Airlines 2021-02 by Redactive Media Group

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SAFETY DATA KEY IN TACKLING RISING PREMIUMS

Flight safety performance is vital in mitigating airline insurance costs

2021 – 02

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SUSTAINABILITY A CLEAR AMBITION Sustainability is at the heart of our business. From the beginning, we have invested in technologies to make our engines cleaner, quieter

ever more sustainable future. A common mission, extraordinary together.

cfmaeroengines.com CFM International is a 50/50 joint company between GE and Safran Aircraft Engines

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Airlines.

Contents 2021 – 02

Comment 5 Willie Walsh, Director General

Data must drive global policies to bring travel freedom back to the world

26 Driving sustainability

Michael Rousseau, President and CEO of Air Canada, says Canadian aviation regulations must change

42 IATA Opinion: Lara Maughan, Worldwide Head of Airport Slots

Features

Slot relief is the best recovery plan

How safety performance is becoming a key factor in mitigating increasing insurance costs

22 Rise in airline insurance premiums

Digest 08 IATA and industry update

Digitization needed for restart, Don't politicize aircraft ops, Optimism for travel demand as borders reopen

32 European fragmentation

A unified response is needed to help carriers overcome the cracks and improve future eﬃciency

14 Data: In numbers

Industry growth forecasts

CEO Interviews 16 Fascination with flying in unchanged

Lufthansa CEO Carsten Spohr speaks about his airline’s ReNew program and the industry’s continuing appeal

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 Production editor Vanessa Townsend 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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For Airlines. subscription requests, or change of address notifications, email Airlinesint@iata.org We welcome feedback and content ideas

A game-changing oﬀset carbon credit scheme oﬀers a green and sustainable solution for airlines 40 Opportunity knocks

Advertising Business development manager +44 (0)20 7324 2763 airlines@redactive.co.uk

36 Global emissions oﬀset

Air cargo has been the one bright spot for the industry during the pandemic as e-commerce grows

Airlines. ISSN 1360-6387 The opinions expressed in this publication are those of the individual authors or advertisers and do not necessarily reflect those of Redactive, IATA or its members. The mention of specific companies or products in articles or advertisements contained herein does not imply that they are endorsed or recommended by IATA or Redactive. The paper in this magazine is elemental chlorine free (ECF), manufactured within ISO 4001 environmental management standards and is sourced from sustainable managed forests. All of this publication’s content is subject to copyright, design rights and trademarks of Airlines. and third parties.

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2021 – 02 Airlines

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Willie Walsh: DG Insight

Data can bring travel freedom Data must drive global travel restart policies that manage COVID-19 risks while reviving livelihoods and boosting economies. The data on vaccination shows that vaccination protects travelers from serious illness and death and carries a low risk of introducing the virus into destination countries. The US Centers for Disease Control and Prevention (US CDC) stated that “with a 90% eﬀective vaccine, pre-travel testing, post-travel testing, and 7-day self-quarantine provide minimal additional benefit.” But we can’t restrict travel to only those who are vaccinated. The data here tells us that testing, not quarantine, is the solution. We teamed-up with Airbus and Boeing to demonstrate potential methodologies to demonstrate how the risks of COVID-19 can be managed in various scenarios. Focusing on risks across the whole journey, Airbus considered more than 50 airlines.iata.org

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variables in its model. Meanwhile, Boeing modeled the eﬃcacy of testing strategies. Both studies came to a similar conclusion—screening can keep COVID-19 importation at manageable levels. And that should allow governments to give people back the freedom to travel without putting individuals in undue risk or jeopardizing the viability of the healthcare system. Using data, we can work with governments to calibrate travel policies to protect people, revitalize jobs and strengthen the economic restart. Everybody can respect a data-driven decision. That is the way back to normality.

Willie Walsh IATA Director General

The UK introduced a traﬃc light system to categorize the COVID-19 risk at travel destinations. “What's the point of a traﬃc light system, if it is stuck on red?”

April domestic traﬃc was only 25.7% down versus pre-crisis (April 2019) levels. “The continuing strong recovery in domestic markets tells us that when people are given the freedom to fly, they take advantage of it.”

A Ryanair jet was intercepted and forced to land in Minsk. Europe's political response was a safety directive . “Two wrongs do not make a right. Aviation safety must never be politicized.”

2021 – 02 Airlines

29/06/2021 09:30

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IMAGES: GETTY

Digital solutions are vital to an eﬃcient restart of travel. Since the pandemic, passenger waiting times at airports have doubled to around three hours. Without process improvements, these delays could increase to eight hours when traﬃc returns to 100% of 2019 levels. The solution to avoid this is digitalization and automation of COVID-19 health checks. The Big Picture

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28/06/2021 09:35

Digest Digitization needed for smooth travel industry restart Governments must move quickly to adopt digital processes to manage travel health credentials (COVID-19 testing and vaccine certificates) or face severe impacts: Pre-COVID-19, passengers, on average, spent about 1.5 hours in travel processes for every journey (check-in, security, border control, customs, and baggage claim). Current data indicates that airport processing times have ballooned to three hours during peak time with travel volumes at only about 30% of pre-COVID-19 levels. The greatest increases are at check-in

“Without an automated solution for COVID-19 checks, we can see the potential for significant airport disruptions on the horizon. Already, average passenger processing and waiting

times have doubled from what they were pre-crisis during peak time—reaching an unacceptable three hours … Nobody will tolerate waiting hours at check-in or for border formalities. The technical solutions exist. But governments must agree digital certificate standards and align processes to accept them. And they must act fast,” said Willie Walsh, IATA’s Director General. If governments need COVID-19 health credentials for travel, integrating them into already automated processes is the solution for a restart. This would need globally recognized and interoperable digital certificates for COVID-19 testing, and vaccine certificates.

IMAGES: ISTOCK/SHUTTERSTOCK

and border control (emigration and immigration) where travel health credentials are being checked mainly as paper documents. Modeling suggests that, without process improvements, the time spent in airport processes could reach 5.5 hours per trip at 75% pre-COVID-19 traﬃc levels, and 8 hours per trip at 100% pre-COVID-19 traﬃc levels.

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24/06/2021 16:02

Digest

“Politicians should never use aviation safety as a cover to pursue political or diplomatic agendas”

Aircraft operations must not be politicized IATA called on the European Aviation Safety Agency (EASA) to maintain the critical separation between politics and aviation safety issues. The call followed the latest developments following the incident when Ryanair FR4978 was intercepted over Belarus Airspace and forced to land in Minsk. On June 2, EASA replaced its recommendation (Safety Information Bulletin) for European airlines to carefully assess the risk of flying in Belarus airspace with a blanket prohibition (Safety Directive) on European aircraft entering Belarus airspace. “Aviation safety must never be politicized,” said Willie Walsh, IATA’s Director General. “IATA condemned the actions of the Belarus government and called for an independent investigation. Banning European aircraft from

using Belarusian airspace with a Safety Directive is also a politicization of aviation safety. This is a retrograde and disappointing development.” On May 23, Ryanair flight FR4978, while overflying Belarus en-route from Athens to its final destination, Vilnius, was made to divert and land in Minsk by Belarusian authorities. In the immediate aftermath of the incident EASA issued a Safety Information Bulletin advising airlines to avoid operations in Belarusian airspace. This did not ban European aircraft from using the airspace but required any airline that continued to do so to satisfy themselves that the safety of the aircraft, passengers, and crew, was not at risk. IATA supported this measure as a proportionate response.

HOW TO OPEN TRAVEL BORDERS THROUGH THE USE OF DATA Data-driven decisions must manage the risks of COVID-19 when reopening borders to international travel, according to IATA. Strategies without quarantine measures can enable international travel to restart with a low risk of introduction of COVID-19 to the travel destination. Evidence shows that vaccination protects travelers from serious illness and death, and carries a low risk of introducing the virus into destination countries: The Robert Koch Institute (RKI) concluded that vaccinated travelers are no

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2.2%

Willie Walsh, Director General, IATA

longer significant in the spread of the disease. The European Centre for Disease Control and Prevention (ECDC) issued interim guidance on the benefits of full vaccination stating “the likelihood of an infected vaccinated person transmitting the disease is currently assessed to be very low to low.” The US Centers for Disease Control and Prevention (US CDC) stated that “with a 90% eﬀective vaccine, pre-travel testing, post-travel testing, and 7-day self-quarantine provide minimal additional benefit.”

Data-driven travel: Unvaccinated people face potential barriers to travel

365,895 tests were conducted between Feb 25 and May 5 on those arriving to the UK, who were PCR negative before travel. Only 2.2% tested positive for COVID-19 infection during universal quarantine measures after their arrival 2021 – 02 Airlines

24/06/2021 16:02

Digest

ANOTHER SINGLE EUROPEAN SKY FAILURE IATA expressed disappointment at the adoption of the general approach on the Single European Sky 2+ proposal (SES) by the European Council, which will entrench the failure of monopoly air navigation service providers to tackle emissions, delays, and costs.

Many key provisions of the Commission proposals on SES2+ have been watered-down by the Council. This will mean the ineﬃciencies in the air navigation network that result in 6%–10% in avoidable carbon emissions will continue.

Optimism for travel demand as borders reopen

VACCINATED PASSENGERS KEY TO GLOBAL BEST PRACTICE IATA applauded the growing number of countries making data and evidencedriven decisions to open their borders to vaccinated travelers. More than 20 countries have wholly or partially lifted restrictions for vaccinated travelers. Germany is among the latest countries to make quarantine alleviations for vaccinated travelers. Vaccinated travelers are no longer subject to quarantine measures (except from certain high-risk countries). Germany has also removed quarantine requirements for travelers with a negative COVID-19 test result (except from certain high-risk countries). The decision followed a review of scientific advice from the worldrenowned Robert Koch Institute (RKI), which concluded that vaccinated travelers are no longer significant in the spread of the disease and do not pose a major risk to the German population. Specifically, it stated that vaccination reduces risk of COVID-19 transmission to levels below the risk from a false negative rapid antigen test.

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IATA and Tourism Economics released a long-term view for postCOVID-19 passenger demand recovery that demonstrates that people remain eager to travel in the short and long term. Forecast highlights include: In 2021, global passenger numbers are expected to recover to 52% of pre-COVID-19 levels (2019). In 2022, global passenger numbers are expected to recover to 88% of pre-COVID-19 levels. In 2023, global passenger numbers are expected to surpass pre-COVID-19 levels (105%). By 2030, global passenger numbers are expected to have grown to 5.6 billion. That would be 7% below the preCOVID-19 forecast.

Beyond 2030 air travel is expected to slow, due to weaker demographics and a baseline assumption of limited market liberalization, giving average annual growth between 2019 and 2039 of 3.2%. IATA’s pre-COVID-19 growth forecast for this period was 3.8%. “I am always optimistic about aviation. We are in the deepest and gravest crisis in our history,” said Willie Walsh, IATA’s Director General. “But the rapidly growing vaccinated population and advancements in testing will return the freedom to fly in the months ahead. “And when that happens, people are going to want to travel. Aviation is ready. But I don’t see governments moving fast enough.

THE COST OF TESTING MUST NOT STOP TRAVEL RESTART IATA called on governments to ensure that high costs for COVID-19 testing don’t put travel out of reach for individuals and families. An IATA sampling of costs for PCR tests (the test most frequently required by governments) in 16 countries showed wide variations by markets. Findings include: Of the markets surveyed, only France complied with the World Health Organization (WHO)

recommendation for the state to bear the cost of testing for travelers Of the 15 markets where there is a cost for PCR testing to the individual The average minimum cost for testing was $90 The average maximum cost for testing was $208. Even taking the average of the low-end cost, adding PCR testing to airfares would dramatically increase the cost

of flying for individuals. Pre-crisis, the average one-way airline ticket, including taxes and charges, cost $200 (2019 data). A $90 PCR test raises the cost 45% to $290. Add another test on arrival and the one-way cost would leap 90% to $380. Assuming that two tests are needed in each direction, the average cost for an individual return-trip could balloon from $400 to $760.

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24/06/2021 16:02

Advertising Feature: Get-e

By Roy Hughes, Commercial Director at Get-e

Hearing the hunger for hotels Why Get-e is introducing hotels into its crew transfer oﬀering

sourcing solution, saving administration cost and time. The visibility and monitoring provided by the Get-e platform enhances duty of care to the air crews, with COVID-safe and secure transport. We match the best HOTAC suppliers to meet airline requirements and specifications with pre-auditing and reporting as standard. Our objective is to maximize crew satisfaction and the crew rest experience. In the event of any issue or query, emergency support is available 24/7.

At Get-e, we employ our adaptable technology to continuously improve and evolve our product offering using feedback and input from our airline partners. As a result, we are currently developing an integrated hotel (HOTAC) proposition alongside our global crew transportation services as an automated solution for both crews and disrupted passengers. What does Get-e currently provide? Get-e supports carriers by acting as a one-stop-shop. Crew transfer bookings are quick and easy to manage on the Get-e platform, which is particularly important when booking ad-hoc transfers. The booking status can be tracked online, while the location of the driver is available before and during the transfer. The visibility and monitoring provided by the Get-e platform enhances duty of care to the air crews, with COVID-safe and secure transport delivered from quality vetted, fully insured, and experienced transport suppliers. There is no doubt that the pandemic has forced airlines into a significant rethink as to how to optimize their operations at a lower cost and with less resource. A key consideration for Get-e is the ability to support and be part of the restart strategy of our airline partners. Our customers have seen noticeable changes in their ability to book crew transfers quickly and efficiently, enabling them to concentrate on core operational activities, which is much more difficult when these processes are airlines.iata.org

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being handled manually. We have found that the automation of crew transfers can reduce direct operational resources and hours required, on average, by the equivalent of up to five full-time members of staﬀ. So why HOTAC? Bringing HOTAC booking under our umbrella means that we can provide a much more seamless and holistic oﬀering to our customers. Airlines can arrange the airport transfer, accommodation and return journey in one place, with contract management of hotels all managed as part of a single, flexible

Airline reputation management tools This year, Get-e created a disruption management platform, giving airlines a ready-to-go transportation and HOTAC partner to support passengers aﬀected by flight diversions at the touch of a button. From our disruption management platform we are alerted of any flight disruptions such as diversions or severe delays and can arrange alternative transport and hotel accommodation. Using digital solutions across the value chain means that in the time between finding out about the diversion and the plane landing, transport can be sourced and booked—en route to the airport. This not only improves the passenger experience through minimizing delay but also reduces administration time and cost and the risk of passenger compensation claims. To find out more about Get-e’s crew transfer, HOTAC or disruption management platform, visit www.get-e.com, call +44 203 856 8655 or email operations@get-e.com. 2021 – 02 Airlines

24/06/2021 16:03

Advertising Feature: AJW

Sajedah Rustom, Chief Executive Oﬃcer at AJW Technique & Tom de Geytere, Chief Sales Oﬃcer at AJW Aviation.

Advances in Aircraft Supply Chain Solutions

Aftermarket service providers in the aviation supply chain have long understood the need to help their customers improve eﬃciency.

The reduced demand seen during the pandemic, where parts and component repair sales fell by 60-70%, propelled the streamlining of the supply chain to adapt to leaner, optimized fleets. As commercial travel swiftly moved to narrow-body aircraft, accommodating the reduction in passengers, a significant increase in the retirement and subsequent surplus of wide-body aircraft inventory also emerged. Cargo became a lifeline with yields increasing by approximately 30% in 2020, creating new purpose with rapid passenger to freighter conversions. With business travel expected only to recover to 80% of pre-pandemic levels by 2024, airlines downsized their business models and cabin configurations appropriately. Here at AJW Group, where our entire structure is designed around supply chain process steps, we heightened the design and development of smart digital solutions to meet customers’ evolving needs, including the support of many passenger to freighter conversions. We built digital tools and dashboards to closely monitor fleet recoveries by customer and by platform to ensure Airlines 2021 – 02

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our operations are synchronized with flying patterns. We launched a responsive, interactive, and mobile customer portal, ensuring clients can access orders, view status on the go, and extract any related documents. It enables 24-7-365 interaction with support teams, regardless of location, with no transaction delay, full data, and process integration. We also released our new eCommerce platform, AJW® eventory, for parts trading, where users can browse and purchase from our extensive inventory, including our ‘priced to move’ Outlet stock, with easy access to full paperwork trace, chat functionality, and the ability to ship via any chosen method and track the shipment in a few clicks. Furthermore, we are now working with third-party partners to list their inventory on our platform. From an MRO point of view, we worked closely with airlines to ensure repair requirements are met with flexible, cost saving solutions to conserve cashflow and manage just-in-time operations, given volatility of service. For example, at AJW Technique, our state-of-the-art MRO facility in Montreal, we launched a Quote and Hold program, where we evaluate and hold the customer repair until time of need, after which we activate the repair and deliver to the customer, ready for flight, on-demand. AJW Technique has also designed

“From airframers to component OEMs, to independents and MROs, service providers had to flex fast, sparking digital innovation to eliminate admin and elevate the workforce productively” Sajedah Rustom

logistical storefront solutions in Miami and Singapore, allowing customers to ship their components to a local address, minimizing the administrative burden that comes with international freight and customs documentation. We also expanded our Safety cell thanks to increasing volumes of slides and raft repairs from renowned local carriers. We have run a successful fulfillment model for many years, providing a cost-eﬀective way to manage scheduled maintenance, reducing out-ofservice events, while maximizing life limits. Digital transformation has been critical, especially in MRO environments where tribal knowledge of the workforce is extensive. With the goal of maximizing technicians’ component touch-time, AJW Technique has airlines.iata.org

24/06/2021 16:04

Advertising Feature: AJW

also taken the leap of investigating tools to enable a digital shop floor. Examples include productivity trackers, automated payables and receivables, credit control automation, turnaround time gaming systems, performance management dashboards, piece parts provisioning models, and dynamic pricing algorithms. We have also tested asset location tracking using RFID and Bluetooth technology as a proof of concept. This allows technicians to have a full view of

high value assets at their fingertips facilitating traceability and workflow management. Beyond RFID technology, we are also investigating other hands-free systems and collaborating with AJW Aviation on predictive maintenance discoveries also. With our extensive spend leverage, we have successfully renegotiated service-level agreements with our major component OEM suppliers, improving supply and reducing costs. Forecasting incoming units combined

“We increased investment in customer-facing digitalization, resulting in real-time monitoring dashboards and tracking tools, thereby making internal productivity fully transparent” Tom de Geytere airlines.iata.org

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with business intelligence data obtained from our airline customers has allowed us to proactively ramp up the supply chain for piece part, exchange pool, and inventory purchases alike. This ensures clear focus on aligning work inflow with flexed labor capacity and just-in-time material replenishment. With over 100,000 exports a year, we work closely with our logistics partners to meet customers’ demands. “Earlier this year we opened a new 35,000 sq. ft. warehouse in Milan, primarily to support easyJet’s EU operations,” says Tom de Geytere. Sajedah Rustom adds: “We have recently launched our first European MRO facility, AJW Technique Europe, located near Gatwick Airport. The new MRO begins with in the acquisition of a battery repair facility, strategically positioned to support European airline requirements.” Advancing our supply chain process step model has driven eﬃciencies at every level and with further enhancements planned, we are continuously improving integration within customer, partner, and supplier systems. Since 1932, for almost 90 years, AJW Group has been transforming aviation eﬃciency adapting dynamically and flexibly, through recessions, wars, terrorism and now a global pandemic. We have holistically addressed the aviation supply chain from end to end, integrating internal data, processes, systems and culture, with that of our customers, suppliers and strategic partners to ensure exceptional delivery and unfailing performance.

2021 – 02 Airlines

24/06/2021 16:04

Data

In numbers

% of GDP

INDUSTRY GROWTH FORECASTS

20 18 16 14

ITA

FRA

SPA

CAN

AUS

S KOR

In some markets consumers’ ‘excess’ savings exceed 10% of GDP

JAP

GER

Consumers have accumulated savings to spend

Source: IATA Economics using data from Oxford Economics

Estimated passengers by 2030 By 2030, global passenger numbers are expected to have grown to 5.6bn—7% below the pre-COVID-19 forecast and an estimated loss of 2-3 years of growth due to COVID-19

5-20% Previous shocks cut 5%–20% from revenue passenger kilometers and recovery took 6-18 months

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Global economy back at pre-COVID crisis output Global industrial production and trade 2% above 2019 levels by February 2021 Source: IATA Economics using data from ICAO, IATA Statistics and OECD Index, Jan 2019=100 105 100 95 90 85

Global Industrial production Cross-border trade

80 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21

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24/06/2021 16:05

Data (Source: IATA: COVID-19 , An almost full recovery of air travel in prospect)

Supply side drives structural change in aviation COVID-19: long-term loss of two years growth Technology, liberalization & innovation drove unit costs down 90% Source: IATA Economics using data from ICAO, IATA Statistics and OECD

Strong rebound when border travel barriers removed but not full recovery Source: IATA Economics (Tourism Economic/IATA Air Passenger Forecast, April '21)

US$ in 2017prices to fl y a tonne kilometer

Billion

4.0

7.0

Unit cost of air transport, US$/ATK, inflation-adjusted

Boeing 707

3.5

6.0

Global O-D passengers, billion April forecast January forecast Pre-covid forecast

-7% ~2 years lost

3.0 5.0

2.5 1973 oil crisis

2.0

US airline market deregulation

4.0

EU airline market deregulation

1.5

3.0

Great Recession

1.0

COVID-19

CAGR: 3.9% 2x every 19 years

2022: 88% of 2019 level

2.0

0.5

2021: 52% of 2019 level

0.0 1950

2023: 105% of 2019 level

1.0 1960

1970

1980

1990

2000

2010

2020

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

2030

The US Centers for Disease Control and Prevention: “With a 90% eﬀective vaccine, pre-travel testing, post-travel testing, and 7-day self-quarantine provide minimal additional benefit.”

105% By 2023 global passenger numbers will be 105% of pre-COVID-19 levels

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Average annual growth between 2019 and 2039 is expected to be 3.2%.

3.2%

IATA’s pre-COVID-19 growth forecast for this period was 3.8% 2021 – 02 Airlines

28/06/2021 09:33

CEO Interview

“Digitization and sustainability were transforming the way we do business. COVID-19 hasn’t altered anything, but it has accelerated the process”

Airlines 2021 – 02

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25/06/2021 15:48

CEO Interview

The fascination with f lying is unchanged Lufthansa CEO Carsten Spohr talks to Airlines. about the industry’s continuing appeal INTERVIEW BY: GRAHAM NEWTON

ne of the things the pandemic highlighted was the fact that the industry was already in an era of change and Lufhansa’s ReNew program hopes to steer the airline through that change. How badly has the crisis aﬀected Lufthansa and what is your immediate strategy for recovery?

We were one of those carriers that came into this crisis on the back of some of the best years in our history. Our business was running well and based on a clear strategy, and we were in a strong financial position. And it still didn’t protect us! Originally, when we had to cancel our China flights, we realized that this pandemic was a big blow. But just a short time later, we had to stop our services to the United States, which accounts for up to 50% of our long-haul business. That was the point at which it became obvious that this crisis could be fatal, even for us. We immediately began talking to governments, because the situation needed to be stabilized quickly. That started with the German government, but of course we spoke to the home airlines.iata.org

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“The truth is that climate change is more important to us now than it was 10 years ago. And we have to take what we have learned and put our knowledge into action”

governments of all the carriers in the Lufthansa Group. Every government took a different approach to this. But the willingness to save the airlines was clear in all cases. For airline staff, seeing empty airports, planes parked along runways and empty corridors in offices was something you never forget. And now as air travel picks up again, every single flight reopening is celebrated, even at a carrier the size of Lufthansa. I flew to the United States recently and it felt very special. There is a different spirit in the industry now and we need to celebrate the small things.

How will the ReNew program help?

It was obvious before the pandemic that our industry was in an era of change. Digitization and sustainability were transforming the way we do business. COVID-19 hasn’t altered anything in that respect, but what it has done is accelerate the process. Our ReNew program is about seizing that opportunity. But this is more than just another reorganization, another restructuring, another reduction in costs, another restart. It is deliberately named because there is an element of a brand new beginning in this. 2021 – 02 Airlines

24/06/2021 16:06

CEO Interview

In terms of digitization, it is unfortunately the complete opposite. In this respect logistics must learn from the passenger business. This is because our passengers tell us where the pain points are—shipments don’t do that. IATA has a big role to play in speeding up the industry’s understanding of cargo digitization and ensuring we work together with our logistics partners to make air cargo even more eﬃcient.

20-30%

Have customer expectations changed and how will you adapt to the new reality of tests and contactless travel?

Perhaps the most important change is that the customer now understands again that traveling is not a commodity. That was never my belief anyway, and I argued in many interviews that we undervalued our industry, and therefore €5 ($6) fares were both irrational and irresponsible. The pandemic has proved this argument. What aviation brings to the world, the level of quality and service that airlines provide, is now valued more because of the disruption caused by COVID-19. At the same time, we kept on making flying more convenient and even safer with contactless boarding. Cameras that use face recognition technology work even with passengers wearing masks. In my opinion, the trend towards less contact and the desire for more space will not go away. Customers will value space, especially on longer-haul flights. That will see people moving up from economy to premium economy and from there to business class. We will end up gaining new business class travelers.

Are aviation environment targets bold enough and should the industry go further?

Aviation’s environmental targets were ambitious when we set them. But the world has moved on and so has aviation. The truth is that climate change is more important to us now than it was 10 years ago. And we have to take what we have learned and put our knowledge into action. Aviation is doing just that. Think about how much better new aircraft are from a sustainability point of view. And we have worked with partners to develop several sustainable aviation fuels. They just need government support now to ensure a suﬃcient supply can be produced so the price comes down. Aviation must acknowledge its environmental responsibility, but it also needs to be transparent and communicate its achievements.

Cargo is the one bright spot for the industry. What can be done to make it more eﬃcient and help airlines to benefit from the growth of e-commerce?

Cargo was always extremely important to the Lufthansa Group as we are operating one of the world’s most modern freighter fleets. Our cargo revenue has gone up from 8% of total revenues to more than 20%. This is obviously partly because other revenues are down, but there is no doubt that cargo has become more important. It is a growing business where sustainability plays an increasingly important role. Expectations are high, companies are only doing business with like-minded carriers and sustainability initiatives are measured professionally—something the passenger business can learn from. Airlines 2021 – 02

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Is it important to go ahead with modernizing the fleet, despite the poor economic climate for airlines?

Next generation aircraft emit 20%-30% less carbon dioxide. And they are up to 50% less noisy too

Yes, that is essential for the future. At Lufthansa, we ordered additional brand new widebodies in early May. The order is a symbol of our belief in our airline and in our industry, and we are taking the best possible position for our competitiveness and a sustainable future. Next generation aircraft emit 20%-30% less carbon dioxide. And they are up to 50% less noisy too, which is something many people forget about. And, of course, they are better airlines.iata.org

24/06/2021 16:06

CEO Interview

financially speaking, with lower costs. So, they make a huge diﬀerence. What are the longer-term implications of governments taking stakes in airlines, not only at Lufthansa but also across the industry?

IMAGES: FRIEDER BLICKLE-LUFTHANSA/ISTOCK/SHUTTERSTOCK

It will be diﬀerent for every airline and for every government. Most airlines never wanted government involvement, but it had to happen in this unique crisis. Interestingly, we saw it in nearly every country, regardless of the region or the political system. Why? Because all those governments realized that aviation is essential to their economy and people. We should value this as a positive sign for our global industry. They couldn’t and they didn’t want to let airlines fold. But this in no way changes my opinion that governments should take stakes in airlines only temporarily. We aim to fully pay back the stabilization package as early as possible. In fact, Lufthansa is already in the process of paying back and at the same time we are also investing in the airline. It is a not a case of either paying oﬀ debt or investing in the future. We must do both. Whereas last year capital markets were not an option for us, they are now receptive again. Our job as management is to define a clear path out of this crisis situation, appealing to all stakeholders. Given that Germanwings and the German subsidiary of Brussels Airlines are closed down, does the idea of an airline group and airline alliances still have merit?

Aviation will always need alliances, because we can’t properly serve a customer in the modern, connected world with a single airline. And in mature markets like Europe, diﬀerent business models are needed to meet diﬀerent customer segments. An airline group is one way of meeting this challenge. Some business fundamentals will not change. What is your feeling about the industry’s future? Will it ever fully recover, or will airlines.iata.org

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20%

Our cargo revenue has gone up from 8% of total revenues to more than 20%

19 passenger fears overs sustainability and health dampen demand?

“I hesitate to make a detailed forecast because they have all been wrong in this crisis. But I share the belief that by the mid-2020s aviation will have fully recovered”

One element of safeguarding our future is to show that we are proud of aviation. This has been the most diﬃcult time for the industry since the Second World War, wherever you are in the world. But people’s fascination with flying has not suﬀered. I would say it has even increased. We shall never lose sight of that. In this regard, I urge people to watch the movie Living in the Age of Airplanes again. I hesitate to make a detailed forecast because they have all been wrong in this crisis. But I share the belief that by the mid-2020s aviation will have fully recovered. And by then it will be a more sustainable industry, partly because of outside pressure, but mostly because of our own desire to improve. It will also be an even safer industry too, because it has always been the case that flying becomes safer and nothing will change that. Again, that comes from the industry’s own wish to improve. And I really hope it will be a more digitalized industry that is fully connected with our partners to allow our customers a true, multimodal travel experience. 2021 – 02 Airlines

24/06/2021 16:06

Advertising Feature: CAA International

Asimina Voskaki, Senior Manager Environment, CAAi

CAA International: A green restart

The industry rebuild must have sustainability at its core, says CAA International

Aviation must emerge from the crisis stronger than before. Safety, eﬃciency, and sustainability must all improve as the industry strives to rebuild value for individuals and economies worldwide. Though sustainability has always played a crucial role in aviation growth, there is little doubt that the pressure on the industry to reduce emissions and noise is increasing. A cultural shift is becoming ever more evident in consumer behavior. Consumers are aware of the climate change debate and making informed decisions about their purchases. The most obvious area of concern is carbon emissions, and the industry has long been working to bring these down, with the ultimate aim of zero emissions. But it is noise that will be particularly troublesome in the short term. “For more than a year, planes have been grounded,” says Asimina Voskaki, Senior Manager Environment, International Development at CAA International, the technical cooperation and training arm of the UK Civil Aviation Authority. “People, especially around airports, have become used to very low levels of noise. The industry restart will highlight this problem. In eﬀect, any noise will be compared with Airlines 2021 – 02

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almost total silence in the skies.” As the need for effective noise management has never been greater, CAA International runs two virtual training courses on Noise Management and Noise Modelling to help organizations gain a deeper understanding of this problem and build the competencies to develop effective noise management strategies. “Environmental management must include a complete assessment of the impact,” says Voskaki. “There are often interdependencies and trade-offs and some problems will evolve over time. You must deal with the reality of the situation. That might mean a different solution today to ensure organizations have the ability to invest in targeted environmental mitigation in the future.” Skill gaps do exist, as the ICAO Carbon Offsetting Reduction Scheme for International Aviation (CORSIA) scheme has illustrated. CORSIA will enable the aviation sector to mitigate its environmental impact through carbon offsetting but the implementation of the scheme requires a high level of knowledge that is not necessarily inherent in the industry or the national aviation authorities.

Indeed, Voskaki says retraining existing employees and hiring new talent will be critical to putting sustainability at aviation’s core. Fortunately, the industry is a powerful brand and working to further its environmental aspirations can be a rewarding experience. An environmental specialist can be involved in a range of areas, from consulting, research and modelling to managing oﬀsets and designing new tools. “There are so many opportunities, it is a really interesting proposition,” Voskaki suggests. One area that is seldom mentioned in relation to aviation’s environmental work is the prospect of climate change profoundly airlines.iata.org

24/06/2021 16:07

Advertising Feature: CAA International

“These are challenging times, but there is a chance to restart. Getting an education in environmental matters will help that restart”

IMAGES: SHUTTERSTOCK

Asimina Voskaki affecting the sector rather than vice versa. Aviation would be directly influenced by climate change, and particularly climate extremes. There is a clear risk factor involved that will affect safety, capacity and efficiency, environmental performance, and ultimately demand. The aviation sector must understand the potential disruption and be prepared for climate resilience as a result. “These are challenging times but there is a chance to restart,” says Voskaki. “Getting a thorough education in environmental matters will help that restart.” All aviation stakeholders must not only have a sustainable, forward-looking strategy but also must pursue collaboration wherever airlines.iata.org

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possible. The CAA International course on Aviation and the Environment explores this in detail, says Voskaki. “It is impossible to tackle climate change on an individual basis,” she says. “CORSIA again provides an example. There are regional differences and knowledge has to be passed along the aviation value chain for everyone to benefit.” Governments must play their part in supporting efforts where necessary. Efficiency improvements are promising, and sustainable aviation fuels have been proven to work. But the latter needs further commercialization to bring the price down. A higher level of collaboration will also

allow the industry to review its environmental targets and adjust them as necessary. There are ambitious targets in place including a 50% reduction in emissions by 2050 compared with 2005 but this is a fast-moving sector and the clamor for net zero emissions is already apparent. “And that again shows the need for training,” concludes Voskaki. “It keeps participants up-to-date with the latest thinking and it allows them to devise credible delivery plans for industry targets. Targets may become tougher, but delivery mechanisms will also improve. Aviation and the environment is a vast topic that is constantly evolving.” 2021 – 02 Airlines

24/06/2021 16:07

Insurance

How f light safety data could affect airline insurance prices With premiums rising across the airline insurance market, safety performance will become a key factor to mitigate increasing insurance costs, write John Rooley, CEO, and Simon Knechtli, Managing Director, Global Aerospace, Willis Towers Watson

“At a foundational level, the standard indicators for safety performance come from programs such as the IATA Operational Safety Audit (IOSA)”

Airlines 2021 – 02

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y any measure, 2020 was a bad year for aviation. IATA calculated airlines’ total losses reached $126bn, with passenger demand having fallen almost 66% compared

with 2019. For the industry’s insurers, who have had to return substantial amounts of premium to the commercial airline operators whose fleets largely sat idle during the current pandemic, it wasn’t much better. In 2021, insurers intend to again increase insurance rates. The degree of increase will depend on whether airlines can provide evidence of the kind of risk management that gives insurers the confidence to diﬀerentiate specific clients from the pack. Insurers and their clients often talk about price diﬀerentiation come renewal season, but it is not often established. Why? Because, without evidence that can document elite safety practices, underwriters make fundamental assumptions based on intuition or on common market perceptions. These assumptions can be misinformed and do not benefit airlines that invest in advanced quality and safety practices.

With insurers trying to raise the premium base across the board this year, it is becoming increasingly clear that airlines will have to give enquiring underwriters the evidence they require to show that individual carriers deserve to be considered ‘a better risk’ than their peers. This will inevitably require greater transparency into the detail of each client’s investment in safety, risk mitigation, and quality-assurance programs. The days of leveraging corporate size or the airline’s brand to drive home the best deal are gradually being replaced. Airlines must show the insurance market that the financial relationship between the buyer and insurer is as a direct consequence of significant investments concerning safety and risk. Any number of events faced by airlines during day-to-day operations can increase the carrier’s risk and/or result in claims. Common causes of claims from aircraft operators include: pilot error; damage from foreign objects; bird strikes; weather events; ground-handling incidents; and geopolitical instability, to name a few. With the cost of aircraft repairs on the rise—and global claims stubbornly exceeding historic premiums—any evidence that an airline

airlines.iata.org

24/06/2021 16:11

Insurance

understands those risks and has strategies in place to mitigate them will be critical to build insurer confidence and their appetite for risk. It is the key marker to diﬀerentiation. At a foundational level, the standard indicators for safety performance come from programs such as the IATA Operational Safety Audit (IOSA). But because these oﬀer standard safety indicators, when insurers are considering which airlines merit discounts on market premiums, they look for evidence that their clients are driven to exceed higher-than-average performance standards. Unveiling a safety culture

There is a saying among auditors in the management systems community that measurement is at the heart of management— that is, you cannot manage what you do not measure. The big data era has given the aviation sector the tools required to do both. Although technology gave the airline industry the ability to capitalize on the vast amounts of data it generates, it is a strong safety culture that will ensure that lessons learned are put into action. Insurers are looking for evidence of

airlines.iata.org

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extensive data capture that suggests a strong culture of hazard and event reporting, practices that also allow airlines to build understanding of their own risk environment. Beyond data collection, brokers will warm to any evidence that the intelligence generated from the data was used to inform the company’s broader risk management strategy, highlighting the path from data collection to the adoption of advanced practices. Revealing performance trends not only gives insurers the confidence to insure an airline’s risks, but also builds market appetite for an airline’s insurance business. This creates competition and expands the carrier’s options of potential underwriters across the insurance market. Ultimately, a culture of data diligence and transparency gives the insurer the incentive to positively diﬀerentiate the client from the pack when the time comes to renew the program, and a degree of justification should a future accident bring the insurer’s judgment into focus. An area where a culture of strong safety practices will make insurers pay attention is that relating to unstable approaches. These are relatively common causes of incidents and, as

2021 – 02 Airlines

24/06/2021 16:12

Insurance

The dramatic change in an insured’s risk exposures has given insurers the opportunity to reapportion their portfolio premium

66 percent is the fall in passenger demand compared with 2019—a total loss of $126bn

such, they are a concern for airlines and insurers alike. Insurers will expect to see a safety culture, supported by data and training, that encourages pilots to go around for another, safer attempt at landing. For example, any airline whose fuel-saving policy clashes with their weatheravoidance policy is clearly going to be of interest to an insurer. Training for these events should emphasize that any decision to execute a go-around is not an indication of poor performance from the flight crew. It is prudent decision-making, as it errs on the side of safety. Of equal importance is an open and just culture within an airline. Hierarchy in the cockpit (and within the organization) as well as a punitive culture are high on the list of threats to a safe operation. The ability of each employee to report voluntarily and confidentially, without fear of reprisal, any act or omission that could jeopardize the safety of the airline is a critical element of an airline’s safety best practice. Technology can unveil what did go wrong, but sometimes only a human being can report what could go wrong. The former is reactive and the latter predictive. This is a fundamental differentiator that insurers consider as they look to avoid potential claims, or at least charge sufficient premiums to counter their effects. Company-wide awareness of risks

Senior executives at airlines are well acquainted with the risks and opportunities within their area of operational responsibility. But the full theater

Airlines 2021 – 02

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of risks can be less obvious. In fact, many companies do not measure total business risk. The understanding of corporate risks is often compartmentalized within divisional silos such as legal, operations, human resources, IT, finance, and management. Come renewal season, insurers would look positively at any evidence that departmental risks are being shared across corporate divisions and are also understood and managed by upstream partners in the supply chain. What tends to destroy the ability of the company to understand its risks—and how best to manage them—is a procurement-based strategy. Risk is not a commodity to be traded, so insurers give little discount consideration to those buyers who treat it as such. Without evidence to the contrary, airlines can be held captive to common market preconceptions, especially if they operate in a more challenging region of the world. Misconceptions can be reversed by sharing safety performance indicators that support positive trends, demonstrate best practice, and reveal a company to be on a path to continuous improvement. The dramatic change in an insured’s risk exposures, both negative and positive, caused by the coronavirus crisis has given insurers the opportunity to re-apportion their portfolio premium. Quality metrics and sharing evidence of safety leadership will be a critical foundation on which strong relationships with the insurance community increasingly will be built.

airlines.iata.org

24/06/2021 16:12

Helping your customers IATA Travel Pass is not just a standalone app — it’s interoperable.

OK to travel

That means any or all of its functions can be incorporated into an airline’s own travel app. So travelers can get the IATA Travel Pass in their

Registry of health requirements

Registry of testing / vaccination centers

Lab App

IATA Travel Pass App

Find out more:

iata.org/travel-pass

IATA.JUNE21.025.indd 25

17/06/2021 15:56

CEO Interview

Driving sustainability Michael Rousseau, President and CEO, Air Canada, says Canadian aviation regulations must change and starting afresh will drive sustainability forward WORDS: GRAHAM NEWTON

aking over the role of CEO at Air Canada during the pandemic shows how positive Michael Rousseau is about the future outlook of the airline and the global industry, and is working with the Canadian government to put strategies in place to ensure the industry can return safely post-pandemic and rebuild.

What are your immediate priorities?

Although we are optimistic that the worst of COVID-19 is behind us in Canada, as with the disease itself the after-eﬀects on our industry will persist and need to be dealt with. Most immediately, we are focused on working with the government on a plan for safely reopening our country. Canada put in place some of the strictest travel and quarantine rules in the world which, for a global carrier like Air Canada, were especially harmful. The plan should include clear metrics and requirements for each stage, not only for us to plan but also so that our customers, who we know are eager to travel, can book with confidence. This will also allow us to expand our network and, very importantly, start recalling employees, who have made tremendous sacrifices. Additionally, we are focused on minimizing our cash losses to ensure we take on as little incremental debt as possible, allowing us to recover quicker and make the necessary future investments to remain competitive and meet all of our long-term goals. Airlines 2021 – 02

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What does the financial agreement with the government and the customer refunds mean for the carrier’s financial position?

We entered the pandemic with one of the industry’s strongest balance sheets relative to our size. We had nearly C$7 billion (US$5.8bn) in unrestricted liquidity and, subsequently, we raised an additional C$6.8 billion on our own. Though our financial position was strong, the depth and severity of the pandemic exceeded even the most pessimistic scenarios. And there was ongoing uncertainty as to the future direction and duration of this crisis. As a result, we felt it was only prudent to take advantage of the Canadian government’s large corporation support program to obtain repayable airlines.iata.org

24/06/2021 16:13

CEO Interview

“I am positive about the future and excited about the opportunities I see for our company in the post-pandemic world” airlines.iata.org

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2021 – 02 Airlines

24/06/2021 16:13

CEO Interview

debt commitments for up to C$3.975 billion. In addition, the Canadian government purchased C$500 million of Air Canada equity representing about 6% of the outstanding share count and provided a repayable loan to refund customers who had purchased non-refundable fares. Ideally, we will not need to access this money. Instead, it provides an extra layer of insurance and along with our fairly deep unencumbered asset pool and access to debt markets, should provide confidence to customers, the financial markets, and our employees that Air Canada will emerge strongly from the pandemic. Under the agreement, the government made available up to C$1.4 billion to help us refund customers holding non-refundable tickets who did not travel due to the pandemic. The fact of the matter is we have been pleased by how few customers have requested refunds and instead are holding onto future travel credits. This is an encouraging sign people want to travel again. Can you tell us about your longer-term plans as the new CEO?

Though COVID-19 set us back, it was indiscriminate and aﬀected all carriers. Our relative position is therefore much the same, provided Canada catches up with other countries in reopening travel. This gives us a great foundation to rebuild. In forcing us to strip back things like our network and onboard service to the bare bones, COVID-19 has let us rethink what we were doing and given us an opportunity to build anew, particularly through technology. You will see continued attention to traditional focus areas, such as cost control, but also heightened emphasis on customer service, our employees, and the environment. To give some examples, at the height of COVID-19 we relaunched our Aeroplan loyalty program, but with so little flying the normal modes of earning and redemption were unavailable. Instead, to maintain loyalty, we developed new ways for members to earn and benefit from the program and this will continue. Airlines 2021 – 02

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At Air Canada we take pride in the fact there are more than 60 languages spoken and we have repeatedly won awards for diversity & inclusion

737 MAX aircraft: At the end of 2021, we expect to have 27 of a firm order of 40 737 MAX aircraft

As part of the mitigation and recovery strategy, Air Canada removed 79 older aircraft from the fleet permanently

The Canadian government purchased C$500 million of Air Canada equity, (roughly 6% of the outstanding share count)

Another focus and growth opportunity is cargo. While Air Canada has always carried cargo, air freight boomed with COVID-19 while belly capacity disappeared. We took full advantage of this, first by using passenger aircraft modified to carry more cargo and now we are retrofitting some older 767s to all-cargo configurations. We are also starting to introduce an e-commerce business with partners, leveraging our international network and cargo capacity. Do you see any of the changes to the passenger experience as permanent?

Though I would rather we had got there without COVID-19, the pandemic did provide us the opportunity to re-examine the customer journey and design more customer-friendly and relevant process improvements. This is particularly true in airports, where airlines have long talked about contactless travel. But with COVID-19 we moved more quickly as part of our biosafety program. For example, in various airports we introduced virtual queuing in place of physical lineups, touchless check-in, and bag drop, touchless access, and food ordering at our lounges. And we also undertook a pilot with facial recognition for boarding in San Francisco. These changes not only strengthen safety, they speed up and simplify processes for our customers. They are likely to be retained and further developed. How important is the return of the 737 MAX to operations?

Fleet is another area where COVID-19 accelerated change. As part of our mitigation and recovery strategy, we removed 79 older aircraft from our fleet permanently, including less eﬃcient Boeing 767, Airbus A319, and Embraer 190 aircraft. Their retirement will reduce Air Canada’s cost structure, simplify the fleet, and shrink our carbon footprint. We are able to do this because we have new Boeing 737 MAX and Airbus A220 aircraft airlines.iata.org

25/06/2021 15:49

CEO Interview

arriving. At the end of 2021, we expect to have 27 of a firm order of 40 737 MAX aircraft. The MAX is attractive from an environmental and fuel cost perspective, oﬀering an 11% CASM advantage over our mainline Airbus A320s. The capacity and range are optimal for us, as we can use them on long-haul North American and certain ETOPS routes, such as Hawaii from Calgary and Vancouver or London-Heathrow from Halifax and St. John’s. It is a versatile aircraft, and its capacity is well-suited for the early stages of a recovery, when loads might be lighter and bigger aircraft less profitable.

IMAGES: ISTOCK/SHUTTERSTOCK

You have committed to net zero emissions. Should the industry do more for the environment?

It is not a question of “should.” I would say even though the industry has already done a great deal it must do more. There are many reasons why, but the first is that it is the right thing to do. Climate change is humanity’s most urgent challenge, and we have no choice but to face up to it, accept our responsibilities and do our part to combat it. If that is not enough, we should all remember it is also good business. Anything we do to reduce the burning of fuel and creating emissions goes to the bottom line. As well, customers want us to behave responsibly and will use their wallets to show disapproval if they believe an airline is being irresponsible. Finally, there are tremendous outside pressures, including from environmental advocates, Environmental, Social and Governance (ESG) investors, and governments. Such demands will only grow, and we would do well to get ahead of them. At Air Canada we have done this by setting a goal of net-zero emissions by 2050 with fairly aggressive interim targets so people can see our progress. Is technology the best or only answer to a more eﬃcient business model, sustainability, and a better passenger experience?

Technology will play a central role in our airlines.iata.org

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COVID changes? What regulatory changes do you need in Canada? And are there any industry-wide changes you would like to see? Like all airlines, we have an ongoing dialogue with governments about a wide range of issues. In fact, it often seems every government policy somehow aﬀects airlines because we are so integral to every part of society and the economy. In Canada, we are one of the few countries where air transport is almost exclusively a user-pay model and the broader societal contributions of our industry appear not to be appreciated. There are security fees, airport improvement fees, navigation fees, and airport landing and terminal fees. Throughout the pandemic more costs were added as governments had airlines conduct health checks and implement other policies, which consumed valuable resources. The weakness, frankly unsustainability, of this user-pay model was exposed by the pandemic. With traﬃc volumes falling 90%, revenues collapsed, not only for airlines but for airports and Canada’s air navigation service. This has led to higher charges and forced all of us to take on more debt that will have to be paid by future generations of travelers or reduced investments. We need to continue to educate governments about the economic benefits airlines deliver so they will treat us as catalysts and accelerators.

business processes. It is the primary way to cost-eﬀectively ensure consistency while staying flexible, and it has the virtue of scalability. It is only through technology that airlines can provide a satisfying, individualized experience to tens of millions of customers each year. This is why we are devoting considerable resources to such things as artificial intelligence, machine learning and analytics, as well as mobile and digital technologies. That said, though customers like the convenience technology can provide, there will always be a need for positive human interaction. At the end of the day, airlines are in the customer service business. Nothing can replace the warm greeting, friendly smile or even the added assurance that comes from personal attention. For this reason, we are committed to enabling our people and encouraging them to create meaningful human connections through the customer experience. This will be supported by our continued innovation in technology, loyalty, and products.

Will diversity be forgotten about as airlines struggle to survive?

At Air Canada we take pride in the fact there are more than 60 languages spoken and we have repeatedly won awards for diversity & inclusion. Our experience is diversity gives us a competitive advantage serving a multicultural country like Canada and a leg up in the global markets where we compete for a diverse customer base. But it runs more deeply. Workplace diversity is one of the most important elements for an organization’s success. It brings diﬀerent talents and skillsets together to work toward common goals. It leads to more creative, innovative, and productive teams. We have also found that our reputation for diversity is a powerful recruiting tool, giving us access to the best and brightest from everywhere, vastly expanding the talent pool we can draw from. Check out Michael Rousseau’s outlook for aviation on our website. https://bit.ly/3gkVSrE 2021 – 02 Airlines

25/06/2021 15:49

Advertising Feature: AMROS

Giuseppe Renga, CEO and President, AMROS Group

Making the most of asset management

AMROS is providing a holistic asset management software solution to help the aviation industry post-COVID

For most people, the idea of building back better involves technology. Although there are few areas in aviation untouched by technology, there are few that could not be further improved by continued implementation. “From our perspective as a service provider to the aviation industry, we believe that there is a strong requirement for innovation on a more holistic level, starting with the mindset, and trickling down to the entire value chain,” says Giuseppe Renga, CEO and President of AMROS Group. Managing the aircraft as an asset is a good example of this trickle-down eﬀect. The management process is rather simple to digitize, and workflows and processes can be easily automated. But this disguises the fact that there is an enormous range of factors to consider. Aircraft are, after all, flying eco-systems of engineering, operations, technology, and big data. “And as with every eco-system, it requires the necessary care, in the form of maintenance, repair, and overhaul,” says Renga. “This aspect of asset management is crucial as the maintenance of the aircraft substantially determines its value. However, a majority of maintenance workflows are performed in paper and the outcome includes an amount of human error that significantly impacts aircraft value, Airlines 2021 – 02

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turnaround time between operators, and maintenance costs, to name a few.” Renga says this potential cost impact can be averted if aircraft owners and operators properly understood the status, and value, of their aircraft. Which is why AMROS, with decades of experience in aircraft management, maintenance and international aviation legislation, provide airlines a boundary-free understanding of the asset through future-oriented asset management software. In May 2021, AMROS announced it is developing a holistic asset management software solution based on artificial intelligence and machine learning, that will deal with complex asset management challenges. The solution is under development by the wholly-owned subsidiary AMROS Innovations, with the first iteration of the product scheduled for release in September 2021. This will include

“Airlines are resilient, but many will probably not survive another disruption of the magnitude of COVID-19” Giuseppe Renga

modules that facilitate asset transfer between operators and owners using international standard electronic formats, as well as interconnectivity with various cloud and MRO systems. “The core idea is to provide an accessible platform to the industry with low entrybarriers into this new software environment, saving costs and maximizing return on investment from the very beginning,” says Renga. Accurate and timely A digital maintenance report would be accurate and timely. And this could inform future maintenance decisions, personnel airlines.iata.org

24/06/2021 16:16

Advertising Feature: AMROS

Is aviation an attractive industry for young IT talent? “Absolutely yes!” states Giuseppe Renga, CEO and President at AMROS Global. “Aviation is just starting to embrace future technologies and so there is a lot to do in our industry. AMROS is actively seeking young talent for its asset management software development team and already has a strong set up in place where we encourage innovation and embrace a variety of new technologies. “New technologies like AI, machine learning (ML), robotic process automation (RPA), and the integration of artificial neural networks (ANN) will improve the error prone solutions in place today, generating business opportunities unseen in the industry,” he continues. “As technology and environmental issues are evolving in incremental steps that have shorter life cycles, clever IT innovation will drive owner and operator decision makers to gain access to accurate data. IT talent linking the new technologies to create innovative solutions and bringing them to life, are the future in the airline industry.”

requirements, and other resource management processes. Renga says the impact on costs would be “immense.” Such an innovation carries with it many new considerations, however. Ownership of the data, the power to edit it, and its protection are all vital. “Today, an aircraft operator and owner cannot push a button or touch an icon and get a real-time configuration of an aircraft,” Renga informs. “But distributed ledger technology aims at answering these questions about data and can help aviation to really understand their assets. One thinks of the thousands of parts that need to be correctly traced in an aircraft or when and airlines.iata.org

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where maintenance was performed and by whom and according to which rule-set.” The AMROS asset management software delivers automated, human-error free aircraft information collection and assessment. For Renga, therefore, the question of investment in innovation is about face. Rather than note the lack of money available for innovation, airlines simply cannot aﬀord not to invest. “The best time to invest in technology is always 20 years ago,” he jokes. “The forces in the market are constantly changing and the pandemic will most probably have a short- to mid-term eﬀect on aviation returns on investment (ROI). We have seen it over and

over again how the slightest disruption can aﬀect ROIs and cash reserves in airlines. “Airlines are resilient, but many will probably not survive another disruption of the magnitude of COVID-19,” he adds. “Investment in new technologies have a positive impact as they represent an added value to the company generating positive profit and loss results. However, investments are required not only in the passenger flow with millions of multipliers but also in the surrounding operational and technical asset processes that have huge cost impacts in the longer run.” For more information, please visit https://amrosglobal.aero 2021 – 02 Airlines

24/06/2021 16:17

Europe

Coordination can overcome the cracks 32

A unified response is needed to help carriers overcome European fragmentation, as Graham Newton reports

uropean carriers suffered a 73.7% traffic decline in 2020 versus 2019, making it one of the worst affected regions. Combined, Europe’s airlines lost €27 billion. The reliance on international traffic has seen the decline continue in 2021. March, for example, saw an 88.3% decline in traffic compared with March 2019 and a load factor below 50%. “Pre-COVID, Europe had efficient connections,” says Rafael Schvartzman, IATA’s Regional Vice President for Europe. “The European Union (EU) space was a single market, similar to the US domestic market. That intra-EU connectivity has gone. What we have now is as fragmentation.” Anything that can speed the recovery of European carriers and improve their future efficiency has to be welcomed. IATA Travel Pass contains all the passenger details necessary for safe, efficient travel. It will inform passengers on what tests, vaccines, and other measures they require prior to travel, details on where they can get tested, and, most importantly, the ability to share their tests and vaccination results in a verifiable manner that also protects privacy. The aim is to give airlines and governments

“Europe talks a good game about the importance of competitiveness. It’s time to put action behind those words with the SES” Willie Walsh, IATA Director General Airlines 2021 – 02

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accurate information on passengers’ COVID-19 health status and therefore the confidence that they can restart operations and re-open borders. And most importantly, it can be integrated with the EU COVID-19 Certificate. The interoperable, secure, and GDPRcompliant health certificate represents an essential tool to facilitate the free movement of people within the EU and reopen travel in a safe and responsible way. The EU has also called for free and accessible testing and full equality so that no additional measures, such as quarantine or further testing, should be imposed on travelers presenting a valid EU COVID-19 Certificate. “The certificate will help restore confidence,” says Schvartzman. “It will bring something that has been missing; a coordinated and harmonized set of rules to re-establish connectivity. And thanks to the integration with IATA Travel Pass, that harmonization and connectivity can spread to the rest of world.” Indeed, Ursula von der Leyen, President of the European Commission (EC), has said that the EU will grant unrestricted access to vaccinated travelers from the United States. IATA’s Director General, Willie Walsh called it “a step in the right direction.” He added: “It gives hope to people for so many reasons—to travel, to reunite with loved ones, to develop business airlines.iata.org

24/06/2021 16:17

Europe

IMAGES: IKON IMAGES

Build back better

It is not enough to simply recover, however. The aim for the industry is to build back better. If that is to be the case, the EC still has plenty of work to do. Most obviously, it must kickstart the infamously languorous Single European Sky. The June 2021 Transport Council—attended by Transport Ministers—must adopt more ambitious targets. “State inaction has meant that SES targets have not been met,” explains Walsh. “New legislation, as proposed by the Commission, is the only way to force the reform and improvements that are desperately needed. But the intransigence and selfishness of key EU states and their air airlines.iata.org

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27m

opportunities or to get back to work.” Recently, France and Spain have relaxed COVID-19 border measures for vaccinated passengers and adopted the broader use of aﬀordable antigen testing although harmonized measures across Europe are still a long way oﬀ. “Many European states have yet to significantly relax borders at all,” said Walsh. “This fragmentation should be replaced with a unified approach that is consistent with the recommendations of the EU. People, businesses and economies would all benefit from greater alignment across Europe in relaxing measures and restoring the freedom to travel.”

navigation service providers (ANSPs) threatens to collapse the latest Commission effort.” The SES is vital for a safe, sustainable, and efficient European air transport industry. Among its benefits are: an improvement in safety performance by a factor of ten greater capacity and fewer delays, giving a €245 billion boost to Europe’s GDP and a million extra jobs annually from 2035 A 10% cut in EU aviation emissions, supporting the European Green Deal. “Europe talks a good game about the importance of sustainability and competitiveness,” says Walsh. “If the combined weight of the climate crisis and the COVID-19 crisis are not sufficiently compelling drivers for SES, it’s hard to know what could be.” IATA supports giving regulators the power to enforce robust performance targets. It also endorses the strengthening of the pan-European Network Manager to improve efficiency, which will help cut delays and emissions. Walsh believes a failure of the Commission’s proposal would be a lost opportunity for change when it is vitally needed. “The environment and the European economy will pay a high price for that, along with travelers and airlines,” he argues. Key variables

“It is diﬃcult to know what will happen in the years ahead,” concludes Schvartzman. “After all, you could never have predicted what has happened so far. But is important not to repeat mistakes. The fragmentation of Europe was the worst. Regional connectivity must be maintained through a data-driven approach that would also spark global connectivity.” “Passenger confidence is vital,” he adds. “Clearly, the demand is there. But if the rules to allow travel are not in sync then airlines will be stopped from serving that demand. Aviation can grow strong again, but it needs a coordinated response from all stakeholders.” For details on European airport charges, visit the Airlines. website at https://airlines.iata.org

Travel sector supports more than 27 million jobs and €441.1 billion across Europe

2021– 02 Airlines

24/06/2021 16:18

Advertising Feature: JBT

David Bunting, Managing Director, EMEA, JBT Ground Support Equipment

Flexible and reliable equipment underpins the resurgence of ground operations

JBT is leading advances in the ground operations sector to provide the flexibility and reliability that ground operators crave in their equipment

The travel headline during this crisis has been the lack of aircraft in the sky. But when planes don’t fly, the whole aviation value chain is aﬀected. And that includes many smaller companies that have had to rapidly adjust to the new realities. Ground handlers have been hit hard, for example. Staﬀ have been furloughed or lost their jobs and expensive ground equipment has lain dormant. David Bunting, Managing Director, EMEA for JBT Ground Support Equipment, says many handlers turned to the cargo sector for some degree of relief. “The cargo sector has been resilient and even grown during the pandemic,” he notes. “This growth can be put down to a number of factors, including the requirement of

personal protective equipment for frontline staﬀ dealing with the pandemic and the increase in on-line retailing.” But switching to handling cargo flights was easier said than done. Because the industry lost the bellyhold capacity of passenger flights, space was at a premium. The airline solution was to quickly press unused passenger aircraft into cargo service. This created a host of challenges for ground handling companies that were short on personnel and the right equipment. Simply, cargo ground fleet isn’t designed to dock at a passenger door and cargo shipments aren’t expected to be walked up and down passenger steps. JBT’s Cargo Chute was designed to meet this challenge. The Cargo Chute is a

“The cargo sector has been resilient and even grown during the pandemic” David Bunting, MD EMEA, JBT Ground Support Equipment

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temporary modification to passenger steps, effectively turning them into a conveyor belt. Operators are able to safely unload packages in a controlled manner eliminating the requirement to walk down steps while carrying cargo and packages. This alleviates the strain on operators, reduces manpower requirements, and speeds operations. As this work continues, ground operators must also turn their attention to the industry restart. It will not be easy. The sector has low margins and high staff turnover even in normal times. Gearing up to handle the resumption of passenger traffic from a standing start will test every company in the sector. Bunting believes that JBT is better placed than many as the company manufactures a broad range of ground support equipment, which is easy to operate, reliable, and supported by a truly global customer service network. Ensuring their equipment is ready for action could require a full safety inspection, however, although this depends on how the machinery was stored and maintained while idle. “Careful attention will need to be paid to components which may have deteriorated while out of use, such as hardened seals and flat spots on wheels,” says Bunting. “We’ve even seen birds and vermin nesting in equipment but, hopefully, if it has been regularly checked and run to normal operating temperature and, for electric equipment, batteries kept optimized this won’t be an issue.” airlines.iata.org

25/06/2021 15:47

Advertising Feature: JBT

“Careful attention will need to be paid to components which may have deteriorated while out of use” David Bunting To assist its customers, JBT has run a number of online maintenance training courses as well as customer specific virtual troubleshooting. This has helped keep its vast range of equipment prepared for all eventualities. Equally important is the use of data to understand exactly what is required and how a piece of equipment is performing. Modern fleet is constantly monitored, and the use of metrics can fine tune operational efficiency. JBT’s iOPS telematics suite provides a multitude of data to support the efficient operation of a ground handler’s fleet, such as live access to a machine’s current status, fleet utilisation, and predictive maintenance warnings. As the industry begins its long recovery to pre-COVID traffic levels, many innovations will come to the fore. For ground operators, this could make all the difference and allow a return to profitability. JBT is determined to lead advances in the sector and provide the flexibility and reliability that ground operators crave in their equipment.

For more information, please visit www.jbtc.com/en/emea/aerotech airlines.iata.org

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2021 – 02 Airlines

25/06/2021 15:47

Carbon Oﬀsets

C 36

arbon offsets, one of the four ‘big beasts’ of the aviation industry’s strategy to slash carbon dioxide emissions, have been given another substantial boost with a new product tailored to airlines. The Global Emissions Offset (GEO) is aimed at making it easier for airlines to scale-up buying offsets. It is a key new development in aviation carbon markets and will be traded on IATA’s Aviation Carbon Exchange (ACE), which was launched recently in partnership with the technology provider CBL Markets. ACE is an exclusive platform for airlines to trade in carbon offset projects and is the only exchange to be integrated into the IATA Clearing House, which guarantees a secure settlement system for payment and delivery of carbon offsets. Offsets, or carbon credits, are used by the aviation industry to compensate for CO2 emissions arising from airline operations, whether on domestic or on international routes, with the latter coming under the Carbon Reduction and Offsetting Scheme for International Aviation (CORSIA). The GEO, developed by CBL, breaks new ground by bundling together several different certified carbon offsets into one contract. Most carbon mitigation programs, from forestry to habitat preservation to renewable energy projects, can be included in the bundle, provided they have been certified by third-party regulators as being CORSIA compliant under ICAO regulations. It allows airlines to buy bigger tranches of carbon credits under one umbrella scheme that meets all certification standards. Previously, to acquire the same number of offsets that a GEO offers, airlines had to Airlines 2021 – 02

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Global Emissions Offset: big step in airline sustainability Game-changing offset carbon credit scheme offers a green solution for airlines WORDS: GRAHAM NEWTON

airlines.iata.org

24/06/2021 16:18

Carbon Oﬀsets

The industry’s overall commitment is to bring down aviation emissions from 915 million tonnes in 2019 to 325 million tonnes in 2050 complete their own due diligence on multiple projects with potentially diﬀerent certification standards, as well as diﬀerent pricing. “The GEO is a game-changer,” said Sebastian Mikosz, Senior Vice President for Member and External Relations at IATA. “It shows that the ACE we launched just a few months ago continues to provide key support for airlines when it comes to the issue of tackling climate change. The CORSIA agreement is a fundamental part of the industry’s aim to stabilize net CO2 emissions at 2020 levels and the development of GEOs will help underpin that.” Four pillars of aviation’s climate change strategy

Global Emissions Oﬀset (GEO) is aimed at making it easier for airlines to scale-up buying oﬀsets airlines.iata.org

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Carbon oﬀsets, together with technology, air traﬃc management, and flight operations, are the four pathways—the ‘big beasts’—to meeting aviation’s climate change commitment. In 2016, ICAO’s 193 member states signed the CORSIA, which aims for carbon neutral growth in international aviation from the beginning of 2021. A voluntary three-year pilot phase was launched in 2021, which is to be followed by another voluntary phase from 2024 to 2026. CORSIA will become mandatory for nearly all ICAO member states by 2027. The only exemptions will be small, lesser-developed economies with low rates of air travel.

Carbon oﬀsetting is regarded as a short to medium-term solution in the industry’s commitment to bring down aviation emissions from 915 million tonnes in 2019 to 325 million tonnes in 2050. As new technology develops, oﬀsetting is expected to play a diminishing role in emissions reduction. With the right government support, emissions targets will be achieved through the widespread use of sustainable aviation fuel, and hydrogen and electric technology.

Carbon markets come of age

However, carbon oﬀsets will be important for many years yet. They have become an accepted and widely used tool to mitigate emissions, not just from aviation but from industries worldwide. Many projects today combine emissions reduction with the additional benefits of poverty reduction, habitat preservation, and better standards of living—all of which support the UN’s Sustainable Development goals. In Kenya, for example, villagers are subsidized to switch to high-eﬃciency wood-burning stoves and easy-to-use water filtration units, which reduces the amount of firewood needed to boil water and frees up more time for other work. As the market matures, the diversity of products is likely to keep growing. The GEO is one of the first big new developments to be traded on the ACE, but it won’t be the last. 2021 – 02 Airlines

24/06/2021 16:19

Advertising Feature: New York Stewart International Airport

A secret no more: New York Stewart International Airport More and more people are discovering what used to be one of the New York Hudson Valley’s best kept secrets—New York Stewart International Airport (SWF), located less than 60 miles north of New York City. 38

SWF is a key gateway for this thriving region in New York and a low-cost alternative for accessing the Big Apple and dozens of other nearby attractions, including the Culinary Institute of America, West Point, the world-famous Woodbury Commons Outlet shops and the newest, largest Legoland ever built, which opened this summer and is less than 30 minutes from the airport. New York Stewart International Airport is conveniently located at the intersection of two major interstate highways—I-84 and I-87 (the NY State Thruway)—and oﬀers extensive capacity and access to a population of more than 15.6 million residents within a

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broader 60-mile radius. In 2019, SWF’s natural catchment generated 5 million annual air travelers, and the potential for growth was only strengthened during the last year, as the region was repeatedly cited in news reports for its outsized gains in population and property values as New Yorkers fled cities to move to the Hudson Valley. The airport also continues to deliver consistently stronger air cargo numbers as freight carriers recognize the region’s growing potential. SWF is operated by the Port Authority of NY & NJ as part of the busiest airport system in the Americas, which also includes JFK International, Newark Liberty International, LaGuardia, and Teterboro airports. SWF, which has had commercial air service for more than three decades, came under Port Authority control in 2007 and since then the agency has invested over $220 million on a host of

improvements, including the complete repaving of its two runways (one of which at 11,817 ft is among the longest in North America), expanded parking, and most recently, a $37 million, 20,000-square-ft terminal expansion completed in 2021 that delivered a new U.S. Customs Federal Inspection Station that can screen up to 400 international passengers per hour. The new arrivals hall also is equipped with modern passenger processing technology, including Global Entry kiosks so passengers spend less time in line and more time at their destination. The Port Authority is committed to air carrier success at SWF—one of the most underserved airports in the region with room to grow across its seven contact gates and various hardstand parking options. The airport oﬀers a generous incentive package that fully waives airport landing and fuel flowage fees and all rental charges during the first 24 months of service to a new nonstop destination to oﬀset startup costs. It also provides marketing support for new entrants and routes while also leveraging the Port Authority’s relationships with local stakeholders, including tourism leaders in local counties. Add to that two best-in-class FBOs for all ground handling needs, a best-in-class terminal/concessions manager, and the option to provide nonstop, express-bus service between the airport and midtown New York City via the airport’s partnership with Short Line Bus/Coach USA (which will time its schedules to match flight arrivals and departures and can scale to meet passenger demand), and you can see why the secret is out: New York Stewart International Airport is an option worth exploring! airlines.iata.org

24/06/2021 16:19

NEW YORK CITY. AND SO MUCH MORE.

LEGOLAND® NEW YORK RESORT • 15 miles from SWF

If you want to serve the New York City region, look no further than New York Stewart International Airport. Conveniently located just outside NYC in New York’s Hudson Valley, Stewart offers multiple advantages including low operating costs, a new international arrivals hall, a competitive incentive program, and access to millions of travelers with nonstop bus service to/from NYC. To learn how you can expand your service at Stewart, contact aleminton@panynj.gov

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24/06/2021 16:19

Cargo

Opportunity knocks for air cargo as e-commerce grows 40

Air cargo has been the one bright spot for the industry during the pandemic. The sector is close to 5% above pre-crisis levels and both load factors and yields have grown. WORDS: GRAHAM NEWTON

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n 2021, IATA estimates cargo will represent some 30% of total revenues, a significant increase from the usual 12% average. And the good times will continue to roll. This year, cargo tonne kilometers (CTK) will grow more than 13% over 2020 levels and carriers will increase their share of cross-border trade. In other words, air cargo is growing faster than other modes of transport. Moreover, IATA business confidence surveys of cargo heads reveal plenty of optimism for the year ahead.

Online shopping

strongly pre-crisis, lockdowns across the world have only served to accelerate people’s penchant for buying goods online. Even major markets such as the United States and China have moved at least a couple of years ahead of schedule. Worldwide, e-commerce is valued at about $5 trillion in 2021. Approximately 80% of cross-border e-commerce is transported by air, which represents more than 20% of global e-commerce value. But realizing the full potential of e-commerce requires significant changes. “E-commerce is digital by nature,” explains Brendan Sullivan, IATA’s Head of E-Commerce and Cargo Operations. “Air cargo

There are a number of reasons for such positivity, including the continuing distribution of vaccines and medical equipment, and the need to facilitate the strong rebound in global trade. But perhaps the brightest star on the horizon is e-commerce. Growing

airlines.iata.org

24/06/2021 16:20

Cargo

Going digital

$5tr

Worldwide, e-commerce is valued at about $5trillion in 2021

Approximately

80%

of cross-border e-commerce is transported by air, which represents more than 20% of global e-commerce value

airlines.iata.org

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Digitization in the sector has been happening slowly but surely. But e-commerce’s extraordinary growth rate has increased the pressure to pick up the pace. On the plus side, air cargo’s recent success has made investment possible. “Airlines appreciate the impact cargo is having on the bottom line,” says Sullivan. “I think airline CEOs and CFOs will make money available for digitization projects because the return on investment looks promising.” But as air cargo looks to serve e-commerce markets, a number of pain points have become clear. As part of a research study with PwC, IATA identified several issues, including unstandardized services and pricing, which ultimately leads to consumer confusion. “There is a lack of products tailored for e-commerce, increasing cost and time, insuﬃcient service levels in fulfillment, and inflated costs for forwarding,” accepts Sullivan. Focus on services

However, the problems can be overcome. A focus on e-commerce products and services to build market share is essential. As passenger traﬃc remains suppressed, it may be possible to temporarily repurpose an airline fleet for cargo service, as seen with the ‘preighter’ situation for example. Longer term, as more passenger traﬃc comes on board, the capacity will need to be closely monitored to properly serve e-commerce customers. Digital integration with business partners is also a must. This includes the integration of data flows between airlines and other parties involved in shipment processes. All parties need to assess and develop multimodal forwarding platforms and provide transparency for consumers. “Airlines also need to ensure smooth customs clearance,” suggests Sullivan. “Compliance with common standards, such as trusted traders' initiatives, will help and could reduce the time

“I think airline CEOs will make money available for digitization projects as the return on investment looks promising” necessary for border controls. Where possible, digital integration with customs authorities should be considered as this will further enhance a seamless and eﬃcient physical operation.” Digitization also helps sustainability. There is not just more money in e-commerce but many more users. And all surveys point to those users wanting sustainable packaging and carbon neutral delivery where possible. The changes would allow air cargo to deal with the current capacity crisis and provide the visibility that customers require. Most importantly, the greater the level of digitization, the stronger the resilience should another shock occur. “Robust air cargo will be built on digitization and focus on risk management and quality control,” says Sullivan. “Limited capacity has led to a higher value being attached to cargo and that raises the bar for quality control.” “Any solution air cargo carriers implement must have sustainability at its core,” says Sullivan. That is another reason why digitization is key. The industry must work together and reduce waste. E-commerce insists that goods must get from A to B quickly and the sector cannot do that with paperwork. ONE Record, an IATA initiative that improves data sharing, has seen excellent take-up from airlines and there are a number of pilot schemes taking place. “Air cargo carriers should act today if they want to stay relevant in this digital shift,” Sullivan adds. “First and last-mile solutions must be integrated under one brand. Positioning your company as an industry leader in innovation will bring success and revenue as well as sustainability to your business.”

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must match that and more. We need multimodal digital interoperability.”

2021 – 02 Airlines

24/06/2021 16:20

IATA Opinion: Lara Maughan

Slot relief is best recovery plan Lara Maughan, IATA’s Worldwide Head of Airport Slots, says the industry’s slot relief package must be adopted as soon as possible.

ILLUSTRATION: SAM KERR

he northern winter 2021 season starts on October 31, 2021. At this point the prospects for the season are highly uncertain, which is creating a nightmare for airlines trying to plan their operations. For this reason, IATA is urging governments to swiftly approve a slot relief package for the season. Early decisionmaking will be a huge benefit for airlines, airports, and passengers alike. Decisions are being made now about airport resources, airline fleet, crew, schedule size, and route structures that will influence airlines’ networks into 2022. Understanding the slot rules at each airport in the airlines’ network is fundamental. For the upcoming winter season, IATA and the Worldwide Airport Slot Board (WASB) is on the front foot providing a timely approved approach to governments. The WASB recommendation for winter 2021 enables an economic and environmentally sustainable recovery of flights, as long as it is implemented in full. To support planning, it needs to be adopted quickly. Seeking slot relief for the fourth season in a row is not done lightly, but no one could have predicted the extent of the crisis. The lack of predictability and stability around each country’s plans to start their reopening has left the airline schedule and network planning teams in a continued no man’s land. Airlines need flexibility to navigate another season of volatility. Changes in restrictions, re-openings and closures are some of the ‘known unknowns’. Optimism must be levelled with the ability to react quickly and shift flying to where demand exists. Airport capacity is also a concern due to reduced passenger processing capabilities and pressure on the terminals related to health management measures, requiring temporary schedule changes.

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Normal slot rules often achieve slot use in excess of 98% but are not appropriate in the current circumstances where international travel is down 80% or more. Being able to plan without the normal slot use constraints means airlines are in the best position to react and serve demand, build schedules for passengers, and fly to where their governments will allow them. The WASB proposal is not for a full waiver, it’s a package that requires airlines to think very carefully about their network for the upcoming season. They are given the tools to sustainably plan an operation that reflects the markets they operate in, open or closed, while also granting flexibility to react. The solution is pro-competition, allowing entry and schedule development, such as at Heathrow, the world’s most congested airport. For example, an airline with a large domestic network that is operating at levels close to 2019 is not going to return all their slots. They need the slot times and the access to their airports to underpin their schedule. By contrast, airlines operating long-haul international networks will take considerably longer to restore the frequency of services they operated between cities. These services represent a connected world that is a spider’s web of feeder services from regional airports to hubs, and that enable passengers to move quickly anywhere in the world. Without relief, airlines are forced to preserve the most critically congested airports in their networks and will dump operations on their marginal routes. The WASB proposal tries to protect these carefully crafted networks, which form the backbone of global connectivity. This will enable aviation to play its crucial role in turbo-charging the world’s recovery from the pandemic. airlines.iata.org

24/06/2021 16:21

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Airlines 2021-02

Articles inside

IATA Opinion: Lara Maughan Worldwide Head of Airport Slots

Driving sustainability

European fragmentation

Opportunity knocks

IATA and industry update

Willie Walsh, Director General