Airlines 2018-04

2018 – 04

airlines.iata.org

AIRLINES.

OPENING BORDERS TO GROWTH Relaxing visa requirements would release the benefits of air travel demand

2018 – 04

CEO Interviews Qatar, Cargolux | ONE Order Simplifying the process IATA Opinion Finance roles are key | CORSIA The countdown continues

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Airlines.

Contents 2018 – 04

Comment

26 The quest for compliance

7 Alexandre de Juniac, Director General

Trade wars must not prevent the ‘business of freedom’ from flourishing

31

Richard Forson, Cargolux CEO, believes cargo airlines can improve individual fortunes with a collective approach

Dossier

19 IATA Opinion: Aleks Popovich, Senior Vice President, Financial and Distribution Services

31 Opening borders to growth

The importance of finding finance talent

Relaxing visa terms offers an opportunity for greater connectivity across the globe

Digest

Features

10 IATA and industry update

36 Countdown to CORSIA

Strengthening Indian aviation, Pledge to stop human trafficking, Freight growth continues, Rwanda CAA signs MoU

As the deadline for CORSIA continues to loom large, IATA and ATAG are advising airlines on how to comply

16 Data: In numbers

40 Commercial connections

36

Aviation in India—2017 and beyond

CEO Interviews

5

Simplifying and standardizing the order management process, ONE Order will make seamless travel a reality

20 No time to stand still

Qatar Airways CEO and IATA Chairman, His Excellency Akbar Al-Baker says carriers can never rest on their laurels

IATA Corporate Communications Vice President Anthony Concil Creative Direction Richard McCausland Assistant Director Chris Goater www.iata.org Editorial Editor Graham Newton Head of content production DeeDee Doke Assistant editor Patrick Appleton Senior designer Gary Hill Picture editor Claire Echavarry Production Production manager Jane Easterman +44 (0)20 7880 6248 jane.easterman@redactive.co.uk Publishing director Aaron Nicholls

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60 Seconds with...

20

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42 Holger Paulmann, CEO of SkyAirline

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2018 – 04 Airlines

20/09/2018 16:07

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Comment: Director General and CEO, IATA

Taking stock The end of the peak summer travel season in the northern hemisphere provides an opportunity to take stock of where we are as an industry

ILLUSTRATION: SAM KERR

W

e are coming off another record summer for air travel demand. In addition to the bread and butter business traveler, aircraft were full of those using their vacations to explore our planet, visit with friends and relatives, or perhaps just unwind on a beach somewhere. With over 20,000 unique city-pair connections on offer and over 100,000 flights per day, the options are practically unlimited.

That’s not to say that everything went perfectly.

Some airlines struggled to operate their published schedules, owing to aircraft delivery delays related to engine issues, or engine problems in the installed fleets. Safety was not compromised; but efficiency and productivity were. In Europe, travelers were too often victimized by air traffic delays, because governments have not invested enough in infrastructure and because of air traffic controller job actions. And jet fuel prices remain stubbornly high, reducing the demand boost that might otherwise occur from lower airfares More troubling is the fact that air cargo growth is slowing.

This partly is attributable to the end of the inventory restocking cycle. Manufacturing firms’ export order books in key markets of Europe, China and Japan are weakening. And currency turmoil is roiling some emerging-market economies.

On top of this we are seeing the beginnings of a global trade war. There is no immediate threat to 2018 being a profitable year. But even if the tariffs to date are focused on goods that do not typically move by air, there is good reason to be watchful.

Trade is key to globalization. And globalization has made the world a more prosperous place. Since 1990, 1.1 billion people airlines.iata.org

07_DG Comment_Airlines 2018-04.indd 7

have been lifted from poverty thanks to world trade. Expanding middle classes in China, India and elsewhere are a direct result of the creation of the global economy.

Aviation can be proud of the role we have played as an enabler for these phenomenal changes. Of course, trade is also an engine of growth for airlines. But we need to be committed globalists not just for the opportunities that it creates for aviation. If isolationism wins the day, the world will take a broad step back economically.

We also need to recognize that globalization has left some behind and this helped to propel populist movements. There are no quick fixes to address this—least of all raising barriers to trade that hurt producers and consumers in both developed and emerging markets.

Trade wars, border restrictions, and the forces of protectionism do not look like they will leave newspaper headlines any time soon. That gives even greater purpose to the need for aviation to bear witness to the fact that society is undeniably richer (materially and socially) because of growing linkages between countries. The business of freedom must prevail. Trade wars only produce losers. That’s a message we must repeat at every opportunity.

7

Alexandre de Juniac: Director General and CEO, IATA 2018 – 04 Airlines

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8

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IMAGE: GETTY

Aviation is the business of freedom. With trade tensions between the world's two largest trading nations—China and the US—escalating, there is concern in the automotive industry, which relies heavily on air cargo to deliver important vehicle parts around the world. Rising tariffs as a result of any trade war would hit the industry and affect millions of drivers worldwide.

The Big Picture

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20/09/2018 16:09

Digest Challenges facing Indian aviation addressed at summit in Delhi The International Air Transport Association (IATA) has called on the Indian government to help maximize the potential of aviation in the country by improving infrastructure and addressing government policies that hinder the industry.

At the International Aviation Summit in Delhi, IATA Director General and CEO Alexandre de Juniac said current infrastructure woes affected airlines negatively and he urged the government to support the “business of freedom” by making the necessary moves to alleviate such problems.

“India’s social and economic development needs airlines to be able to profitably accommodate growing

allowing flexible use of military airspace to expand airspace capacity for civil operations. IATA also encouraged the government to look at ways to improve India’s competitiveness through regulation by aligning with global standards and reducing excessive government-imposed costs, including zero-rate Goods and Services Tax for international travel in line with ICAO. “Creating a better environment for aviation will progress India’s development,” said de Juniac. “Safe, secure and sustainable air links make our world a better place. That is why I call aviation the business of freedom.

And the government and industry share a responsibility to work for its success.”

IMAGES: GETTY/ISTOCK/ALAMY

10

demand. We must address infrastructure constraints and government policies that deviate from global standards,” he said.

Indian airlines are suffering as a result of steeply rising fuel costs and the decline in value of the Indian Rupee.

This is aggravated by the fact that fuel takes up 34% of operating costs for Indian carriers, which is much higher than the global average of 24%.

De Juniac pinpointed four areas to improve the infrastructure in India, such as a masterplan for the country’s airports, opening Navi Mumbai airport, modernizing airport processes using technology in line with global standards (implementation of One ID), and

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Digest

“The airport community is determined to work with border authorities and our partners across the world in helping to put a stop to this activity.” Angela Gittens (see story p11, below)

De Juniac speaks out against human trafficking The aviation industry must “further mobilize” to tackle human trafficking, according to International Air Transport Association (IATA) Director General and CEO Alexandre de Juniac.

Speaking out in support of the United Nations World Day Against Trafficking in Persons, de Juniac pointed out that aviation is the “business of freedom”, but that people traffickers continue to use the industry for illegal means.

“As an industry, we have our eyes open, and are working with governments and law enforcement to stop trafficking,” he said.

“Through a joint campaign with our airport colleagues, we hope to further mobilize the aviation industry in the fight against this abhorrent trade in people’s lives.”

Airlines and airports are determined to assist authorities by reporting suspected human

trafficking cases – which affects 25 million people annually – and making it as difficult as possible for the global air transport network to be exploited.

Through the partnership between Airports Council International (ACI) World and IATA, the industry has committed to raising awareness, training staff to recognize the signs of trafficking, and putting in place reporting protocols to alert the authorities.

ACI World Director General Angela Gittens echoed de Juniac’s comments, reaffirming the industry stance that ACI World would be “keeping our eyes open” to signs of human trafficking.

“People trafficking is an appalling crime. The airport community is determined to work with border authorities and our partners across the world in helping to put a stop to this activity,” said Gittens.

RISE IN AIRLINE SHARE PRICES SEES NORTH AMERICA TOP

Mixed results: Airline shares are still lower than at the beginning of the year

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The airline share price index improved in Q2 2018, dominated by North America, with modest gains in Europe & Asia Pacific. However, airline shares are still lower than at the beginning of the year.

The financial monitor has also revealed that the initial Q2 2018 data point to a moderate squeeze on airline profitability compared to the same quarter a year ago.

Other points in the financial monitor include: Oil prices eased slightly again in July, but the upward

trend remains in place. Jet fuel prices dipped back below US$90/bbl this month, .

There are signs of downward pressure on passenger yields. Yields in the less price-sensitive premiumclass cabin have proven more resilient than the economy cabin, despite signs of weakness in May. Passenger demand carried solid momentum into the peak Northern Hemisphere summer period, but freight demand is showing signs of some moderation.

Events October to November

Global Airport & Passenger Symposium 2-4 October Athens, Greece Business Technology Forum 8-9 October Cairo, Egypt Lithium Battery Workshop 9-10 October Bangkok, Thailand

11

Cargo Security & Facilitation Forum 9-10 October Bangkok, Thailand AirPharma Conference 9-11 October Bangkok, Thailand Cargo Claims & Loss Prevention Conference 9-11 October Bangkok, Thailand Airline Industry Retailing Symposium 23-25 October Rome, Italy Wings of Change—Europe 13-14 November Madrid, Spain Alternative Fuel Symposium 15-16 November Singapore

2018 – 04 Airlines

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Digest

Empowering talent: Countries around the globe are expected to benefit from the new pricing structure

Talent boost for developing nations

12

IATA Director of Training Guy Brazeau has said a new pricing scheme to help developing nations improve their workforces will ‘nurture the talent’ in the regions and assist connectivity.

IATA has announced a 30% discount on more than 350 courses—almost all its training catalogue—in a variety of subject areas for aviation professionals living and working in developing nations.

Brazeau said: “Aviation is the business of freedom and a catalyst for development. A

well-trained aviation workforce is essential to realizing the industry’s potential to support social and economic growth— critical enablers of the UN’s Sustainable Development Goals.

“By making IATA training more accessible in developing nations we are helping airlines nurture the talent they need to support growing demands for connectivity.”

Some 100,000 aviation professionals are trained up annually with the help of

IATA, which offers more than 40 diploma programs— supported by top academic institutions globally—aimed at creating safe, efficient, and sustainable businesses in the sector. The move reaffirms IATA’s commitment to the

Passenger demand accelerates in June June capacity, measured in available seat kilometres, increased by 6.5% and load factor rose 1 percentage point to 82.8%. The first six months of 2018 produced demand growth of 7%, a strong performance but down from 8.3% growth recorded in the first half of 2017. June international passenger demand increased 7.7% compared to June 2017. All regions recorded growth, led by airlines in the Middle East and Africa. Capacity climbed 5.9%, and load factor increased 1.4 percentage points to 61.9%.

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International Civil Aviation Organization “No Country Left Behind” initiative, whose goal it is to ensure all states have access to the significant socio-economic benefits that come from safe and reliable air transport.

By region: Asia-Pacific airlines’ June traffic rose 9.5% compared to the year-ago period, up from 7.7% growth in May. Middle Eastern carriers posted an 11% demand increase in June compared to the same month last year.

European carriers saw traffic rise 6.1% compared to June 2017, down slightly from 6.3% year-over-year in May. North American airlines’ demand went up 5.9% compared to June 2017.

Latin American airlines saw a 5.6% rise in traffic compared to June 2017.

This was down by 7.9% from May. African airlines’ traffic rose 10.9% in June, up from just 2.1% growth in May.

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Some 100,000 aviation professionals are trained up annually with the help of IATA, which offers more than 40 diploma programs.

, 100 000

Digest

Freight growth continues despite trade war worries Air cargo continued to grow in July despite lingering concerns over the prospect of trade wars between the US and China.

Data from the International Air Transport Association shows that demand, measured in freight tonne kilometers (FTKs), rose 2.1% in July 2018, compared to the same period the year before.

Despite the moderate rise, this proved the slowest pace of growth since May 2016. In addition, freight capacity, measured in available freight tonne kilometers (AFTKs), grew by 3.8% year-on-year in July.

This was the fourth time in five months that capacity outstripped demand.

“July demand for air cargo grew at its slowest pace since 2016. We still expect 4% growth over the

course of the year, however the downside risk has increased,” said Alexandre de Juniac, IATA’s Director General and CEO. “The tariff war and increasingly volatile trade talks between the world’s two largest trading nations—China and the US—are rippling across the global economy. Trade wars only produce losers.”

Although the temporary grounding of the Nippon Cargo Airlines fleet may have amplified the growth slowdown in early July, indicators such as the ending of the inventory restocking cycle, a weakening in export order books in Europe, China and Japan, and longer supplier delivery times in Europe and Asia mean that slower growth is likely to continue in the meantime.

Capacity grew

3.8% 13

Demand rose

2.1%

“The volatile trade talks between the world's two largest trading nations—China and the US—are rippling across the global economy.” Alexandre de Juniac 2018 – 04 Airlines

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14

IATA and CFM International have reached a “milestone” deal on maintenance, repair and overhaul (MRO) services.

Under the agreement, CFM has adopted a set of “Conduct Policies” that will enhance the opportunities available to third-party providers of engine parts and MRO services on the CFM56 and the new LEAP series engines.

Among the different elements included in the comprehensive deal, CFM has agreed to: License its Engine Shop Manual to an MRO facility even if it uses non-CFM parts; Permit the use of non-CFM parts or repairs by any licensee of the CFM Engine Shop Manual; Grant airlines and third-party overhaul facilities the right to use the CFM Engine Shop Manual for without a fee.

IATA Director General and CEO Alexandre de Juniac welcomed the news, saying that the “milestone agreement” will lead to increased competition among the providers of parts and services to CFM’s engine operations.

RWANDA CAA SIGNS SAFETY MOU WITH IATA Rwanda’s Civil Aviation Authority has signed a Memorandum of Understanding (MoU) with IATA to improve aviation safety.

The MoU will see both parties work to establish a framework for using the IATA Operational Safety Audit (IOSA) along with Rwanda’s safety oversight.

Rwanda becomes the second African state to fulfil the Abuja Declaration’s (2015) proposal to establish a framework for recognition of IOSA and for all African

airlines to obtain IOSA registration by 2020. In 2017, the all accident rate for airlines on the IOSA registry was nearly four times better than that of non-IOSA airlines.

Rwanda CAA Director General Silas Udahemuka said: “Rwanda CAA is committed to improving African aviation safety. This partnership will help us to do that by taking advantage of IOSA in our safety oversight program.”

“Rwanda CAA is committed to improving African aviation safety.

Our partnership with IATA will help us to do that.”

Silas Udahemuka Rwanda CAA Director General

AVIATION BRACING ITSELF FOR FUTURE JOB GROWTH Future job growth in aviation is expected to be highest in ground operations, customer service and cabin crew, according to a recent IATA study.

IATA commissioned market survey experts Circle Research to find out how HR decision-makers are dealing with the problem of

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filling anticipated job gaps in the aviation industry.

It was found that 75% of respondents—which included a range of airlines, airports and ground service providers across the globe—expect to see the number of customer service, ground operations and cabin

crew roles rise over the next two years.

Just under half (48%) agreed that sourcing new talent was a concern, owing to issues regarding skills and salary expectations, while only 28% of respondents believed current training is effective.

passenger disturbances can be costly, with fines, prison terms, airline bans and diversion fees of up to £80,000 some of the risks.

IATA AND CFM INTERNATIONAL AGREE MAINTENANCE DEAL

, £80 000

Digest

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Digest

“Any incident is one too many. Cabin crew and passengers have a right to a flight free from disturbance. The party should be at the destination, not on the plane.” Rafael Schvartzman (see story p15, below)

Fly responsibly: Passengers are being warned of the consequences of drinking too much when flying

‘One Too Many’ campaign raises drinking awareness IATA has joined forces with the travel industry in the UK to launch a campaign aimed at raising awareness of flying responsibly.

The ‘One Too Many’ campaign sees IATA, Airlines UK, the Airports Operators Association (AOA) and the UK Travel Retail Forum (UKTRF) working together to address the issue of passengers drinking to excess when on flights.

Launching the initiative, UKTRF Chair Francois Bourienne reiterated that it is an offence to be drunk on an airplane. Such passenger disturbances can be costly, with

GAPS on the horizon

heavy fines, prison sentences, airline bans and diversion fees of up to £80,000 some of the risks.

Backing the campaign, IATA’s Regional Vice President for Europe, Rafael Schvartzman said although incidents are “relatively rare” it remains a concern for cabin crew.

“Any incident is one too many.

Airlines have a zero-tolerance approach to unruly behaviour and cabin crew and passengers have a right to a flight free from disturbance and harassment,” he said. “The party should be at the destination, not on the plane.”

15

Changing times: GAPS aims to improve the passenger experience

The three-day Global Airport and Passenger Symposium (GAPS), to be held in Athens on 2-4 October, is expected to draw more than 500 senior delegates from across the travel value chain.

The primary drivers of change in improving passenger experience are expected to be data-driven technology solutions, IATA said. Four main areas of change will be examined: The Transforming Airport: Technology will enable the transfer of some airport processes offsite and transform how passengers board their planes once they are at the airport.

The World of Interactive Data: The real-time exchange of operational data is enabling collaborative decision-making and creating business opportunities to serve customers better.

The Seamless Journey: Back office efficiencies such as ONE Order and innovation in identity management such as ONE ID could revolutionize airport processes.

The Aircraft Experience: Improvements in aircraft design and on-board systems will enable product innovations that customize the passenger experience while expanding revenue-generating opportunities.

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2018 – 04 Airlines

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Data

In numbers I N D I A ' S A V I AT I O N S T O R Y

Composition of key global domestic market RPK growth (Source: IATA)

Industry

16

3.1%

1.8%

1.7%

May-18

3.7%

3.8%

5.3%

5.5%

5.3%

8.6%

6.0%

11.9%

15.3%

15.8%

17.6%

6.7%

7.9%

Jun-18

Domestic Domestic Domestic Domestic Domestic Domestic Domestic India China Russia USA Brazil Japan Australia

The air transport market in India employs more than 390,000 people and supports another 570,000.

Overall the industry contributes some US$30 billion annually to India's GDP.

In 2017, more than 158 million passengers flew to, from and within India. This represents an increase of almost 15% over 2016 and is the third consecutive year of growth in the order of 15-20% per year.

158,0 0, Top 10 growth airports 2017— passengers handled (ACI, IATA WATS)

The top 10 growth airports 2017—cargo handled (ACI, IATA WATS)

1

Antalya, Turkey (AYT)

38.2%

1

Johannesburg, South Africa (JNB)

39.3%

$21bn

2

Lisbon, Portugal (LIS)

18.8%

2

Cincinnati, USA (CVG)

27.3%

3

Moscow, Russia (SVO)

17.8%

3

Moscow, Russia (SVO)

25.8%

4

Nanjing, China (NKG)

15.5%

4

Muscat, Oman (MCT)

23.8%

value of aviation tourism

5

Milan, Italy (MXP)

14.2%

5

Kuwait, Kuwait (KWI)

23.3%

6.2m jobs are supported by tourism in India—a figure enhanced by the benefits of aviation.

6

New Delhi, India (DEL)

14.1%

6

Hangzhou, China (HGH)

20.8%

7

Brussels, Belgium (BRU)

13.6%

7

Campinas, Brazil (VCP)

20.7%

8

Xi'an, China (XIY)

13.2%

8

Mumbai, India (BOM)

18.1%

9

Bangalore, India (BLR)

12.9%

9

Nairobi, Kenya (NBO)

18.0%

10

Hangzhou, China (HGH)

12.6%

10

Chennai, India (MAA)

17.2%

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Data

Composition of India's current aircraft fleet

97.7m

(Source: CAPA * incl turboprops and regional jets)

In 2017, there were a total of 97.7 million domestic passenger journeys, up almost 15 million from 83 million in 2016.

Narrowbody 75.9% Widebody 9.9% Other 14.2% *

2018

Largest city-pair routes within India & their 2017 global ranking (IATA) Rank Route

pax 2017 YoY growth Global rank

1

Mumbai-Delhi

5,566,510

1.9%

7

2

Bangalore-Delhi

3,492,889

-1.5%

20

3

Bangalore-Mumbai

2,716,801

3.0%

35

4

Kolkata-Delhi

2,153,297

5.6%

52

5

Delhi-Pune

1,997,165

17.5%

63

6

Delhi-Hyderabad

1,891,240

3.8%

75

7

Delhi-Chennai

1,836,447

-5.4%

80

8

Mumbai-Goa

1,748,145

-0.2%

89

9

Mumbai-Chennai

1,717,468

5.1%

91

10

Delhi-Goa

1,692,230

23.6%

96

46th

In June 2018, the domestic India market recorded its 46th consecutive month of double-digit consecutive months year-on-year growth; an outstanding performance.

17

000 Share of international traffic by continent, 2017: The bulk of international traffic from India is to the Middle East and Asia, with these two markets accounting for around 70% of the total. (IATA)

Africa

Asia

Europe

South America

Middle East

North America

2.8%

30.3%

13.6%

0.2%

41.5%

11.6%

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31/08/2018 08:55

IATA Opinion: Aleks Popovich

Finding the right finance talent Aleks Popovich, IATA’s Senior Vice President, Financial and Distribution Services, explains the need to attract, develop, and retain future airline finance professionals

ILLUSTRATION: SAM KERR

L

ast month, IATA published a report on future employment requirements in the airline industry. The good news is that with air travel demand set to double over the next 20 years, a lot of new jobs will be created.

The not so good news is that the industry faces significant challenges in filling those jobs with the right people.

In the finance side of the business, the issues are two-fold. In the first place, we’re competing for new hires with sectors of the economy that didn’t exist 25 years ago, such as Google, Amazon and Facebook. Second, the role of an airline finance professional is changing. It’s less about old-fashioned number crunching and transaction processing and more about being a value manager with a focus on areas such as payment, risk management, decision support, and data analytics.

The finance function plays an integral role in an airline's financial health. Hence the importance of creating High Performing Finance Organizations (HIPO) to support this.

And becoming a HIPO ultimately depends on attracting top finance talent to the airline organization—and keeping them there when the headhunters from Silicon Valley and Wall Street come calling. To do that we’re taking a multi-pronged approach that is focused around attracting candidates, developing, and retaining the airline’s existing finance talent pool.

Under the guidance of the IATA Finance Committee (FinCom), we’ve launched an airline finance internship program with some leading universities around the globe that offers benefits to all parties. So far, we’ve had 55 candidates apply for internships and seven airlines have committed to offer up to 26 intern positions, with three candidates already having airlines.iata.org

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been placed with an airline. While we are excited about our progress, we have a 2018 target of attracting 20 airlines to provide internships for up to 50 candidates, so we welcome additional airlines into the program.

Turning to preparing the existing airline workforce to support the HIPO pillar, IATA Training, with the advice and guidance of the FinCom’s HIPO Working Group, is developing an ‘IATA Finance Academy’ curriculum of learning.

With a focus on creating value managers, we’re building the curriculum on subjects including Decision Support and Analytics; Airline Finance Transformation; Financial Risk Management; Aircraft Financing; and Cost Management.

Our target audience for the IATA Finance Academy is existing airline professionals who are in need of development as value managers. We expect that class registration will open at the World Financial Symposium (WFS) in September and courses will start being offered in 2019.

We also want to create a sustainable community in which finance professionals can share and exchange ideas and best practices. Forums include the Financial Community App (https://apple.co/2BRx49R), social media, and WFS. We are providing recognition to financial leaders through initiatives like the Best Industry Contributor Award, awarded at WFS. By developing and recognizing the financial skillsets that are going to deliver the most value to airline leadership, we’re raising the profile of the airline finance function within the airline and creating the conditions and incentives to ensure we have the right finance workforce in the airline industry, today and in the future. We welcome your support!

19

2018 – 04 Airlines

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CEO Interview

20

Airlines 2018 â&#x20AC;&#x201C; 04

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CEO Interview

No time to stand still His Excellency Akbar Al-Baker, Qatar Airways Group CEO and IATA Chairman, says airlines must continue to embrace rapid changes brought about by a dynamic industry WORDS: GRAHAM NEWTON

A

IMAGE: GETTY

irlines can never stand still.

Qatar Airways continues to expand its network, develop its cargo business, and invest in greater efficiency at its award-winning hub. As Group CEO His Excellency Akbar Al-Baker explains, smart regulation would help cement the economic benefits this activity generates.

Advances in AI to manage big data and forecasting will present opportunities in the future for airlines to optimize revenue management systems

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Our expansion plan for 2018 is aggressive; we have already launched London Gatwick and Cardiff in the UK; Bodrum, Antalya and Hatay in Turkey; Mykonos and Thessaloniki in Greece; and Málaga in Spain. We also plan to launch new destinations such as Lisbon, Portugal; Tallinn, Estonia; Valletta, Malta; Cebu and Davao, Philippines; Langkawi, Malaysia; and Da Nang, Vietnam.

Can you continue to grow as you have done in previous years?

Has cargo been a key component in your revenue and what can be done to improve cargo processes?

Qatar Airways will continue to grow in 2018.

Our innovative approach to both product and service drives our customer loyalty, which in turn drives our rapid growth. Our growth in the last year has been impacted by the loss of destinations in Saudi Arabia, the United Arab Emirates, Bahrain, and Egypt, due to the illegal blockade imposed on international airspace by these countries. Since the blockade we managed to replace these destinations with new routes, expediting expansion plans across our global network. We continue to focus on joint business agreements and further strategic investments as well as expanding our passenger and cargo network.

Qatar Airways Cargo is the second largest international cargo carrier in the world as measured by freight-tonne kilometers and naturally is a key component in our revenue.

Our cargo fleet consists of 23 widebody cargo aircraft, including a Boeing 747-8 Freighter.

Our portfolio of distinctive products includes QR Pharma, QR Fresh, QR Live and QR Express offering efficiency and compliance in the handling of temperature-sensitive pharmaceutical and perishable cargo, transportation of live animals as well as time-critical shipments.

We have also made substantial investments in our cargo operations at our Doha hub to ensure

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all cargo deliveries are processed efficiently and seamlessly. Special facilities and well-trained personnel ensure expert handling over a wide variety of product categories. Looking ahead, we will be increasing cargo capacity at the airport, from the 1.8 million tonnes handled last year to 4.4 million tonnes, through the addition of a second cargo terminal. In addition, we will provide the best e-cargo solutions in the world.

How important has the new airport been in your success in both the passenger and cargo markets?

Hamad International Airport (HIA) ensures that the Qatar Airways flight experience is complemented by the same level of service, comfort, and hospitality on the ground as passengers receive in the skies.

The airport set a new record for passenger traffic and aircraft movements in 2016/2017, handling 38.2 million passengers and 250,419 landings and take-offs. The airport also handled a total of 1.8 million tonnes of cargo.

HIA has won a host of awards across numerous categories and was certified as a ‘5-Star Airport’ in January 2017 by Skytrax. Qatar Airways’ network works because HIA is able to connect our flights efficiently and conveniently. In this regard, HIA continues to provide a strong and unmatched competitive advantage for Qatar Airways, serving 38 million Qatar Airways passengers annually. HIA is operationally efficient, supporting 88.4% on-time departures and among the top airports globally able to support international connections below 60 minutes. The airport’s third-phase development plan is under way, and this will add significant capacity to the airport and allow Qatar Airways to continue its upward growth trajectory. Once complete, phase 3 will boost our capacity to 50 million passengers a year.

What is your view of airport privatization?

The private sector can play a meaningful role in bringing expertise and cost efficiencies to air transport infrastructure provided the right framework is put in place. Airports are natural airlines.iata.org

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4.4mt

CEO Interview

Looking ahead, we will be increasing cargo capacity at the airport, from the 1.8 million tonnes handled last year to 4.4 million tonnes, through the addition of a second cargo terminal

monopolies and privatization without proper governance and public accountability can easily lead to predatory behavior, with airlines often the first victim. It is essential to understand the risks that can occur during privatization to determine the appropriate regulatory framework.

Do alliances still hold value in the modern industry?

Qatar Airways is part of the oneworld alliance, which serves more than 1,000 airports in 150-plus territories with 14,000 daily departures.

It carries almost 550 million passengers a year on a combined fleet of 3,500 aircraft and generates more than $130 billion in annual revenue.

Our broad network has further expanded by more than 350 destinations through our membership of the oneworld alliance and our codeshare agreements with our airline partners.

We announced a joint business agreement with International Airlines Group (IAG) subsidiary, British Airways, over the course of the 2016-2017 year, with revenue sharing on the trunk London Heathrow-Doha route. The joint business enabled us to coordinate commercial activities for the benefit of our mutual customers, while drawing our two companies closer together and thereby strengthening not only our bilateral relationship but also the oneworld alliance.

Qatar Airways has also launched new codeshare partnerships with other oneworld partners.

The facts and figures speak to the value that oneworld brings to the airlines and their customers.

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Looking ahead, do you think we will continue to see a fragmented industry or will ownership rules relax, and consolidation occur cross-border?

We need to overcome fragmentation within in the industry and with related industries such as tourism and alternative or complementary modes of transport.

We must advocate in favor of harmonization, the adoption of global standards, smart regulation, and maximum operational flexibility for airlines.

It is undeniable that consolidation has contributed to the overall improvement of the 2018 – 04 Airlines

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CEO Interview

industry, allowing airlines to generate cost synergies and network efficiencies. In recent years, we have witnessed the emergence of joint ventures and equity partnerships among airlines serving international markets. This trend has been good for consumers as airlines’ networks and routes have become better aligned with the travel needs of passengers.

However, these commercial arrangements are still subject to regulatory review and governments could decide to withdraw their support at any moment based on short-term political considerations.

How can we get governments to understand the benefits of aviation and create fair and transparent regulations?

Our industry plays a crucial role in the global economy. Worldwide, aviation supports nearly 63 million jobs and $2.7 trillion in global GDP. And there is enough historical evidence to prove that the countries and regions that have implemented liberal aviation policies have ultimately benefited economically and socially.

Our role as an industry is to continue to engage with governments and regional bodies to ensure the development and implementation of smart regulation. We must encourage governments to adopt regulatory approaches that do not harm the industry’s economic potential. IATA is promoting the value of aviation across various regions, emphasizing the important role that aviation plays in connecting people and businesses.

What new technologies do you think will be most disruptive to the airline industry?

Like all industries, aviation is not immune to the disruptions caused by rapid advances in information technology. These advances have created both challenges and opportunities.

Advances in handheld technology and social media access have resulted in more airlines selling direct to passengers as opposed to the traditional model via distribution systems through intermediaries and agents. This has airlines.iata.org

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150 220

plus destinations are served by Qatar across six continents

is the number of aircraft in Qatar's fleet

Qatar Airways became the Oneworld alliance's

12th full member in October 2013

60 plus destinations are served by the airline’s cargo division—Qatar Airways Cargo —with a dedicated cargo fleet

brought a reduction in costs for airlines but also created opportunities for new non-aviation retailers to aggregate and sell end-to-end travel with airlines only one part of the chain. This creates its own challenges as airlines learn to work with new players in the e-retail market.

Advances in artificial intelligence to manage big data and forecasting will also present opportunities in the future for airlines to optimize revenue management systems. In terms of aircraft, advances in fuel efficiency have brought new competition in the form of low cost carriers challenging the established market positions of legacy carriers. On the other hand, it has made once secondary airports more attractive as they can be connected directly or via hubs with right-sized aircraft.

As IATA Chairman, what are your plans for assisting airlines in dealing with human trafficking?

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Human Trafficking, increasingly referred to as Trafficking in Persons (TIP), is the fastest growing and second largest criminal industry in the world. As with all forms of transport, aviation can unknowingly be misused to facilitate TIP. Ultimate responsibility for identifying, investigating, and prosecuting perpetrators of this crime lies with government and enforcement agencies. However, the aviation industry can play a key role in providing intelligence to the authorities by identifying individuals who may be being trafficked during air travel and reporting this to the relevant authorities.

The IATA 74th AGM unanimously approved a resolution denouncing TIP and committed to a number of actions related to anti-trafficking initiatives. As Chairman, I am proud our members unanimously supported this resolution, with many members well advanced in implementing programs to identify and report TIP. Human traffickers operate in plain sight and can only be stopped with the full cooperation of all parts of the value chain, especially airport operators, ground handling agents and other air transport system stakeholders.

2018 – 04 Airlines

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CEO Interview

I know it is a contentious topic, but the technology for autonomous operations exists.

Look at drones. This will be interesting in the longer term

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Airlines 2018 â&#x20AC;&#x201C; 04

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CEO Interview

The quest for compliance Cargolux CEO, Richard Forson, examines the factors affecting air cargo’s future, both positive and negative WORDS: GRAHAM NEWTON

A

ir cargo is enjoying a resurgence after years in the doldrums, with Cargolux one of those reaping the benefits. But there are a number of critical aspects of the industry that could yet affect its future growth and Cargolux CEO Richard Forson believes that all stakeholders must engage in ensuring air cargo’s success.

Are you satisfied with Cargolux’s performance?

I think any cargo unit will be happy with their performance last year. Cargolux is no exception.

We had a very successful year. I have just signed off on our 2017 accounts for approval by our Board and they are extremely positive.

But, as I say, we won’t be the only one. Market circumstances were good, and everyone will have taken advantage of that.

Nevertheless, a sign of Cargolux’s strength is a solid start to 2018. We are ahead of forecast and all 27 aircraft in our fleet are fully deployed.

During the Chinese New Year, the dip in traffic out of Asia has to a large extent been offset by our performance in other areas.

Is the partnership with Emirates SkyCargo making any difference yet?

The agreement was finalized in May 2017. We have airlines.iata.org

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to be cautious on the commercial side because it is important to be compliant with all aspects of relevant regulations governing such relationships.

We have to be certain we do everything by the book.

There are several ongoing discussions. Our ground handling at Dubai has moved from Dnata to SkyCargo and we have wet-leased an aircraft to them. Possibly, there may be a second wet-leased aircraft in the near future.

The interaction between the parties is excellent and a deeper level of cooperation would be desirable. But compliance is foremost in our thoughts.

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Why are you part of Henan Cargo Airlines and what are your plans for the airline?

Zhengzhou Xinzheng International Airport in Henan is an important hub for Cargolux. There are 15 frequencies a week during peak periods and it is our biggest hub in China.

One also has to be aware that we will only be a minority shareholder in Henan Cargo Airlines.

The main benefit we see out of our intended partnership is that we will be able to offer more destinations and flexibility for our customers through block space agreements and interlining.

The project is proceeding slowly because there are a number of approvals to obtain and crew to recruit, a market that is already under pressure.

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CEO Interview

The shortage of pilots is a major issue in China and it is not straightforward to recruit pilots if they are already flying with other Chinese airlines.

We are exploring the use of Western pilots but that is an open question right now. We are seeking clarity from the authorities. The situation to recruit in China is under increasing pressure on the demand side due to additional aircraft coming into service, including for domestic express freight operators.

How can the speed of e-cargo implementation be improved?

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For any asset-heavy industry, it takes longer to adapt to changes in the market. Having said that, there has been talk of e-cargo for many years. However, as an industry, we have been too slow in converting to a digital environment.

There is a real desire to improve the interaction with our customers, provide a seamless service, and to reduce cost and paperwork. However, obstacles include poor data quality, incomplete coverage, lack of common data standards, and the use of legacy technology.

One of Cargolux’s prime focuses is digitizing as many processes as possible including the process from ‘quotation to cash’. We want it to be as quick and efficient as possible.

What about the perishable and pharma trade?

Is air cargo moving quickly enough to adapt to pharma requirements?

Recently, there has been a huge amount of investment from airlines and airports in serving the pharma trade.

Pharma is still a premium product at the moment, but it will soon become a commodity because of this. Every airline will be able to offer a certified cold chain process for pharma.

That is a good thing, but it does mean yield premiums will be eroded.

Perishables are also a growing market and many cargo units are focusing on this sector as a result. But perishables do not bring you the best yields. Achieving a yield to volume balance is a crucial business decision. And perishables come Airlines 2018 – 04

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with quite a few restrictions on what else can be carried due to different temperatures, proximity to live animals on board, and so forth.

Do airports need to do more to accommodate cargo operations?

For any asset-heavy industry, it takes longer to adapt to changes in the market.

Having said that, there has been talk of e-cargo for many years.

However, as an industry, we have been too slow in converting to a digital environment

Yes. Cargo is still second place to the passenger side of the business.

Some airports are good and have made significant investments in their cargo operations. Singapore and Hong Kong are good, as are Dubai and Doha. And I believe JFK in New York is looking at new cargo infrastructure.

But at Amsterdam Schiphol, cargo carriers have lost slots because of the growing passenger business. Most airports are not investing enough in cargo. There are a variety of reasons for this but mostly it is about serving the growing passenger market first. It will become more difficult for cargo carriers to get slots at key airports during peak passenger periods.

What is the best approach for improving cargo security?

There are a multitude of security measures with which we have to comply. It increases cost and there are no quick ways to solve this.

Of course, we need to know what we have on board. We want to be secure and we will comply with all requirements.

Technology is certainly part of the solution.

We are beginning to see its impact on the passenger side and it can be implemented on the cargo side too. It will help to improve not only the security but also the facilitation of shipments.

Again, though, it comes at a cost, including decisions to not operate to certain airports because of security concerns or not loading export cargo where we are not happy with the screening process.

We work in close collaboration with our aviation authority who have oversight over our operations. Lithium batteries are a good example of additional security measures that we have self-imposed on our operations. Safety of operations is always the number one priority. airlines.iata.org

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CEO Interview

The lithium battery market is potentially huge given the fact that many motor manufacturers are now developing electric cars.

With all of these challenges, it is worth noting that the shortest time in the whole shipment process is the time spent flying. It is clear that processes on the ground must be improved, from security to infrastructure to regulatory approvals.

90

destinations are served by Cargolux across five continents

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One of Cargolux’s prime focuses is digitizing as many processes as possible including the process from ‘quotation to cash’

Can cargo do more to help with aviation’s environmental targets?

Cargolux was founded in 1970 by Luxair, the Salen Shipping Group, Loftleiðir and different private interests in Luxembourg

The environment is a serious topic for Cargolux and we include it in our official financial statements so there is complete transparency.

There are a number of ongoing programs to reduce our carbon footprint, such as recycling initiatives. The biggest impact of all, though, is investing in new technology aircraft that will reduce noise, NOx, and carbon emissions through better fuel burn and cleaner burning engines.

We also have some very specific programs to save fuel while never comprising the safety of the flight. We do our utmost to limit our impact on the environment.

that machines can react quicker than humans. If they are programmed correctly and can learn from situations through artificial intelligence, then one can very well ask the question, do we need a pilot at all? Acceptance from the general public will certainly be an issue on the passenger side but perhaps not to the same extent on cargo operations.

How difficult is it to attract staff to air cargo rather than the passenger business?

In general, what is your outlook for the air cargo industry?

If you look at the forecasts from the manufacturers, then it seems clear that there will be a problem. A huge number of pilots and maintenance staff will be needed to handle the aircraft on order. It will be a problem for airlines, both passenger and cargo.

There are plenty of initiatives underway to address this. But as you look ahead, the question is to what extent technology can be used to help deal with the issue. I’m wondering if you will need crew at all, especially for cargo operations. I know it is a contentious topic but the technology for autonomous operations already exists. Look at the use of drones. This will be an interesting development in the longer term and, in my view, it will certainly develop first on the cargo side.

Modern aircraft today essentially fly themselves and the pilots are there to monitor and to react to any unusual events. But we know

The air cargo industry depends heavily on the level of global trade. At the moment, the geopolitical situation is tense, and we could see a tit-for-tat trade war. That would obviously hurt air cargo.

One positive thing though is that main deck freighter capacity is not increasing. The capacity increase is coming through the passenger side but as passenger aircraft begin to fly longer and longer missions, belly capacity for cargo suffers.

So, cargo carriers will remain relevant. The nose door of the 747 gives you the ability to handle outsize shipments, for example. It is a big advantage. Although the 777-200F program will continue and possibly be replaced by a 777X version, the aircraft isn’t a direct replacement.

It will be interesting to see what the manufacturers will do as even a derivative of a passenger aircraft costs billions to develop into a freighter.

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is the number of aircraft in Cargolux’s fleet

1970

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Dossier: Travel Facilitation

Dossier

Opening borders to growth

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Relaxing visa requirements would unlock the benefits of air travel demand and have a positive economic impact around the world

IMAGES: GETTY/ISTOCK

WORDS: GRAHAM NEWTON

In 1963, at a United Nations Conference on International Travel and Tourism in Rome, 87 States agreed that “governments should extend to the maximum number of countries the practice of abolishing, through bilateral agreements or by unilateral decision, the requirement of entry visas for temporary visitors.”

The pace of change has been such, however, that over 50 years later IATA airlines.iata.org

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has deemed it necessary to call on governments to intensify efforts to spread the economic and social benefits of aviation by removing onerous barriers to the free movement of people across borders.

“Aviation needs borders that are open to people and trade,” says Alexandre de Juniac, IATA’s Director General and CEO. “We must be a strong voice in the face of those with protectionist agendas.

I would like to imagine a future for aviation where airlines are as free as possible to meet the demands for connectivity.”

Marked differences

It is argued that visas perform several important functions, most importantly security enhancement. They are also used to control immigration or limit the stay or activities of visitors, to generate 2018 – 04 Airlines

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Dossier: Travel Facilitation

revenue, and to act as a tool for reciprocity measures between countries.

But, says Gloria Guevara, President and CEO of the World Travel and Tourism Council (WTTC), “it is not always the case that visa systems improve safety and security, and technology can be used with a dual purpose of increasing security as well as facilitating travel.

“Onerous visa regulations increase the price of travel, as on top of the visa fees there is the cost of travel to visa application centers,” she continues.

“Uncertainty around processing times and appeal systems can prevent people from planning ahead and/or taking trips

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at short notice. It can also discourage travel to destinations that have unfriendly visa processes.”

Too many visa regimes are still overly restrictive, expensive, and inefficient.

According to the World Travel Organization (UNWTO) approximately two-thirds of the world population need to obtain a visa prior to international travel.

There is a marked difference between emerging and mature economies, partly a result of the increasing protectionist rhetoric heard in those mature economies. When traveling to an emerging economy on average, 59% of the world’s population needs a

Global trends in openness 1980-2018 Source: UNWTO Openness Report 2018

World average

Advanced economies

Emerging economies

45 40 35 30 25 20 15 10 5 0

1980

2008

2010

2012

2013

2014

2015

$89bn Some $89 billion in tourism receipts and 2.6 million jobs would be created in Asia-Pacific Economic Cooperation countries through the reduction of barriers to travel Airlines 2018 – 04

31-35_Dossier_Airlines 2018-04.indd 32

2016

2018

traditional visa. When visiting a mature economy, however, 70% of the world population needs a traditional visa.

Essentially, between 1980 and 2015, the general openness of advanced economies decreased while the general openness of emerging economies increased. Little wonder that there is stronger aviation and tourism growth coming from emerging economies in Asia-Pacific, Africa, Latin America, and the Middle East.

Simple step

Overall, the number of travelers requiring traditional visas continues to drop, albeit slowly. UNWTO data shows that destinations are making special efforts to facilitate visa formalities for tourists originating from those fast-growing outbound markets, China and India.

China gained visa-free access to Belarus and visa-on-arrival access to Zimbabwe in June 2018, for example, and recently had its visa-waiver agreement with the British Virgin Islands come into effect.

Data from UNWTO and the China National Tourism Association suggests Chinese citizens made 120 million trips—and spent $215 billion—abroad in 2017, which makes China the largest tourism market in the world.

And China is increasingly committed to inbound tourism too. It recently opened Hainan province to nationals of 59 countries who cannot easily access other parts of the country.

Professor Kate Coddington, Assistant Professor of Geography at Durham University, says this move “is expected to attract significantly increased Japanese and Russian tourism to China.” More broadly, she notes, “the increasing push to brand Hainan as China’s Hawaii through a focus on beach tourism as well as other newly authorized activities such airlines.iata.org

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Dossier

Discussion on… Henley Passport Index The latest Henley Passport Index puts Japan and Singapore in joint first place, with their citizens enjoying visa-free or visa-on-arrival access to 189 destinations. Both countries gained access to Uzbekistan earlier in 2018, knocking Germany off the top spot.

South Korea shares third place with six European Union (EU) member states: Sweden, Finland, Italy, Spain, Denmark, and France. And Austria, Luxembourg, the Netherlands, and Portugal share fourth place with the United States and the United Kingdom.

According to Professor Dr. Florian Trauner, Research Professor at the Institute for European Studies at the Free University of Brussels, EU member states, including the UK, are unlikely to see their passport power improving while their own inbound travel policies remain restrictive.

“The current political climate in the EU is not

conducive to more liberal admission policies,” says Trauner. “In the wake of the Brexit vote, the UK has been trying to install a stricter immigration regime vis-à-vis both EU and non-EU citizens.

“The EU, similarly, has sought to strengthen its external border control in reaction to the ongoing refugee crisis. Softening visa

In the spotlight...

38 years of visa policy across the world

requirements may be perceived as being lenient on immigration. In addition, EU member states have significant political reservations regarding the processing of the three remaining candidates for EU visa liberalization: Kosovo, Turkey, and Russia.”

The Henley Passport Index is based on exclusive data received from IATA.

Openness score by region 2018

World population affected by visa policies, 1980

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Source: UNWTO

Traditional visa: 75% Visa on arrival: 5% No visa required: 20%

Traditional visa Visa on arrival No visa required eVisa

Source: UNWTO Openness Report 2018

59

Most open destinations

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Central Africa

North America

Oceania

South-East Asia

East Africa

50

North Africa

57

21 18 13

World population affected by visa policies, 2018 Source: UNWTO

Traditional visa: 53% Visa on arrival: 16% No visa required: 21% eVisa: 10%

Most restrictive destinations

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Dossier: Travel Facilitation

Open Borders… IATA’s Open Borders Strategy has four main components: Alexandre de Juniac, IATA Director General and CEO

“I would like to imagine a future for aviation where airlines are as free as possible to meet the demands for connectivity”

Review visa requirements and removing unnecessary travel restrictions. The solution to overly restrictive, expensive, and inefficient visa regimes lies in unlocking the potential of shared information in a trusted framework.

1

Include travel facilitation as part of bilateral and regional trade negotiations. Restrictive visa requirements are non-tariff barriers to trade and should be addressed in trade discussions.

2

Link registered-traveler programs.

When registered-traveler programs are linked, as is the case between Canada and the United States, the efficiencies grow.

3

Use Advance Passenger Information (API) data more effectively. As governments have information in advance of boarding, inadmissible passengers should be notified before their journey begins, and arrival procedures should be streamlined for passengers whose data has been vetted in advance.

“Over the next 20 years, the number of passengers will double,” said Alexandre de Juniac, IATA’s Director General and CEO. “That’s excellent news for the global economy, as air connectivity is a catalyst for job creation and GDP growth. But we will not get the maximum social and economic benefits from this growth if barriers to travel are not addressed and processes streamlined.”

4

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Gloria Guevara, President and CEO of the World Travel and Tourism Council

“Uncertainty around processing times can… discourage travel to destinations that have unfriendly visa processes”

Nick Careen, IATA Senior Vice President, Airport, Cargo, Passenger and Security.

“Importantly, this is not about questioning a government’s right to determine who enters their country” Airlines 2018 – 04

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as horse racing, sports lotteries, and duty-free shopping not only provides an incentive for Chinese tourists to keep their spending within China but also targets investment to a province suffering from budgetary issues.”

Encouraging the freedom to travel is a simple step that promises huge strides in economic benefits. UNWTO research suggests the rewards for progressive visa strategies will be plain to see. Some $89 billion in tourism receipts and 2.6 million jobs would be created in Asia-Pacific Economic Cooperation countries through the reduction of barriers to travel. The ASEAN community would benefit to the tune of $12 billion and 650,000 extra jobs and G20 economies would get $206 billion from additional international tourism and 5 million extra jobs.

“While millions of travelers cross borders each year without the need for a paper visa, many millions more still find their journeys restricted by complicated application processes and paperwork,” says Guevera. “We’ve seen much progress on this front however, with ever

greater levels of cooperation between countries and the introduction of simpler, quicker, and cheaper processes often aided by new identification technologies. Our research shows the benefits that secure visa facilitation regulations can bring to a country in terms of promoting travel and tourism and driving job growth.”

Determining entry

IATA has launched an Open Border initiative, part of which deals with

70% When visiting a mature economy, however, 70% of the world population needs a traditional visa airlines.iata.org

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Dossier

removing unnecessary visa restrictions.

“Importantly, this is not about questioning a government’s right to determine who enters their country,” says Nick Careen, IATA’s Senior Vice President, Airport, Cargo, Passenger and Security.

“Rather, for those that can enter, visa data should be handled electronically, and that data should be linked to such other systems in the travel process as check-in and boarding.”

Too often, airline data sent in advance has not been used sufficiently to reduce immigration queues, as illustrated by the United Kingdom in summer 2018.

Traditional visa processes should thus be moved to eVisa, visa on arrival or no visa at all. In fact, data is being collected under UN resolutions 2178 and 2396 and many countries are embracing the advantages of the digital transformation.

Following on from the success of similar schemes in Australia, Canada, and the United States, the European Union has adopted a new European Travel Information and Authorization System (ETIAS), which in essence allows the EU to know who is entering the region and if they pose a security risk.

ETIAS will cost €7—though the under-18s and over-70s will get it for free—and is due to come into operation in 2021. All visa-exempt third-country nationals who plan to travel to the Schengen area will have to apply for pre-travel authorization.

Though the main reason for ETIAS is security, it is anticipated that authorization will also reduce procedures and reinforce the visa liberalization policy of the EU. Guevera sees this as an important first step in the digitization of travel. “The ultimate aim will be the use of biometric technology to ensure seamless, more efficient and more secure travel,” she concludes. airlines.iata.org

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Discussion on… Seamless travel The number of travelers will exceed 7 billion within the next 20 years. During that time, most of the world’s major airports will need upgrades to keep pace but development timelines and funding scarcity makes that outcome unlikely.

The solution to this capacity problem therefore lies in more efficient processing.

International travel needs to be made easier.

“We are seeing that many governments are very interested in moving their visa systems to be more online and integrated with other systems,” says Gloria Guevara, President and CEO of the World Travel and Tourism Council (WTTC).

“Simultaneously, we have seen countries set deadlines or mandates to implement biometric systems in international arrivals and departures. Implementation of biometrics systems will significantly improve the passenger experience and reduce visa requirements.”

Travel facilitation and increased security through the use of technology is one of WTTC’s top priorities and it has recently partnered with IATA to further this initiative. The two organizations will adopt a common approach, exchange information, and work together to promote biometrics standards and global interoperability.

“Last year, one of every five jobs created in the world were in

7bn The number of travelers will exceed 7 billion within the next 20 years our sector,” says Guevera. “If we don’t use biometrics technology to improve the processes, we are not going to be able to achieve the potential of travel and tourism. Millions of jobs are at stake, so this is a priority for WTTC and our members.”

Ideally, travelers will no longer have to repeatedly present travel documents, boarding passes, and booking confirmations to multiple stakeholders at different stages of the journey. Instead, they will be able to book transportation, request a visa, check-in, proceed through security, cross borders, board aircraft, collect baggage, rent a car, check in and out of hotels, and access myriad destination services simply by confirming their identity and booking data.

Notes Guevera: “WTTC and IATA have partnered to work on improving the passenger

experience and strengthen the voice of our industry by including the entire sector.

While IATA’s One ID project focuses on the passenger, WTTC will expand work to include the traveler, bringing in hotels, cruise, car rental and other industry segments to achieve an end-to-end seamless journey. The more the benefits of digitization and integration can be demonstrated and quantified, the stronger the case governments can make to find the resources to implement such changes.”

WTTC has already engaged with G20 governments on this issue. Its research concludes that between 7 and 19 million jobs can be created in these countries if biometrics are used to increase capacity and improve the traveler experience.

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Tourism supports one in every 10 jobs on the planet Source: UNWTO

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Environment

Countdown to CORSIA The clock is ticking to the introduction of Carbon Offset Reduction Scheme for International Aviation (CORSIA) WORDS: GRAHAM NEWTON

rom January 1, 2019, all airlines operating international flights will have to monitor and report fuel consumption and emissions regardless of whether their government has signed up to the voluntary phases of CORSIA. Those airlines based in countries that have volunteered to comply fully with CORSIA will need to do so from January 2021 and global mandatory compliance begins six years later.

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Certain requirements

The release of ICAO standards and recommended practices (SARPs) for the monitoring and reporting stage is a vital step forward, bringing certainty to airline work in this area. The SARPs detail the technical requirements and so ease implementation efforts. The resulting submissions will form part of a baseline of CO2 emissions for CORSIA. “Significant effort was made at the globallevel to ensure that these CORSIA SARPs could be adopted within such a limited timeframe, and that States and airline operators would be prepared to use them,” says ICAO Secretary General Dr. Fang Liu. “ICAO will continue to actively assist our Member States in these and Airlines 2018 – 04

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Environment

2019 1 January 2019 - All airlines operating international ďŹ&#x201A;ights will have to monitor and report fuel consumption and emissions from this date

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Environment

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other CORSIA preparations, both directly and through capacity-building partnerships we’ll help them to establish.”

Michael Gill, Executive Director of the cross-industry Air Transport Action Group (ATAG) and IATA’s Director Aviation Environment, agrees it means airlines can now begin final preparations. “The ICAO Council is to be commended for their fast progress on this important technical work,” he notes.

IATA has been working with ATAG to play its part in furthering CORSIA implementation with a series of comprehensive workshops in various parts of the world. These sessions use a mix of learning tools to help airlines prepare for carbon offsetting.

“We’ve had a great response from the industry participants and governments which have taken part in the training so far,” says Gill. “It is very hands-on real-world education on what needs to be done to comply with CORSIA from January 1 next year. By the end of 2018, over 20 of these workshops will have taken place. We encourage all airlines to ensure their staff are up to speed on this. Make sure you have a focal point and that they are in touch with IATA.” IATA, meanwhile, is finalizing FRED+, an easy-to-use, intuitive platform developed to support and facilitate CO2 emissions reporting for aircraft operators and states. FRED+ is based on the IATA Fuel Reporting and Emissions Database (FRED), which has been in use since 2012.

FRED is used to track another of the industry’s environmental goals—an average annual improvement of at least 1.5% in fuel efficiency—and has 250 active users.

FRED+ help desk sessions began in late June and teach participants about the key benefits of FRED+ and enable them to browse through a mock-up of the system, with the possibility to ask questions related to the different functionalities.

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FRED is used to track an environmental goal of the industry—an average annual improvement of at least 1.5% in fuel efficiency—and has 250 users

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Environment

CORSIA checklist What to do in the second half of 2018: Submit Emissions Monitoring Plan.

One of the first steps under CORSIA will be the requirement for each operator to develop an emissions monitoring plan. The emissions monitoring plan will detail the methods that will be used to monitor fuel use and calculate emissions and data management, flow and control.

Select a verification agency.

Prior to submitting their annual emissions reports to administering authorities, aircraft operators will need to have their data checked by an external verifier.

Airlines may wish to identify a suitable agency in advance.

Start emissions monitoring on January 1, 2019.

As the baseline for the CORSIA will be set using the average emissions between 2019 and 2020, all aircraft operators will need to start monitoring their CO2 emissions in 2019.

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A number of participants have already expressed interest in being FRED+ test users, with the system scheduled to go live on January 1, 2019.

FRED+ fosters strong synergies between stakeholders through compliant and uniform processes to: Reduce administrative burden and cost Safeguard commercially sensitive data Ensure equal treatment of all airlines Drive airline environmental performance Additional decisions

Gill points out that ICAO’s work on CORSIA preparations is only halfway done, however. He says ICAO must quickly turn to the additional decisions required to operationalize CORSIA’s carbon offsetting provisions, which are set to take effect in 2021.

“Though we are very happy with the significant progress that has been made at ICAO so far, there are still a number of decisions and steps that must be taken,” he says. “The establishment of the Technical Advisory Board to determine the types of offsets that can be used to comply with CORSIA must be given high priority.”

The most urgent focus, though, is the need for ICAO to ensure governments are ready to provide their oversight role. IATA has called on the ICAO Secretariat to redouble its ongoing capacity building efforts for their member States and encourage fast progress in this area.

“The commitment to sustainability must be shared by governments,” says Alexandre de Juniac, IATA’s Director General and CEO. “The 72 governments already signed on to CORSIA cover 75% of aviation growth post-2020. We want more to join—ideally 100% coverage. It’s not just about signing-up. Under the leadership of ICAO, governments agreed to CORSIA as a universal measure to address aviation’s carbon footprint. They must put all their efforts into honoring that commitment with a successful implementation.”

Given this, the looming onset of national and regional offsetting schemes that undermine the global commitment to CORSIA is an unnecessary

Alternative fuels…

The ICAO Council has agreed for ‘lower carbon conventional fuels’ to be recognized through CORSIA if those fuels are able to achieve a 10% or greater reduction in lifecycle CO2 emissions.

Any use of these fuels that meet ICAO-agreed sustainability criteria will reduce the offsetting requirements for CORSIA by an amount corresponding to their lifecycle CO2 emissions reduction.

“The industry remains committed to the development of sustainable aviation fuel,” says Michael Gill, ATAG Executive Director. “It is conceivable that

conventional fuels could be delivered with reduced CO2 lifecycle emissions, but we of the view that our long-term needs for sustainable fuels will have to be met through non-fossil sources and these should be the focus of research, development and funding.”

The commercialization of sustainable fuels must also be supported by broader policy frameworks. IATA has called on Europe to establish such an appropriate policy framework in the revisions to the Renewable Energy Directive currently under discussion in Brussels.

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complication. Since the unanimous 2016 ICAO agreement on CORSIA, Sweden, the Netherlands and Colombia are among the countries that have proposed national measures to address aviation’s CO2 impact.

And there is continuing uncertainty over the application of the EU ETS to international flights in the post-2020 CORSIA environment. “CORSIA is the agreed global economic measure,” says de Juniac. “So while we are trying to implement CORSIA, it is disappointing to see a number of European states looking to implement new environment taxes on top of the EU ETS.” Willie Walsh, CEO of International Airlines Group, believes that if you can’t demonstrate sustainability then the industry’s future is limited. “The measures we are taking provide us with a path to a sustainable future from an environmental point of view,” he points out. “If we fail on that path then the scale of activity for aviation will have to reduce. We have to demonstrate both financial and environmental sustainability or the industry will decline.”

2018 – 04 Airlines

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ONE Order

Commercial connections E-ticketing sets airlines on a digital path that will reach another milestone in ONE Order WORDS: GRAHAM NEWTON

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ustomer needs and behaviors are changing. A modern passenger might well fly to a major hub and then use a short-haul low-cost service to a regional airport, buying a variety of ancillary services from the airline along the way, such as lounge access or a rental car.

If any part of the itinerary that is contracted with the airline needs confirmation during travel, or a query arises, that modern passenger expects a single access point for all aspects of service provision. In essence, they would want one version of the truth, a single reference travel document that covers all service provision. This is ONE Order.

C First step

The initiative’s roots stretch back a decade, when airlines switched over to an e-ticketing system and consigned the paper ticket to history. This was an important first step in the industry’s digital transformation and has rightly become a landmark moment for aviation.

But it was only that; a first step. The project essentially turned a paper process into an electronic one. Even so, it was enough to set the

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What ONE Order means for aviation partners ONE Order will facilitate product delivery and settlement between airlines and their partners through a simplified and standardized order management process.

Travelers will no longer need to juggle between different reference numbers and documents. With a single reference number, they will be easily recognized by all service providers.

Travel agents, meanwhile, will be able to follow an identical process to book flights and products from airlines, regardless of an airline’s business model or technology capability. And airlines, in turn, benefit by avoiding timely and expensive reconciliation exercises between different references.

seed for future advances. The New Distribution Capability (NDC) standard, for example, has been able to build on this electronic backbone and enables airlines to offer the customer a full suite of choices from a rich product base, no matter the channel being used.

ONE Order—like NDC, essentially an industry standard rather than a system—takes the next logical step. When an airline customer makes a purchase—regardless of what is bought and who ultimately supplies the goods or service—just one record is created, easily tracked by customer and suppliers alike.

The initiative replaces the multiple and rigid booking, ticketing, delivery and accounting methods used by airlines and aviation partners by deploying the data communications advances made possible by the implementation of NDC. Through ONE Order, aviation stakeholders will be able to exchange real-time information on travelers, and their travel purchases, enhancing data consistency and accelerating reporting.

Multiple reservation records as well as e-ticket and electronic miscellaneous document (EMD) concepts will be phased out. In their place will be a standardized and expandable reference that will become the single access point for customer orders by third parties, including interline partners, distribution channels, ground handling agents and airport staff.

“ONE Order represents a significant simplification of airline back-office processes,” says Sebastien Touraine, IATA’s Head of the ONE Order program. “It will make airlines more efficient and provide customers with a superior service proposition.”

Organic development

Reducing complexity won’t be easy, however.

Over the years, airlines have developed bespoke IT ecosystems, replete with their own jargon.

The passenger name record (PNR), containing the traveler’s identity and itinerary or services entitled sends information to a departure

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ONE Order

control system and so forth, while the e-ticket functions as a record of payment and as a mechanism to track services delivery.

This organic development is entirely understandable in the context of the industry but has run its course, says Touraine. The internet has enabled universal connectivity and airlines must take advantage if they are to offer customers the service they expect.

“Aviation needs to talk in internet e-commerce retailing terms,” Touraine advises.

“The jargon that is so familiar to industry insiders has limited airlines commercially.

Airlines need more efficient processes if they are to operate as better retailers and run their back-office like a normal business.”

accounting flows for card and frequent flyer miles payment, flight and ancillary products and voluntary and involuntary change scenarios.

Many more pilots are planned, and the proper certification is being pursued. The aim is to have pioneer airlines using ONE Order—or at least a limited version—in a live environment by 2020.

Nothing has yet been formally decided regarding targets post-2020, but obviously more airlines and more transactions will be at the core of future endeavors.

“If airlines want to be better retailers, selling more than flights, then ONE Order is essential,” Touraine sums up. “It is the obvious way to go.

But this is a major industry project and every stakeholder has plenty to do in the next few years.”

IMAGES: GETTY/ISTOCK

Use cases

The ONE Order standard is now in testing. One pilot involves Amadeus and British Airways and will examine both the operational and the financial side of ONE Order, from offer creation up to the financials. Feedback from this pilot will be shared with IATA and other industry players to contribute to the development of the standard.

A 2018 pilot, meanwhile, combines the expertise of the International Airlines Group and SAP. The project has developed a proof of concept using ONE Order.

The four-month project relied on the SAP Commerce to deliver the order management capabilities and SAP Sales Revenue Billing for the order accounting.

The pilot delivered eight separate use cases that covered basic end-to-end booking and

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Many more pilots are planned, and the proper certification is being pursued. The aim is to have pioneer airlines using ONE Order—or at least a limited version—in a live environment by 2020

2020 airlines.iata.org

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60 seconds with...

Holger Paulmann CEO, Sky Airline

“If a new route makes sense, we will explore it” Why did you change your business model to become a low-cost carrier?

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We knew that the low-cost model had been successful in many regions, but shifting from being a standard airline to a low-cost carrier is a challenge that can be measured only by how the market changes the way it travels, and changes its habits. Especially when you’re the first one to embark on such an endeavor.

Today, one year down the road, we are excited with where we stand; keeping our promise to deliver the option for a safe and swift means of transportation for people that only months ago didn’t have that chance.

What is your strategy for the next couple of years and do you have any specific targets or goals?

Apart from the renewal of the fleet, which will add 21 new Airbus A320neos, the other major project is an investment plan to create centers in other cities of Latin America beyond our Santiago base. But these would not necessarily be in capital cities. The new fleet will provide us with greater seating capacity, so if a new route makes sense we will explore it, as we did in December 2017 in Brazil with the opening of the seasonal routes, Santiago—Rio de Janeiro and Santiago—Florianópolis.

Where are the big opportunities in the future?

Operating in other Latin American countries seems inevitable, and this is a challenge we definitely accept. An effort of this magnitude requires a sound financial plan that takes into account local regulations, limitations, and opportunities. The search for financial partners has already begun, with the need to find partners willing to invest. Another option that the Airlines 2018 – 04

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In brief… Sky Airline Sky was founded in 2002, and has gone on to become a vital player in the South American region Operating out of Chile, it flies to 20 permanent destinations across four countries It became the South Cone’s first low-cost carrier in 2015, a move that had a direct impact of a 35% reduction on domestic market fares

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destinations across

countries

company is considering is acquiring smaller local airlines, although this recognizes that both models can coexist.

We are actively looking for growth options. Our impeccable and fast transition from an inherited airline to a low-cost airline, with sustained success during the last semester, is our best calling card when we meet with potential financial partners.

How can IATA help aviation in the region thrive?

By continuing to pave the way for sustained growth for all operators in emerging and consolidated markets. Also, by helping to reduce airport taxes and charges to create a more competitive industry, especially in developing markets. Of course, pressing constantly for a safer industry on all continents should always be the main pillar for the future, too.

What made you choose aviation as a career?

Aviation is an exciting industry that evolves at the speed of light. It is constantly challenging you to innovate, to implement new models, and to dare to take a step further. airlines.iata.org

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partner of choice to improve your component reliability.

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