the world’s most
exciting industry and Asia is the region that is going to drive it
forward,” said Bisignani.


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