April 2016
Dear Colleagues,
For those in the Northern hemisphere, we are well into spring—a
season of renewal and hope. The start of the season, however, was
marred by brutal terrorist attacks in Brussels. As an industry our
thoughts are with all those who suffered losses on that day in the
subway system and at the airport. We can all be proud of aviation’s
resilience. Brussels Airport and the airlines serving it pulled together
to re-connect Brussels to the world.
Inside This Issue
1
Message from Tony Tyler
2
Safety highlights
3
Climate change
4
Protecting wildlife
5
IATA Annual General Meeting
6
Cargo updates
7
Looking at the Numbers
8
In brief
9
Save the date
Crises have a tremendous power to unite. The firm resolve of the
aviation industry and governments to keep aviation safe from
terrorism was only strengthened by the heinous attacks of 22 March
2016. The forces of terror will not de-connect our world.
One exception to industry unity appeared shortly after Brussels Airport
got back on its feet: Belgian air traffic controllers who staged a
wildcat strike over pension matters. It’s an understatement to say that
such malicious irresponsibility in the immediate aftermath of a crisis is
shocking. If we cannot count on simple human decency from such
highly-compensated professionals, then it’s time for governments to
find ways to guarantee the availability of air traffic control services.
On a more positive note, industry unity is keeping aviation at the
forefront of industries addressing climate change. The top agenda item
for the 39th Assembly of International Civil Aviation Organization is
finding an agreement on a market based measure to manage aviation’s
carbon emissions. The industry is united in its preference for a
mandatory, global carbon offset scheme that would allow it to meet
its commitment to carbon neutral growth from 2020. The industry’s
common approach is providing important support as ICAO’s
190 member states work towards an agreement.
Lastly, we will have an opportunity to showcase our unity at the
72nd IATA AGM in Dublin, 1-3 June, in confirming, Alexandre de Juniac
Chairman and CEO of Air France-KLM as my successor. Alexandre will
be a great leader for IATA. He knows the business well and brings
valuable experience from both government and industry. I am sure
that he will keep IATA close to its members and fully focused on
delivering the value that they expect from their association. I look
forward to seeing you at the AGM.
Page 2
CEO Brief
Safety highlights
Safety by the numbers
The 2015 global jet accident rate (measured in hull losses per 1 million flights)
was 0.32, which was the equivalent of one major accident for every 3.1 million
flights. This was not as good as the rate of 0.27 achieved in 2014 but a 30%
improvement compared to the previous five-year rate (2010-2014) of 0.46 hull
loss accidents per million jet flights.
More than 3.5 billion
people flew safely on
37.6 million flights
(31.4 million by jet,
6.2 million by
turboprop)
There were four accidents resulting in passenger fatalities in 2015, all of which
involved turboprop aircraft, with 136 fatalities. This compares with an average
of 17.6 fatal accidents and 504 fatalities per year in the previous five-year
period (2010-2014).
The 2015 jet hull loss rate for members of IATA was 0.22 (one accident for every
4.5 million flights), which outperformed the global rate by 31% and which was in
line with the five-year rate (2010-2014) of 0.21 per million flights but above the
0.12 hull loss rate achieved in 2014.
The loss of Germanwings 9525 (pilot suicide) and Metrojet 9268 (suspected
terrorism) that resulted in the deaths of 374 passengers and crew are tragedies
that occurred in 2015. They are not, however, included in the accident statistics
as they are classified as deliberate acts of unlawful interference.
Emerging safety challenges
Drones
The commercial applications of drones, or as ICAO refers to them, Remotely
Piloted Aircraft Systems (RPAS), are only being explored but they must not
become a hindrance on efficiency or a safety threat to civil aviation. While the
great majority of drone operators pose no risk, a sensible approach to regulation
and pragmatic method of firm enforcement for those who disregard rules and
regulations must be considered. IATA is joining forces with other stakeholders
working closely with ICAO, airports, ANSPs and pilots to agree on a common
approach. We are also supporting the “Know Before You Fly” campaign in the US
to educate prospective users about the safe and responsible operation of drones
and would like to see similar campaigns undertaken elsewhere.
Lithium batteries
Following ICAO Council’s decision of February 2016, lithium ion batteries are
prohibited as cargo on passenger aircraft, effective 1 April 2016. The industry has
worked long and hard to ensure that lithium batteries can be carried safely. The
vast majority of shipments are in full compliance with appropriate aviation
regulations including the dangerous goods regulations (DGR) and IATA Lithium
Battery Shipping Guidelines. But with 400 million lithium batteries being
produced each week, ICAO has acknowledged the risks of improperly
manufactured batteries and placed a temporary ban on lithium battery shipments
in the bellies of passenger aircraft.
Banning lithium batteries from air freight does not solve the issue of counterfeit
or non-declared goods and it is important that this message is conveyed to policy
makers. The airlines needs to speak with one voice to urge governments to
redouble their efforts to enforce the regulations and close the loopholes that
prevent prosecutions of serial offenders.
NEW: On 18 April 2016, IATA and TRAFI, the Finnish Transport Safety Agency, signed a memorandum
of understanding to use IOSA as a tool to complement their oversight of the Finnish operators. This
will reduce redundant audits while maintaining adherence to the global standards and
recommended practices that are the basis of IOSA. Finland will become the first EU member to use
IOSA to improve the efficiency of their safety oversight process .
CEO Brief
Page 3
Climate change
Towards the 39th ICAO Assembly
We have now entered a key period in the international negotiations on the
introduction of a global market-based measure to address aviation’s CO2 emissions.
We anticipate that the world’s governments will conclude negotiations at the 2016
ICAO Assembly this autumn.
On the positive side, a concrete negotiating text is on the table. This came at the
initiative of the President of the ICAO Council, through strong leadership to build
consensus around a fair and balanced instrument that will achieve real
environmental impact.
However, there are still a number of major aviation States that are not convinced
of the necessity of a global scheme and the potential costs impact for their
economies generally, and their aviation sector in particular. We are continuing to
work with those governments to address such concerns.
IATA and our industry partners have also engaged in an intensive process of
advocacy and outreach, supporting ICAO’s own regional meetings and conducting a
series of industry roundtables across the globe. Our aim has been to reinforce
support for a simple, global carbon offsetting scheme as the simplest and most
cost-effective solution for carbon neutral growth from 2020.
Technology and alternative fuels
On the other goals which we set in 2009, progress is extremely promising.
The first goal was to improve fleet-wide fuel efficiency by an average of 1.5% per year
from 2009 to 2020. Currently, we are tracking at an outstanding 2.4% average
improvement per year due to new technology entering the fleet, improved operational
performance and better use of infrastructure.
On our long term goal - to halve CO2 emissions from air transport by 2050 based on
2005 levels - we remain confident of our industry’s ability to deliver. And there
have been significant developments in this area, particularly in the deployment of
sustainable alternative fuels. This year has seen the roll out of regular alternative
fuels flights out of Los Angeles and Oslo airports and the recent approval for
commercial aviation use of a new alternative fuel created from an alcohol called
isobutanol, derived from sustainable feedstocks.
Airlines are United for Wildlife
On behalf of the aviation industry, IATA has signed a declaration aimed at reducing
the illegal trafficking of wildlife and underlining the aviation industry’s
commitment to sustainability.
The ‘United for Wildlife’ initiative was created by the Royal Foundation of The Duke
and Duchess of Cambridge and Prince Harry. It invited representatives of the
transport industry to pledge their support. IATA, Airports Council International, the
African Airlines Association and a number of individual airlines signed commitments
aimed at raising awareness of the trafficking issue among passengers, and training
staff to recognize and report suspicious packages and behavior.
Cooperation with enforcement authorities and international conservation
organizations such as the Convention on International Trade in Endangered Species
(CITES) has already begun. IATA joined the US Agency for International
Development’s (USAID) Reducing Opportunities for Unlawful Transport of
Endangered Species (ROUTES) Partnership. New guidance material for airlines has
been published, and an IATA Environment Committee Wildlife Taskforce has been
set up to monitor progress and provide advice on the next steps.
The 39th ICAO
Triennial Assembly will
be held in Montreal
from 27 September to
7 October 2016
Page 4
CEO Brief
Annual General Meeting 2016
The 72nd IATA Annual General Meeting and World Air Transport Summit will be
held in Dublin, Republic of Ireland, from 1 to 3 June 2016. The event is kindly
hosted by Aer Lingus.
Air transportation plays a vital role in the social and economic life of Ireland and
the Irish have a proud history of contributing to the development of aviation.
Accordingly we are pleased to welcome you to Dublin, the home city of Aer
Lingus.
Our 2016 discussions will focus on some of the challenges which are high on our
agenda this year. Cyber security is one of them, as security threats to civil
aviation operations have become more sophisticated and challenging. The
environment is another important topic in anticipation of the ICAO Assembly next
October. We have invited a group of leaders both from within and outside the
industry to debate these issues. In addition, this event will, as always, provide an
unparalleled opportunity to network with friends and colleagues from across the
entire industry value chain.
Cargo updates
Better ULD handling to increase safety & reduce costs
The industry’s commitment to safety is also captured by our increased focus on
the use of Unit Load Devices (ULDs). ULD Safety and Flight Safety in general have
come under heightened scrutiny since the publishing of the 2013 National Airlines
Bagram accident report.
The growth in wide body aircraft has contributed to the increase in the use of
ULDs, with more than 900,000 ULDs in operation today representing a
replacement value of nearly $1 billion, and the airline industry spending an
estimated $330 Million repairing damaged ULDs. Yet training, operating
standards, and handling practices vary enormously from party to party, ranging
from excellent to non-existent.
The IATA ULD
Regulations (ULDR)
covers technical and
operational standards
and regulatory
requirements, including
carrier's requirements
applicable to overall
ULD operations.
The initial phase of a ULD safety campaign was launched at World Cargo
Symposium 2016 to raise ULD safety awareness across the industry and help
ensure the entire industry is properly trained to handle ULD safely, minimizing
flight safety risks, aircraft damage as well as ULD damage. Visual elements of the
campaign are downloadable from www.iata.org/ULD.
Our ULD Safety Campaign focuses on five central issues:





ULDs are aircraft parts subject to safety and airworthiness requirements
Correct ULD handling contributes to flight safety
Every stakeholder must commit to its safety responsibility and ensure ULD
training requirements are met
Correct ULD handling also reduces costs and improves efficiency
IATA ULD Regulations is an acceptable means to facilitate industry compliance
Air cargo transformation
IATA launched a new and ambitious Cargo Transformation program at the 2016
World Cargo Symposium (March 2016). The program will facilitate the
transformation of air cargo into a lean, adaptive and innovative industry to adapt to
increasingly sophisticated customer demands. It will champion and federate both
new and existing initiatives that aim at improving the cargo ‘shopping’ experience,
embracing e-Commerce, optimizing the end-to-end journey, developing real-time
interaction and increasing quality. This wide-ranging approach will foster
innovation, boost growth and bring dynamism to air-cargo.
Page 5
CEO Brief
Looking at the numbers:
Industry financial update
2016 has begun in a positive manner for the global air transport industry. The latest financial results from Q4
2015 further cemented the picture of a strong end to 2015, driven by carriers in North America. With the
exception of Latin America, financial performance improved in all regions relative to Q4 2014.
Overview
Amongst the 68 reporting airlines, net post-tax
profit in Q4 2015 was almost 60% higher than Q4
2014. North American airlines were the standout in
the last quarter of 2015, posting an operating
margin of just over 15%. Overall, 2016 looks set to
be another strong year for global industry profits.
Airline shares continue to recover…
Global airline share prices are down a modest 1.3%
over the year to date. However, this is entirely due
to the decline in January; over the past two months
share prices have risen, incl. a strong 5.2% in March.
At the regional level, airline share prices in Europe
are down just over 3%ytd, while Asia Pacific bucked
the trend, with a gain of 1.1%ytd.
Overall, in 2016 to date, airline shares have
underperformed the broader global equity index
which is down 0.2%ytd after a 7.2% surge in March.
Airline Share Prices
Index
US$ indices (Jan 2012=100) Mar 31st
World airlines
174.0
Asia Pacific airlines
88.7
European airlines
225.8
North American airlines
376.6
FTSE All World $
126.3
one month
+5.2%
+6.5%
+6.0%
+3.0%
+7.2%
% change on
one year start of year
-5.3%
-1.3%
-7.1%
+1.1%
+4.3%
-3.2%
-5.9%
-0.5%
-6.1%
-0.2%
Index (Jan 2012=100)
200
180
160
140
120
100
80
2012
2013
2014
2015
FTSE All World $
World airlines $
Lower fuel & fares to stimulate demand
Average global fares in reported US$ terms (excl.
taxes, fees and surcharges) fell by around 12% in
2015 compared to the previous year. However, the
strong US$ appreciation over that period has
exaggerated the downward trend in airfares.
Adjusting for the currency effect, global fares were
~4.5% lower than in 2014 (and down 6.2%yoy in
January). The distortion from the dollar is likely to
ease in the coming months.
Furthermore, industry competitive pressures mean
that the declines in oil prices seen around the end
of last year and into 2016 are likely to translate
into further declines in fares as fuel hedges unwind.
2016
Source: Thomson Reuters Datastream
Crude oil: lower for longer?
Crude oil prices rallied in late-February and earlyMarch, driven by market expectations of a possible
freeze in production levels.
The price of a barrel of Brent crude oil ended March
almost 10% higher than it stood at the end of
February.
That said, the bigger picture is that oil prices are
still around 30% lower than at this time in 2015.
Moreover, with storage levels remaining very high
for this time of year, the overriding market
sentiment for oil prices is ‘lower for longer’.
Indeed, the futures market currently expects oil
prices to remain below $50/bbl until late-2019.
Looking ahead
The collapse of oil prices since late 2014, along
with the rise of LCCs – particularly in some key
Asian markets – helps to explain the continued
strong performance of air travel markets despite a
weakening global macroeconomic backdrop.
While the near-term outlook remains upbeat, we
caution that air travel growth will not be able to defy
the downward pull of weak economic activity
indefinitely.
CEO Brief
Page 6
In Brief
Benefits of European Airspace Modernization
A new report from SEO Amsterdam Economics Research, commissioned by IATA,
has calculated that the European economy will be boosted by EUR245 billion in
2035 if European airspace is modernized.
The Report calculates the impact of eliminating the inefficiencies in European air
traffic management (ATM), which include unnecessary route extensions of up to
50km and delays of around 10 minutes per flight.
Europe has had a long-standing program, the Single European Sky (SES), aimed at removing these
inefficiencies. Its targets include a reduction in environmental impact of 10%, a threefold increase
in capacity, and a reduction of costs of 50%. This project, however, is much delayed and is suffering
from a lack of political leadership at national level.
Travel facilitation and border management
International Organization for Migration (IOM) and IATA have signed a memorandum of
understanding to strengthen, promote and develop cooperation on aviation security and
facilitation, and border security and management.
Areas of common interest between the two organizations include harmonized passenger data
exchange programs and data-driven security; integrated border management; the mobility of
migrants, refugees and voluntary returnees; travel health assistance, pandemics management and
other travel health related emergencies; aviation facilitation and border security and management
programs.
Good cooperation between the various stakeholders is paramount. As international air travel is
today a preferred choice for the regular, orderly and safe movement of migrants, IOM assists tens
of thousands of migrants travelling under its auspices every year.
In line with its broad migration mandate, IOM looks at border management as a way to manage
cross border mobility, but also as an integral part of comprehensive migration management.
Borders constitute a physical and legal space where many challenges related to migration
management do surface and culminate.
Save the date!
Following the success of previous editions in New York and Moscow earlier this year, IATA will organize
a series of Aviation Days in Abuja (Nigeria) on 23-24 May and Buenos Aires (Argentina) on 27 May.
Aviation in Africa carries over 70 million passengers a year, supports more than 6.9 million jobs on
the continent and generates over $80 billion in GDP. Over the next five years the African economy
is forecast to grow at a strong 4.7% per year, well above the global average rate. Aviation Day in
Abuja will review how the continent can realize its full economic potential if aviation –
particularly commercial air transport – is prioritized.
Aviation Day Argentina is organized in collaboration with ALTA, the Latin American and Caribbean
Air Transport Association and JURCA, the Board of Airlines Representatives in Argentina. The
agenda will focus on aviation as Argentina's economic engine of growth. IATA’s latest air passenger
forecasts for South America point to strong growth of around 4.5%pa over each of the next 5 years.
This will mean almost 50 million additional passenger journeys by 2020. For Argentina to grasp
fully the opportunity that this presents, a plan is needed which addresses not only land but also air
infrastructure problems in unison.
Global Sustainable Aviation Forum
Cabin Safety Conference
IGHC Conference
Aviation Fuel Forum
10 May 2016, Montreal (Canada)
10-12 May 2016, Miami (USA)
15-18 May 2016, Toronto (Canada)
17-19 May 2016, Prague (Czech Republic)
72nd IATA Annual General Meeting
1-3 June 2016, Dublin (Ireland)