Director-General and CEO of IATA Tony Tyler, right, Qatar Airways CEO Akbar Ali Baker, center, and IATA Sr. Vice President, Member and External relations Paul Steele at the morning session of the 70th IATA AGM 2014 at Ritz Carlton on Monday. L. Ramnarayan Saudi Gazette DOHA — Tony Tyler, Director-General and CEO of International Air Transport Industry, said that even with the enormous growth over the last 100 years there is plenty of potential still to be achieved and the key to unlocking that potential is a “global mindset.” He made this statement while highlighting the state of the air transport industry in his address at the 70th IATA annual general meeting at Ritz Carlton here on Monday. “We are the industry that connects people and business to make “global' possible. Securing our future potential with a global mindset begins with our immediate challenges: To be profitable, safe and secure businesses; to provide efficient, customer-focused services and to be sustainable in all we do,” he said. On the first of these challenges — our financial performance — there is much to be done. As a global industry, our financial performance does not yet match the value that we deliver, he said. “This year we expect airlines to achieve a collective global profit of $18 billion. That sounds impressive. But brutal economic reality is that on revenues of $746 billion we will earn an average net margin of just 2.4 percent. That's less than $6 per passenger,” he said. “The good news is that airline profits are improving. The average return on invested capital today is 5.4 percent — up from 1.4 percent in 2008. But we are still far from earning the 7-8 percent cost of capital that investors would expect. Airlines are, however, working towards solutions that deliver value to both customers and investors. “Our customers expect efficient global connectivity. But the regulatory structure prevents the global consolidation that has happened in other industries. By creatively working together — through alliances, joint ventures, franchising and domestic consolidation — we are seeing some significant results.” Tyler stressed, “Alongside achieving stronger financial performance we face the constant challenge of safety. It's been our top priority right from the beginning. I'm told that the aircraft that carried the first paying passenger 100 years ago was even nicknamed ‘Safety First'.” “We are making IOSA (IATA Operational Safety Audit) an even more effective standard, making the snapshot of an airline's safety management into a system for constant monitoring. And it will be a requirement for all IATA airlines from 2015,” he said. “The loss of MH370 points us to this immediate need. A large commercial airliner going missing without a trace for so long is unprecedented in modern aviation. And it must not happen again. IATA, International Civil Aviation Organization (ICAO) and experts from around the world are working together to agree on the best options to improve global tracking capabilities,” he added. The second century global mindset extends to the complex challenge of security. Airlines help fund global aviation security with taxes and fees costing $8.55 billion a year, he said, adding, there is waste and inefficiency and we must do a better job. “IATA is partnering with the Airports Council International (ACI) and others to change this. The goal of our ‘Smart Security' program is to improve effectiveness, efficiency and the passenger experience,” Tyler said. There is plenty of opportunity for the second century mindset of global collaboration — both among governments and industry — to make a positive contribution to keep flying secure. While setting off the celebrations of 100 years of commercial aviation, Tyler earlier said: “It's a fantastic birthday to celebrate — the 100th anniversary. But it's also time to take stock and think about what we need for the second 100 years.” Tyler, while lauding Qatar as a excellent venue for the AGM where the industry is recognizing the first century of scheduled commercial aviation, said: “The country is using the aviation-enabled connectivity as a cornerstone of it economic and social development.” Speaking to Airline Business earlier, Tyler said that the AGM touched down in Middle East, for the first time in more than a decade where local carriers are the powerhouse for the industry's global growth. But he warned that the region's full potential would not be realized if airspace management issues are not addressed. “Over the last decade, the share of global traffic for the Middle East airlines has gone from 4 percent to 9 percent. That's largely driven by the big three — Emirates, Qatar Airways and Etihad,” he said. The Gulf's unabated growth is being underwritten by large aircraft orders and ground infrastructure developments, but Tyler cautioned that this could go to waste if airspace management is not expanded in parallel. “If you have fragmented airspace then you have got to make sure that you operate it in an integrated way, and that isn't happening to the extent that it needs to. There are problems, already and they are only going to get worse unless something is done about it. “And that means — particularly in the Gulf — the authorities need to look for solutions. Otherwise all this fantastic airport capacity will have been a waste, because you will not be able to use it.”
