The World Air Transport Summit in Berlin last week introduced a new vision for the industry's future over the next four decades. The new vision, says Amirah Ibrahim, aims to break the monopoly which harms the industry The leaders of 230 airlines all over the world gathered in Berlin last week to discuss the challenges to air transport industry in the near and far future. The event took place as the International Air Transport Association (IATA) held its 66th Annual General Meeting (AGM). The IATA expects airlines to post a global profit of $2.5 billion in 2010. This is a major improvement compared with IATA's previous forecast released in March of a $2.8 billion loss. The three-day event included meetings, forums, workshops and celebrities. A visit to Berlin's old Tempelhof airport was organised to airline delegates and the media. The summit was hosted by Lufthansa. Germany has hosted two previous AGMs ñ Hamburg in 1985 and Munich in 1968. The agenda was topped by a number of items including the industry's strategy on climate change in the aftermath of the Copenhagen talks and in preparation for COP-16 in Mexico. The summit discussed structuring the industry for profitability with consolidation and commercial freedoms. It tried to find an effective and harmonised approach to security as well as a better way for governments and industry to work together with a common vision. A number of politicians and prominent figures were engaged in the forums including Nader Dahabi, former Prime Minister of Jordan, aviation ministers of India and Chile, and a number of CEOs of the world's biggest airlines. BBC introducers ran live discussions with the main speakers along with attendees and TV viewers through e-messages and phone calls. Director General Giovanni Bisignani addressed the AGM with a state of the industry report which concluded that the challenges to air transport centre on five problematic issues: capacity, labour, external costs, taxation and oil. "We face excess capacity with 1,340 aircraft to be delivered this year of which only 500 are for replacement. As for labour, we cannot pay salary increases with our $47 billion losses. Pilots and crew must come down to earth and strikes at this time are shortsighted nonsense," Bisignani explained. IATA launched a wall of shame to condemn non- cooperating partners. "This year's Wall of Shame starts with the 19 European ANSPs (air navigation service providers) who increased your costs by $413 million. We have a special place for GDSs who are leeches charging $4 per transaction and sell you your data at a seven digit price as pure profit for them. Basta! We will break their monopoly on your data with a cost-effective solution." Bisignani also criticised governments which had gone $2.7 trillion into debt to bail out the bankers. "Airlines and passengers should not get the bill to clean up the mess." The last risk was oil price volatility. "From $40 per barrel in 2009, crude almost hit $90 per barrel earlier this year. Governments must protect the economy from irresponsible profiteering," Bisignani commented. On the final day, Bisignani released a new vision for aviation in 2050. "In just over a decade, I can see $100 billion in industry profits on revenues of $1 trillion. As we move towards 2050, this 10 per cent margin will become even more robust. This is not just a crazy dream. Before the recession, at least a dozen IATA members already had 10 per cent margins. We must make this a much broader reality," said Bisignani. Vision 2050 is a groundbreaking initiative to lay the foundations for a sustainable and profitable industry by looking ahead strategically with a four-decade time frame. It rests on four cornerstones of change: profitability, infrastructure, powering the industry and the customer. "Airlines are deprived of the commercial freedom to operate their businesses like a normal business. Our poor profitability makes every shock a fight for survival," said Bisignani as he called on governments to ensure a level playing field. "Infrastructure must be reshaped around the needs of airlines. Airports should compete for airline business based on efficiency. Air traffic management must also change. I can see ten global ANSPs replacing the current 180 at half the cost," said Bisignani. "But we need real leadership to replace the uncoordinated bureaucratic mess that Europe is today," said Bisignani. "Today's jet fuel cannot sustain air transport in the long- term. Our most promising opportunity is bio fuels, which have the potential to reduce our carbon footprint by up to 80 per cent," said Bisignani. "Too often governments are only committed to environment when it means grabbing cash. Governments should be investing in biofuels and green technologies." Bisignani noted that air transport industry must engage its 2.4 billion passengers to change government's "over-regulate and under-appreciate" attitude. "To turn our customers into industry activists, we must improve the value proposition of price, speed, and quality. Our challenge is to gain the support of customers in demanding change from the governments," said Bisignani. Later this year, Bisignani will call leaders from airlines, industry partners, stakeholders, governments, and customers to meet in Singapore. Vision 2050 will be an open, robust, and comprehensive process with results to be reported at the 2011 AGM, scheduled to take place in Egypt. IATA Middle East manager, Majdi Sabri insisted that the restrictions on international capital prevent consolidation across borders. "For the past sixty years, air transport operation had been restricted by bilateral agreements which limit the seat capacity offered and ban foreign airlines from seizing national ones. This should come to end," stated Sabri as he spoke to Al-Ahram Weekly. "Those restrictions resulted in the business having 1061 airlines, many of which are small and weak airlines instead of having less but strong carriers. Airlines need the freedom to build efficiencies across borders, better serve their customers, and achieve sustainable profits to fund growth and innovation," he explained. Sabri indicated the agreement was signed by the governments of six countries, one of which is the UAE, in which all kinds of restrictions had been removed. "The agreement is a model that IATA believes all its members should follow. Four other Arab countries followed, but we still have a lot of work to bring in more governments to get rid of their fears and allow airlines more freedom," Sabri concluded.
