Giovanni Bisignani Director General & CEO

International Air Transport Association Annual Report 2009 65th Annual General Meeting , June 2009

Promoting sustainable forest management. This paper is certified by the Forest Stewardship Council (FSC) and is cellulose based and recyclable. Note: Unless specified otherwise, all dollar ($) figures in this annual report refer to US dollars (US$). IATA Board of Governors 06 Environment 32 Director General’s Message 08 Cost Efficiency 38 The State of the Industry 10 Industry and Financial Services 42 Simplifying the Business 16 Aviation Solutions 48 Safety 22 IATA Membership 50 Security and Facilitation 26 IATA Offices 52 Regulatory and Public Policy 30

We are a resilient industry. We will survive the crisis one way or another. But we must ask some serious questions. In what shape will the industry emerge? Will the shakeout be orderly? And the most important question of all: What can we do to make the industry healthier and stronger?

Giovanni Bisignani 6

IATA Board of Governors as of 1 May 2009

Khalid Abdullah Almolhem Andrés Conesa Naresh Goyal SAUDI ARABIAN AEROMEXICO JET AIRWAYS (INDIA)

Gerard Arpey Fernando Conte Peter Hartman KLM

Tawfik Assy Enrique Cueto Pedro Heilbron EGYPTAIR LAN AIRLINES

David Bronczek Christoph Franz Idris Jala FEDEX EXPRESS SWISS AIRLINES

Chew Choon Seng AIRLINES

Yang Ho Cho

Samer A. Majali Chairman IATA Board of Governors 7

Temel Kotil Fernando Pinto TAP PORTUGAL

Liu Shaoyong Jean-Cyril Spinetta EASTERN AIRLINES

Samer A. Majali Glenn F. Tilton

Wolfgang Mayrhuber Tony Tyler

Titus Naikuni Willie Walsh AIRWAYS

Haruka Nishimatsu AIRLINES 8

Director General’s Message Some of the most dramatic swings in our industry’s history were witnessed in 2008.

Oil started the year at $97 and ended at years of 4,000 aircraft ordered in more travel agents and banks failed, IATA did about $40 per barrel (Brent). But it hit optimistic times. The results of the last not miss one payment or one penny. $147 per barrel in July, threatening to months show that airlines that acted fast As challenges mount with the current add over $100 billion to the industry fuel and most aggressively are reaping the recession, we will continue to be vigilant bill. In the end, oil averaged at $99 per benefits. in ensuring that airlines’ cash flow is barrel, which brought our total fuel bill to never compromised. IATA is working hand-in-hand with its US$168 billion. members to help airlines with at least IATA is helping airlines to reduce costs. By the fourth quarter, the industry story three top priorities in surviving a crisis: Last year we achieved savings of $3.5 was focused on the intensification of improving safety, conserving cash and billion in fuel fees, taxation, and airport the global recession and the resulting cutting costs. and air navigation charges. Our fuel collapse in demand. The year ended with campaign helped our members reduce On 1 April 2009 we achieved an large fourth quarter losses that put the fuel consumption costs by $5 billion. important milestone. In line with targets industry at least $10 billion in the red. agreed at our 2006 AGM, all 224 IATA With 100% e-ticketing in June 2008, we Airlines face a tough 2009. airlines were listed on the IOSA Registry. also realized $3 billion in cost savings. We are a quality association delivering An additional $1 billion was saved There is some relief on the fuel bill. But impressive results on safety. In 2008, with the deployment of Common Use the good news stops there. Demand IATA members had one accident for Self-Service (CUSS) kiosks reaching is disappearing and revenues are every 1.9 million flights. This performance 135 airports. IATA is targeting a further plummeting. The Influenza A(H1N1) was even better than the industry’s one $10 billion in savings with bar coded scare is a reminder that, even in a crisis, accident for every 1.2 million flights. Air boarding passes (BCBP), Fast Travel, this industry remains vulnerable to is the safest form of travel. In line with the the Baggage management Improvement shocks beyond its control. success of IOSA, the IATA Safety Audit Program (BIP) and IATA e-freight. First quarter traffic was down for Ground Operations (ISAGO) is now Even in these turbulent times, we must 9.1%, with premium passenger numbers well established as the global standard look ahead. Two important issues are falling away at almost double that rate. for this area of operations. essential to our long-term industry And cargo was down 22.8%. Many IATA is keeping the industry’s cash agenda: environment and liberalization. airlines, particularly in the US, responded safe. Our financial systems processed with aggressive capacity adjustments, IATA’s four-pillar strategy to address a record $350 billion during 2008 but most were not able to keep pace climate change with technology, effective —equivalent to two-thirds of total with the precipitous fall in demand. operations, efficient infrastructure, and industry revenues. Even as airlines, Others were caught with fuel hedges positive economic measures is delivering higher than spot prices. We may have seen the worst of the recession, signaled by stabilization in freight volumes at exceptionally low levels. But it is unclear how long the industry will bounce along the bottom before a significant recovery. Air transport will be a smaller industry for at least the next few years. The challenge is to reshape and resize for profitability. To start, airlines will need to carefully match capacity with demand. The task will be made more difficult by the planned delivery over the next three 9

results. This year we expect an 8% drop ever. IATA’s Agenda for Freedom Summit we are a resilient industry, capable of in aviation’s emissions. Of that, 6% is will convene again in the last half of the great change. Airlines will rise again to from reduced capacity and 2% is a year. Our aim is to formalize progress the many challenges that this industry direct result of the strategy. Our vision with this group of 15 of the most faces. And we will emerge from this crisis to achieve carbon-neutral growth on the liberal government players in aviation safer, greener and profitable. way to carbon-free technology with a by developing policy tools to move the 50-year time horizon sets us ahead of process forward. any other industry. Airlines are catalysts of economic activity. The challenge for this year is to achieve With the freedom to do business like any an agreement on economic measures. other industry, aviation can play a vital Giovanni Bisignani IATA continues to work with the role in helping governments stimulate the Director General & CEO International Civil Aviation Organization global economy. (ICAO). Our goal is to facilitate a global Securing our future in these difficult solution for the aviation sector at the economic times will be hard work. But United Nations Framework Convention on Climate Change (UNFCCC) meeting in Copenhagen in December. We also need governments to move from thinking about liberalization to action. The economic crisis is making access to global capital more important than 10

The State of the Industry

Oil price bubble leads to crippling rise in costs

Two thousand eight was an exceptionally Crude oil prices started 2008 at a Also notable was that jet fuel prices did challenging year. Airlines were hit first by historic high of $97 a barrel (Brent), the not fall as far. This limited the relief for an unprecedented spike in oil prices and result in part of rising exploration and airlines and their as refineries then by a precipitous drop in revenues extraction costs. The real damage to took the opportunity to boost their caused by a collapse in world trade and airlines’ expenses, however, was done margins. By year-end, however, jet fuel the start of what is looking to be the by the speculation in oil that emerged in prices had fallen back to $60 a barrel, deepest recession since the 1930s. February. That activity drove up oil prices but the refinery margin or “crack spread” a further 50%, to $147 a barrel, by early of 50% over crude oil prices was much Airlines have reacted with unusual speed July, and some analysts at Goldman higher than the normal 25%. to resize capacity in the face of slumping Sachs and elsewhere were predicting demand. This and the subsequent fall The other factor that limited the benefits additional increases, to above $200 a in oil prices back to 2004–5 levels from lower crude oil prices in 2008 was barrel. The hike in oil prices naturally may prevent what is expected to be the the impact of fuel hedging contracts caused jet fuel prices to rise, almost largest-ever decline in revenues, in taken out earlier in the year, when the 60%, from $114 a barrel at the start of 2008, from leading to a similarly record- fear had been of even higher oil prices the year to a peak of more than $180 a breaking net loss in 2009. Nonetheless, than at the July peak. These contracts barrel. 2009 will be as, or more, challenging meant many airlines paid much higher than 2008, with a number of threats Fuel costs soared from an average of prices for their fuel than spot prices on the horizon and the ability of the 28% of airline’s operating costs in 2007 during the 2008 fourth quarter. industry to resize and reshape itself to well over 40% by mid-2008, and to in The application of newly adopted constrained by restrictive regulations excess of 50% for some airlines. The limit accounting rules led subsequently to preventing cross-border mergers and at which this unprecedented surge in reports of large, noncash losses as consolidations. costs could be passed on to passengers unrealized fuel hedges were marked to and shippers was soon reached. That, market. In fact, $5 billion of mark-to- and because profit margins in 2007 had market fuel hedge losses were reported only reached 3.9%, caused the industry by Asian airlines alone in the fourth to sustain a substantial net loss in 2008. quarter of 2008. The oil bubble burst in late July Such heavy noncash losses exaggerated 2008 along with speculation in other the effect on cash flow of fuel hedging commodities. By the end of the year, losses. Nevertheless, the impact on cash oil had fallen to $40 a barrel, less than was significant enough to render airlines’ half its price at the start of the year and financial performances in 2008 much over 70% below its July peak. Notably, worse than expected. though, this was still double the average 1990–2002 price level of $20 a barrel.

Jet fuel and crude oil price Source: Platts, RBS 11

Recession causes collapse of key aviation markets

The other factor that led to larger than growth worldwide. Revenue passenger supply many business travelers. In early expected losses at the end of 2008 kilometers (RPKs) in international markets 2009, the rate of decline in premium was the precipitous fall in traffic in key flown by IATA member airlines rose traffic exceeded 20%. aviation markets. This resulted in a more than 5% on average during the Evidence indicates that many business significant decline in revenues. first half of 2008, not far below the 6% travelers shifted to the back of the growth trend of the previous decade. Airfreight volumes, which are always a aircraft if they didn’t cut travel altogether. In September, though, passenger travel timely indicator of international trade The growth rate for the number of turned negative. And by December, and economic activity, started to decline passengers on economy tickets slowed international RPKs were down 4.6% from during the second quarter of 2008. more significantly from that for premium a year earlier. Measured in freight tonne kilometers travel after September. Heading into (FTKs), airfreight began the year at a Business travel is highly sensitive December, economy travel had fallen fairly robust pace, growing around 5% in to problems in the economy and fell more than 5% from year-earlier levels, the first quarter. By December, however, fast. Ticket numbers for business compared with the over 13% for airfreight volumes had collapsed more and other premium travel had already premium travel. than 22% below the level a year earlier. turned negative by the middle of 2008. Travel on economy tickets will have been The wider impact of the September The scale of this decline is unlike supported to a moderate extent by cuts bankruptcy of New York–based financial anything experienced before by the in fares and fuel surcharges at the end house Lehman Brothers in particular industry and reflects the unprecedented of 2008 and by the shift of business triggered a sharp fall in air travel by global drop-off in manufacturing travelers to the back of the aircraft. the financial sector and especially in production and goods trading at the Overall, however, passenger travel is the number of passengers traveling on end of 2008. The 15%–30% declines dominated by the impact of the recession premium tickets. By December, premium in economic activity in major economies on incomes and confidence. Lowering travel was down more than 13% from worldwide dwarf those of all recessions the cost of travel will not be sufficient to a year earlier. The crisis accounting for in the past 40 years and make this likely offset the effect on travel numbers of the weakness in financial-sector travel had the worst downturn since the 1930s. recession. spread to the manufacturing sector and As with airfreight, passenger markets, particularly its export industries, which too, began the year growing at a robust rate amid still solid economic

Manufacturing output International revenue passenger and Passenger traffic growth indices Source: Haver Analytics freight tonnes - kilometers Source: IATA by ticket type Source: IATA 12

Airlines cut capacity Load factors fall at varying rates in most markets

The surge in fuel prices in the first half of markets, though, continued to expand. The lag between capacity cuts and 2008 meant fuel represented more than This was especially so within and slumping demand reduced load factors. 50% of many airlines’ operating costs. the Middle East, where the largest Load factors at the beginning of 2008 In the United States, many airlines had number of new aircraft were delivered. were high and matched those for the already fully depreciated their older fleets Consequently, the industry saw the fall previous two years. Those levels were relative to the fleets of airlines in other in travel demand exceed its reductions in sustained until midyear, when the regions. US airlines, therefore, were able capacity at the end of 2008. proportion of seats filled started falling. to cut capacity more quickly than airlines By December, average load factors for Deliveries to airlines of jets and elsewhere, particularly in their domestic international markets had fallen to 73.8%, turboprops rose to a record peak of market where reductions were in excess from 76% the previous year. In the early 1,177 new aircraft in 2008. This was of 10%. months of 2009, load factors fell even despite the strike at that reduced more steeply. Airlines in other regions could not deliveries from that maker. Unfortunately, react as quickly because their aircraft the delivery cycle was out of line with the Airlines faced emptier aircraft as a result still carried high fixed capital costs cycle in travel demand. Peak deliveries of the recession. A surge in the number and because of restrictions due to occurred when demand was declining. of older aircraft taken out of service slot regulations. As a result, capacity during September to November 2008 reductions were mixed across markets was exceeded at the end of the year by during the latter part of 2008. the number of new aircraft delivered. So fleets were expanding, forcing airlines The three-largest long-haul international to reduce capacity by cutting flight markets—across the Atlantic, the frequencies and some uneconomic Pacific, and Europe to Asia—saw routes. significant capacity reductions, though not as extensive as within the US. Some

Scheduled data for growth in ASKs Passenger growth and new aircraft Load factors in by major route area Source: SRS Analyser deliveries Sources: Ascend, ICAO, IATA international markets Source: IATA 13

Yields come under increasing Airlines in most regions see downward pressure profits deteriorate

Fuel hedging contracts kept airline The larger fall in fares for seats at the In hindsight, 2007 appears to have been costs high during the fourth quarter of front of aircraft is a sign of how intense a respite during the period of continued 2008. But the fall in spot oil prices will the competition in fares has become downward pressure on profitability significantly reduce costs during 2009. amid the economic crisis. experienced by the industry since 2001. This should allow a reduction in the cost In 2007, the over $5 billion in net profits Airline yields, though, fell even further of travel and air cargo. Airfares, however, for the airline industry in North America than fares during the latter part of 2008. had already begun to decline by October and Europe promised a durable recovery. Higher-yielding premium passenger 2008 amid slumping demand, load The industry’s worldwide operating numbers, for example, dropped at more factors, and aircraft utilization. margin, however, was just 3.9%, and this than twice the rate of the number of was the peak of the cycle. What is more, The first half of 2008 was characterized passengers on economy tickets. this was below the 5.6% peak in the by double-digit increases in premium 1990s profit cycle and lasted only one fares as airlines sought to recover part of to two years compared with five years of the surge in fuel costs from this market more than 4% profitability in the 1990s. segment, which is less price sensitive than other fare segments. There were Much of the loss suffered by the industry also increases in economy fares, but at during the first half of 2008 was due to about half the rate for premium fares. substantial losses by North American Fuel surcharges are not included in these airlines. Airlines in that region were less fare increases. protected from surging fuel prices than airlines in other regions. Around half The year-end deepening of the recession of the industry’s 2008 losses overall and slump in business travel had an occurred in the fourth quarter and were enormous effect on fares as 2008 drew more evenly spread across regions—the to a close. The largest fare declines result of fuel hedging losses and the occurred with premium tickets, which suddenly more-widespread recession. were down 8% from a year earlier by We estimate that the commercial airline December 2008. Economy fares on industry went from a net profit of $12.9 international markets were down by billion in 2007 to a net loss of $10.4 substantially less, at around 3%. billion in 2008, excluding noncash items related to restructuring and mark-to- market fuel hedging losses.

International fare growth Net post-tax profits by ticket type Source: IATA Sources: ICAO, IATA 14

Severe headwinds persist from the global recession in the year ahead

Cash balances, fortunately, are Recession, protectionist threats, fall in demand for imported goods and reasonably high at many airlines, and this restructuring restrictions, new the contraction of global supply chains. offers some protection against difficulties government taxes, and rising Airlines facilitate the international flow ahead. But for the most part balance infrastructure charges persist and leave of trade, capital, people, and ideas so sheets are weaker in this recession than the airline industry vulnerable in 2009. critical to global economic growth. So, in 2000, ahead of the 2001 downturn. for the vitality of the global economy Worldwide economic activity in 2009 And the damaged banking system and of the air transport business, it is forecast to fall 2% or more, and the and financial markets mean that it is will be essential in 2009 to resist any Organization for Economic Cooperation extremely difficult to raise or to pay the measures by governments that involve and Development (OECD) expects to cost for new finance. The US central protectionism. see world trade contract 13%. Some bank is lending money at an interest rate signs suggest that the worst for world Airlines, particularly in the United States, approaching zero, but even the strongest trade is over. But much of the private have reacted speedily to shrink capacity US airlines paid more than 10% to raise sector continues to reduce the debt in an attempt to resize the industry in the capital in 2008. The industry overall is in incurred during the bubble years for face of dropping demand. Worldwide, a fragile financial position. credit, and that will only take incomes though, the industry remains fragmented away from spending and travel. This and nationally based, with only a few implies any recovery in 2010 will be exceptions in and the weak, with most analysts forecasting no European Union. significant economic recovery until 2011. Effective restructuring in other Meanwhile, the emerging threat of international industries includes cross- protectionism, if left unchecked, could border consolidation. Unless, however, cause an even greater collapse in world there is some easing in restrictive trade and investment. No markets have ownership and control regulations, yet been closed, but many bailout and stimulus packages worldwide contain measures that could exacerbate the

GDP growth US household debt Manufacturers’ inventory Source: EIU to disposable income Source: Haver to sales for airfreight Source: Haver, IATA 15

this commercial option will continue to and freight traffic. And the huge budget Industry-wide losses for 2009 are be unavailable to the airline industry. deficits being generated by governments expected to be a little smaller than the Alliances are a second-best route to as they bail out financial institutions and $10.4 billion lost in 2008 as a result of generating network efficiencies: they other industries leave airlines and their capacity cuts and the fall in fuel prices. generate few of the resource savings passengers vulnerable to new taxes once But even in the United States, the risks of mergers. But now even alliances are fiscal restraint returns. are legion. The global economy continues imperiled as some regulators threaten on the downside, and the potential for The US airline industry may have resized the antitrust immunities essential to their protectionism and the introduction of itself to break even in 2009, despite formation. Altogether, the industry’s new taxes could further undermine the the extent of the recession. Airlines efforts to reshape and resize are financial viability of the air transport elsewhere, however, have been unable constrained. industry. to cut capacity to the same extent. The declines in oil and jet fuel prices Lower fuel prices will somewhat offset from their 2008 peaks are important the largest fall in revenues ever for the factors preventing losses in excess of industry, but losses are likely to grow in those in 2001. Rising costs elsewhere, 2009 especially for airlines outside the however, constitute a significant United States. threat. Many infrastructure providers in monopoly positions are raising charges in the face of falling passenger numbers

Brent oil price Source: RBS 16

Simplifying the Business Simplifying the Business (StB) was launched in 2004 as the industry struggled to recover from September 11, from war and terrorism, and from the severe acute respiratory syndrome (SARS) crisis. Global ET penetration Today, the nature and the severity of the In 2008, a significant portion of those crisis may have changed, but the value of savings—$3 billion—was realized with delivering cost savings and convenience 100% electronic ticketing (ET), achieved through global standards and the better on 1 June after four years of concerted use of technology has not. effort. StB is more relevant than ever. It is a Another StB project, Common-Use response to consumer calls for greater Self-Service (CUSS) kiosks for check- convenience and to the industry’s need in, was also completed during 2008 Source: IATA to lower costs. StB can save the industry and generated $1 billion in savings. By up to $14 billion annually. December 2008, 135 airports around

In June 2008 we achieved 100% e-ticketing saving $3 billion annually. There are billions more in cost savings still to be achieved. Giovanni Bisignani 17

Would you like airlines to provide more self-service options? the world offered CUSS facilities. Kiosk That same network will be key to the Source: IATA check-in has a 40% market share in the success of the next phase of StB. United States and Europe and a 30% The StB program has evolved from share worldwide. individual technology projects to end-to- A global network of 4,000 industry end solutions. Four initiatives make up professionals, including StB champions the program: bar-coded boarding passes in airlines and airports, suppliers, industry (BCBP), the Baggage management experts, and IATA staff, was instrumental Improvement Program (BIP), Fast Travel, in completing the ET and CUSS projects. and IATA e-freight.

Simplifying the Business - savings potential Source: IATA Project Savings potential Target date

100% ET $3 billion Delivered 1 June 2008

CUSS $1 billion Delivered 31 December 2008

BCBP $1.5 billion Year-end 2010

IATA e-freight $4.9 billion Year-end 2010

Fast Travel $1.6 billion On-going

BIP $1.9 billion 50% mishandling reduction by 2012 18

Baggage management Bar-coded boarding passes Improvement Program

Bar-coded boarding passes (BCBP) Mishandled baggage costs the industry eliminate costly magnetic-stripe boarding in excess of $3 billion every year. Arriving passes and offer more choice for with baggage is also the second most passengers. BCBP can be accessed important factor in having a pleasant trip through the Web, a kiosk, a check-in according to passengers polled in IATA’s desk, or even a mobile phone and can 2009 Corporate Air Travel Survey. generate up to $1.5 billion in savings. Radio frequency identification (RFID) More than 200 airlines were issuing can resolve some 20% of baggage BCBPs at the end of 2008. By 2010, mishandlings, but the Baggage IATA members will be 100% BCBP, and management Improvement Program (BIP) magnetic-stripe boarding passes will be provides a more-comprehensive set of history. analytical tools and solutions to address mishandling. IATA’s RFID work is now To help airlines achieve BCBP’s potential part of the broader BIP. savings of $1.5 billion, IATA launched its BCBP Matchmaker in 2008. This The BIP solutions toolkit was piloted in dedicated, free-of-charge Web portal 2008 at nine airlines and nine airports allows airlines and airports to plan BCBP of varying size and complexity. It was implementation together. Over 200 found that BIP solutions identified during airlines and 400 airports are using this the trials could address over 90% of tool. the mishandlings at each participating airport. Airlines that implemented BIP IATA also published a global standard saw immediate results. One carrier cut its for mobile BCBP in 2008. This was mishandlings in half at its hub airport in a response to consumer demand and less than three months. Another was able paves the way to paperless travel. to reduce its mishandlings 30% at a US Passengers receive IATA-standard 2-D airport in the same amount of time. bar codes on their mobile phones that they can use to drop off their bags, pass During 2008, the number of mishandled through security, and board their flights bags fell more than 20% from 42.4 —without printing any paper. million bags in 2007, to 32.8 million bags. That is a welcome improvement, The Joint Passenger Services but the industry’s baggage problems Conference (JPSC) amended the global persist. The BIP provides long-term mobile BCBP standard in October 2008, solutions that can keep the mishandling adding a digital signature to enhance rate low even when passenger volumes security in response to US Transport pick up again. Security Administration requirements. Between 2009 and 2012, the BIP will As a result, the mobile BCBP standard is provide the industry with solutions that increasingly used in the United States. will cut mishandlings and their associated costs in half. The program will focus on the 200 airports globally that account for 85% of passengers’ baggage mishandling claims. The top 80 of those airports will receive dedicated diagnostic visits, while the remaining 120 airports will be part of a self-help program beginning in 2010. 19 20

IATA e-freight

Each international airfreight shipment likely to be misplaced, so shipments By the end of 2009, three more can require more than 30 different paper are not delayed because of missing documents will have been replaced documents, increasing airfreight costs documentation. with e-messaging standards and five and lengthening transport times. IATA more e-freight locations will have been In 2008, the number of e-freight e-freight is an industry-wide initiative added. All 20 documents supported by locations tripled from six to 18 and 13 involving airlines, freight forwarders, international standards will be replaced documents were replaced with electronic ground handlers, shippers, customs with e-messages by the end of 2010. messaging standards. The IATA e-freight brokers, and customs authorities. And locations that account for 81% of Handbook was also published online, It replaces paper documents with international airfreight are expected to be offering a comprehensive, step-by-step electronic messages, increases the e-freight capable by that same time. guide to implementing e-freight. Updates speed and the reliability of airfreight, and to this handbook are planned to give offers savings of up to $4.9 billion. members of the air cargo supply chain IATA e-freight can reduce shipment the guidance they need to take the paper times by an average of 24 hours. out of air cargo. Electronic messaging also ensures greater accuracy. Electronic documents auto population, which allows one-time electronic data entry at a point of origin, reduces delays to shipments due to inaccurate or inconsistent data entry. Electronic documents also are less

As we battle this crisis, we must look for opportunities that will build our future with a more efficient industry. What do customers want? A good price and a great product. And in a crisis…customers will only get more demanding. Giovanni Bisignani 21

Fast Travel

The Fast Travel Program is a new The program was piloted 18 times in >>Document scanning allows passengers element of StB. It gives passengers more 2008 and successfully demonstrated its to scan their travel documents at control over their journeys by promoting added value to the industry. kiosks for transmission to government self-service options in four areas: bags agencies, avoiding the need to All four of its project areas, therefore, are ready to go (bag registration), document complete the required ID checks at being implemented, bringing the future of scanning, self-boarding, and bag a check-in desk. Target for 2009: 75 travel to passengers today: recovery (lost bag registration). airports >>Bags-ready-to-go enables passengers Annual potential savings are estimated at >>Self-boarding provides automated to deliver their tagged bags to a $1.6 billion. boarding gates for passengers, baggage acceptance point, or bag such as in a train or subway station, drop, speeding up the check-in reducing boarding times. Target for process for passengers traveling with 2009: 10 airlines baggage. Target for 2009: 10 airlines >>Bag recovery allows passengers to report a missing bag at a kiosk instead of waiting in line at a baggage service counter. Target for 2009: 10 airlines IATA also will monitor two additional areas in 2009: check-in and flight rebooking. 22

Safety Safety is the industry’s number one priority. Success in safety is driven by global standards, a coordinated approach, industry-wide programs, and firm targets. Preeminent among our safety targets is the achievement of the IATA Operational Safety Audit (IOSA) for all IATA member airlines.

Air continues to be the safest way to travel. The fatality rate for air travel in 2008 was at its lowest level since 2004, at 0.13 per million passengers. This was down significantly from the 0.23 fatalities per million passengers recorded in 2007. The 2008 global accident rate— measured in hull losses per million flights of Western-built jet aircraft—was 0.81. This is one accident for every 1.2 million flights, up slightly from the 2007 accident rate of 0.75, or one accident for every 1.3 million flights. Three issues emerged during 2008. Runway excursions accounted for 25% of all accidents, ground damage accounted for 17%, and deficient safety management at the airline level was noted as a contributing factor in 30%. Regional accident rates varied dramatically. Accident rates rose compared with 2007 in the Commonwealth of Independent States (CIS), in Latin America and the Caribbean, in the Middle East and North , in North America, and in Europe. In Africa, Asia-Pacific, and North Asia, year-on-year accident rates decreased. IATA member airlines significantly of a broad range of safety programs. outperformed the industry in safety. The 2008 regional safety rates Source: IATA accident rate for IATA members declined The IATA Six-Point Safety Program (Western-built jet hull losses/million sectors) from 0.68 in 2007 to 0.52 in 2008. reflects the strategic direction being That is one accident for every 1.9 million taken to ensure the continuous flights. improvement of the industry’s safety record. Despite these results, safety is a constant challenge. The 502 fatalities in Established in close cooperation with 2008—down from 692 in 2007—remind member airlines, the program focuses on us of the need for constant vigilance. auditing, safety data management and Our target is zero accidents and zero analysis, safety management systems, fatalities. In pursuit of that goal, IATA operations, infrastructure safety, and continues to press for the implementation maintenance. 23

IATA Operational Safety Audit IATA reached a landmark on 1 April 2009 travelers everywhere of aviation’s noted on the IOSA registry. Failure to when all 224 IATA members had joined commitment to safety. meet any of the deadlines resulted in the IOSA registry. As a result, IATA termination of IATA membership, with Introduced in 2003, IOSA is the first membership is synonymous with best effect 90 days after the milestone was global industry standard for airline practice in airline safety. to have been reached. operational safety auditing. It assesses This provides an important mark of airline operational management and To support the transition to IOSA, in quality for all IATA airlines and reassures control systems. It improves safety 2005 IATA invested $3 million in its and reduces the number of audits Partnership for Safety Program (PfS). performed. And it is ISO 9001:2000 From 2005 to 2007, 180 airlines registered. Since its launch and up until participated in PfS awareness seminars, the end of April 2009, 718 audits have including 100 IATA members, and been completed by eight independent 73 airlines underwent gap analyses, audit organizations accredited by IATA and 1,212 audits have been avoided,

generating industry savings of $72.7 including 59 IATA members. Fully 25 IOSA status Source: IATA million. member airlines in Africa participated in as of 30 April 2009 post-gap analysis PfS training with the At the 2006 IATA Annual General assistance of the International Airline Meeting (AGM), IOSA was made a Training Fund. condition of IATA membership, with three milestones needed for completion. By 31 In addition to making IOSA a December 2006, member airlines had membership condition, IATA promotes to complete contractual arrangements the use of IOSA in national safety for an IOSA audit. By 31 December oversight programs. By the end of 2007, all audits needed to be completed. March 2009, , Chile, Costa Rica, And by 31 December 2008, all audit Egypt, Madagascar, Mexico, Panama, findings had to be closed and the carrier , and Syria had mandated IOSA. 24

IATA Safety Audit for Ground Operations Safety Management System

Following on the success of IOSA, A safety management system (SMS) airports, and air traffic management IATA has applied the same approach to is a systematic approach to managing providers. The toolkit will be available in ground handling safety. Ground damage safety. It includes organizational the third quarter of 2009. was the second most predominant type structures, accountabilities, policies, and of accident in 2008, accounting for 17% procedures. An SMS is a requirement of the year’s accidents. Half of these of IOSA. In almost a third (30%) of involved IATA member airlines. accidents in 2008, deficient safety Safety data management and management on the part of an airline Each year, ground damage costs the analysis was noted as a contributing factor. This industry nearly $4 billion. includes deficiencies in the airline’s Safety data helps the industry better The IATA Safety Audit for Ground safety policies and objectives, risk understand safety issues and trends. Operations (ISAGO) is the industry’s first management, safety assurance, and And that ultimately assists the industry global standard for the auditing of ground safety promotion. in preventing accidents. IATA’s data handling companies. ISAGO is intended sources include information from audits, Working with the International Civil to bring the same improvement in safety accidents, incidents, and flight data Aviation Organization (ICAO), IATA has and efficiency for ground handlers as analysis (FDA). been assisting airlines and other service IOSA aims to achieve for airlines. providers—including air navigation IATA produces its Safety Report based The primary aim of the program is to service providers (ANSPs), civil aviation on data collected at the beginning drastically reduce aircraft damage and authorities (CAAs), maintenance of each year. The report presents a personal injuries. organizations, and aerodrome detailed summary of statistics, trends, operators—to prepare for SMS and and contributing factors involved in the Also important is that ISAGO should ICAO requirements, which came into previous year’s accidents. Based on drive down the number of redundant effect on 1 January 2009. During 2008, these findings, prevention strategies are audits. IATA held 10 SMS workshops around the developed to enhance operational safety. ISAGO was launched in February 2008 globe. They were attended by 18 airlines IATA’s Safety Trend Evaluation, to audit ground service providers (GSPs) and by CAAs, aerodrome operators, Analysis, and Data Exchange System under a common and harmonized set ANSPs, and maintenance organizations. (STEADES) is built on a database of international standards. It has since In 2009, IATA will deliver new guidance of incident reports from participating gained the support of civil aviation material on the SMS and will continue to airlines. In 2008, STEADES doubled authorities in the , assist airlines with SMS implementation its membership. Over 80 airlines now France, the , , on individual and regional bases. benchmark their operations against the Jordan, , and the United STEADES database. This helps them States and at airports in , San determine how effectively they are Salvador, Calgary, Seattle, Guayaquil, managing operational risks by comparing and Lima. Infrastructure safety themselves with other, similar operations. The first ISAGO audits were conducted In 2008, 23% of all accidents were In 2008, STEADES produced information in May 2008. Audits are performed infrastructure related. The majority were regarding call sign confusion, on board every two years. Headquarter audits runway excursions. Although a limited medical events, long and off-centerline are conducted by independent audit number of runway incursions were also landings, dangerous goods, and bird organizations accredited by IATA, and reported. strikes. station audits are conducted by qualified In response, IATA is developing The In 2009, IATA will launch the Global auditors from member airlines that work Runway Excursion Risk Reduction Safety Information Center (GSIC). The in a pool managed by IATA. Toolkit in collaboration with the Flight GSIC will provide airlines with access In 2008, ISAGO’s audit pool comprised Safety Foundation. The toolkit contains to industry benchmarks based on all of 24 member airlines and 107 auditors. It detailed analysis, training material, best IATA’s safety information sources from conducted nine free information seminars practices, and other useful information to a single Web page. These information in all regions of the world; trained 200 enable airlines and ANSPs to reduce the sources include the Safety Report, auditors from 60 different airlines; and risks associated with runway incursions STEADES, IOSA, ISAGO, and the FDA. performed 42 audits, including 18 and excursions. It provides a detailed Initially, the GSIC will be limited to IATA- headquarters audits and 24 station assessment of risks during take-offs and managed data sources. Future versions, audits. IATA will conduct 80 ISAGO landings plus procedures, policies, and however, will integrate information from audits in 2009. recommendations for airline operators, industry-wide safety programs. 25

Maintenance Operations

Maintenance events, such as errors Operations cover all areas affecting governments to enhance cabin by maintenance crews, played a safety, including flight, cabin, ground, and safety. Collaboration with the Civil contributing role in approximately 15% dispatch. In 2008, 31% of the accidents Aviation Authority of China (CAAC) of the accidents that occurred in 2008. on passenger aircraft involved an and with the Civil Aviation University In over half (57%) of these accidents, evacuation. In 86% of these evacuations, of China, for example, resulted in deficiencies in the airline’s maintenance all passengers and crew survived the two successful seminars in that operations were cited as a contributing accident. nation. They enabled Chinese carriers factor. These include deficiencies in to improve their cabin operations Successful evacuations were often linked technical documentation, unrecorded procedures and cabin crew training to proper handling of the situation by maintenance, the use of bogus parts, and to prepare for the 2008 Olympic the cabin crew and to effective training unapproved modifications, and the Games in . and procedures by the airlines. In 2008, poor training of maintenance personnel. IATA worked closely with airlines and To address such deficiencies, IATA added a new segment to its Six-Point Safety Program: safety management in maintenance operations.

All IATA airlines are now on the IOSA registry. This is a great achievement, a reassurance to our passengers, and an important mark of quality for our association. Giovanni Bisignani 26

Security and Facilitation Security, alongside safety and environmental responsibility, is a core promise of the aviation industry. Too often, however, authorities regulate based on fear rather than risk and squander scarce security resources on improbable threats.

US Visit Exit

The industry is secure. But eight years During 2008, the US Department of staff training that would have been after the events of September 11, the Homeland Security proposed under the required had the program gone lack of harmonization and the ineffective US Visit Exit program that airlines collect forward. And it prevented lengthening and inconsistent use of technology biometric data from travelers departing airport counter queues when self- continue to contribute to a security the United States for border control service tools are shortening queues regime that frustrates and confuses purposes. After an intense, IATA-led and processing times and improving passengers and costs airlines $5.9 billion lobbying effort involving 21 airline, airport, the passenger experience. annually. and travel industry associations, the US Congress passed a law prohibiting Airlines and their passengers need further development of the exit program smarter, more-efficient security. In until additional testing was completed in 2008, IATA collaborated with regulators, 2009. airlines, manufacturers, and systems suppliers to drive much-needed change, This avoided more than $12 billion in yielding cost savings and cost avoidance equipment, systems development, and for the industry exceeding $13 billion. That included working to eliminate onerous and ill-conceived passenger fingerprinting requirements in the United States; setting new standards for airline passenger data collection and transmission; inspecting airports to assess security; and introducing Secure Freight, IATA’s global cargo supply chain security program. 27

We have become much more secure. And we are spending much more - $5.9 billion a year. But I am not convinced that we are much wiser or any more efficient with many of our security processes. Giovanni Bisignani 28

Advance Passenger Information Passenger Name Record

The collection of Advance Passenger Governments continue to press the With support and cooperation from Information (API) about who is traveling industry for greater access to airline the governments of Canada and on an aircraft has the potential to Passenger Name Record (PNR) data. New Zealand, IATA obtained a formal increase security and facilitate the The lack of internationally recognized endorsement for SeMS by ICAO’s flow of low-risk passengers. A lack standards on PNR exchanges is leading Aviation Security Panel in 2008. It is of harmonization between countries’ to a costly set of differing requirements. anticipated that SeMS is on track to requirements, though, has burdened the In 2008, IATA gathered its industry become part of ICAO Annex 17, Security industry with unacceptable costs. partners, airlines, and regulators to Standards and Recommendations, commence work on the development of driving its global adoption even by states During 2008, IATA’s work with the a single, common standard for PNR data and airlines outside the IOSA program. governments of Brazil, Indonesia, Peru, exchange. El Salvador, and the Dominican Republic laid the foundation for API programs IATA also successfully advised aligned with international standards. Cuban authorities on the benefits One-stop security Another major win was the successful and limitations of PNR data to ensure lobbying of the UK government to that an unachievable program was Over 325 million passengers a year provide a systems solution for carriers not implemented in that country. A board connecting flights in Asia, that uses the same format in place for nonstandard program would have cost Europe, and the United States. The US passenger data. This will enable more airlines servicing Cuba about $100,000 overwhelming majority must go through than 30 airlines to comply with the UK’s each. security screening multiple times along requirements for its e-borders program their routes, adding time, cost, and

in 2009 without having to change their inconvenience. IATA is pressing for one- systems. stop security where transfer passengers Security Management Systems are not rescreened if they have been IATA achieved total annual savings for the adequately screened at their airport of industry of up to $50 million. IATA’s Security Management Systems departure. (SeMS) provide airlines with a risk- based framework for security in line In 2008, IATA worked with regulators with an airline’s safety culture. All IOSA- in Europe, Asia, and North America registered airlines have implemented core and at ICAO to investigate where the SeMS elements within their corporate concept of one-stop security could be structures, effectively making SeMS a implemented. A number of regions were condition of IATA membership. identified, including the EU-US market, where urgent action is needed. Putting one-stop security in place for passengers arriving in the European Union from the United States is a chief project for 2009. Security does not take a back seat in a crisis. Giovanni Bisignani 29

Cargo security for Simplifying Passenger secure freight Travel New security strategy

Cargo security likewise is among the top The IATA-led Simplifying Passenger Much progress has been made IATA priorities. IATA remains concerned Travel (SPT) interest group brings on security since 2001. Some key by proposals from governments to together more than 65 airports, airlines, objectives, though, remain to be attempt to mandate the 100% screening regulators, and systems suppliers achieved. In late 2008, IATA gathered 15 of cargo. This would slow shipment times with the aim of improving all aspects top aviation security experts to redraw and add unnecessary costs to global of the passenger journey. The SPT global security and facilitation priorities. trade while doing nothing to enhance group continues to push for globally The result is a multiyear security and security. interoperable technologies and mutual facilitation strategy for the most pressing recognition by governments. It works security needs. In 2008, IATA developed a strategy for in cooperation with IATA’s Fast Travel cargo security. That strategy includes the The strategy emphasizes work in five Program to put a new recommended review and development of the SeMS areas: practice in place for the passenger Cargo Addendum, of content for IATA’s journey. >>bringing airlines a threat-based, risk- Security Manual, and of the Secure managed framework for security Freight system. In 2008, the SPT interest group decision making encouraged such regional bodies as Secure Freight was introduced in 2008. the European Commission (EC) Joint >>creating global and regional advocacy The vision is for an air cargo industry Research Centre, the Asia-Pacific plans to shape the regulatory of certified secure operators in secure Economic Cooperation Conference framework supply chains operating to international (APEC), and the Caribbean Community cargo security standards recognized >>coordinating relationships with key (CARICOM) to spread the vision of by relevant national authorities. Secure decision makers and forming new the ideal process flow and harmonize Freight features a process for auditing industry coalitions to tackle industry air travel measures. The EC and APEC and certifying operators. Under it, IATA issues projects are in the exploratory phase. will develop international air cargo CARICOM is conducting trials on >>moving technology from laboratories to security standards for the industry biometric border gates. airports faster that are recognized by governments worldwide. As well, IATA will define >>preventing costly nonstandard data model security program templates. requirements from being implemented, especially for passenger data Secure Freight is a long-term initiative that may take five years to fully develop The strategy will be fully implemented in and longer to mature. It can, however, 2009. lower airline cargo security costs up to 10% when adopted in its entirety. 30

Regulatory and Public Policy IATA’s vision is for an industry that is safe, financially sustainable, competitive but fair, and respected for its dynamic contribution to continued economic and social development. That vision can only be achieved if airlines are allowed to enjoy the same commercial freedoms that other global businesses take for granted.

Liberalization Agenda for Freedom Passenger taxation International air transport is governed In June 2008, IATA’s 64th AGM adopted Governments continue to levy a crippling by a web of over 3,500 government- the Istanbul Declaration. The declaration array of counterproductive taxes on to-government bilateral air services called on governments to remove the an industry that remains one of the agreements, each containing clauses archaic rules that restrict airlines from chief drivers of economic growth and that place significant restrictions on the restructuring across borders. IATA’s development worldwide. In 2008, the ability of airlines to access markets and Director General invited progressive industry saw $6.9 billion in new taxes. foreign capital. The result is a fragmented governments to meet to discuss how to Many were disguised as environment industry whose airlines are prevented move forward on liberalization. taxes whose proceeds were redirected from merging or consolidating and into general government coffers. Fourteen governments and the European from accessing capital regardless of Commission heeded that call and In July 2008, the Dutch government nationality or location. attended IATA’s Agenda for Freedom introduced a new air passenger tax Airlines urgently need access to the summit in October 2008. IATA proposed targeting the collection of $418 million. same tools as other global enterprises if that many of the restrictions in the A subsequent Dutch study calculated they are to navigate through this crisis. numerous bilateral treaties that had that the tax cost airlines $1.2 billion, arisen from the Chicago Convention Dutch airports $121 million, and the The benefits of a liberalized airline of 1944 and that could not, obviously, Dutch economy $1.6 billion. The Dutch industry reach far beyond the industry. be altered overnight simply be waived. government abolished the tax effective The establishment, for example, of a IATA emphasized nullifying the treaties’ July 2009. single European aviation market in 1993 so-called ownership and control created 1.4 million jobs. It is estimated The UK government also announced restrictions. that liberalizing key routes globally significant increases to its Air Passenger would result in 24.1 million new jobs Summit participants agreed that Duty (APD) in 2008. New APD “bands” and generate $490 billion in economic the industry and governments had that come into force in November 2009 activity. a legitimate interest in pushing for will see a ticket tax ranging from $16 to more liberalization. They asked IATA $162 depending on the distance and to facilitate a multilateral statement of class traveled from . A second policy principles to express their common increase is already set for November thinking and approach. This would be 2010, bringing the duty to between $18 a nonbinding statement describing and $251. The increased passenger tax how countries could take a liberalized will cost $4.1 billion annually. approach to the practical application of a transport policy. Discussions are under way on an advanced draft, and it is expected that a critical mass of participants will be ready to commit to signing the draft by the end of 2009. Summit participants also agreed to make available to all countries the most liberal agreements. They asked IATA to convene a second meeting in 2009 focused on turning talk into action. 31

Health and pandemic preparedness The future of aviation IATA lobbying did, however, help IATA routinely works with governments There appears to be growing government eliminate the proposed replacement of on numerous passenger and crew interest in the future of aviation. The UK the per passenger duty by a per aircraft health issues in coordination with the and Australian governments, for instance, duty, which saved the industry $511 World Health Organization (WHO) each launched stakeholder consultations million. and ICAO. Efforts include developing on how to strategically shape the sector comprehensive guidelines that enhance over the coming decades. In October 2008, Belgium and Ireland the readiness of industry and public announced plans to levy departure taxes IATA sent formal submissions to the health officials to deal with a global on airline passengers. IATA’s lobbying consultations in both nations that pandemic. IATA has, for example, resulted in the Belgian government reiterated the industry’s positions on a contributed to ICAO’s Cooperative abandoning its plans, saving the industry wide range of issues, from economic Agreement to Prevent the Spreading $782 million. IATA continues to press regulation to mitigating aviation’s of Communicable Disease through the Irish government to do the same. environmental impact to the need for Air Travel. In addition, IATA promotes significant infrastructure improvements. IATA secured tax savings for the industry proactive guidelines for airlines regarding of $1.4 billion, in 2008. suspected communicable diseases. It More recently, the European Commission also maintains an emergency response (EC) launched an initiative to define a plan that it effectively activated amid the vision for the future of transport and Influenza A(H1N1) event. mobility within the European Union. Throughout 2009, IATA will maintain its During 2008, IATA also developed a dialogue with the EC and keep a close training program for WHO personnel on watch on similar initiatives around the the transport of infectious substances. world. This will help facilitate the safe movement of biological specimens internationally.

Today’s crisis highlights the need for change. But the need for change is much broader than this crisis. If airlines are not being battered by crises, they are being challenged by the business cycle. To manage, airlines need the same commercial tools that other industries take for granted. Giovanni Bisignani 32

Environment Environmental responsibility, alongside safety and security, remains a core promise for the aviation industry, even in the face of the economic downturn. IATA’s vision is for carbon-neutral growth on the way to a zero-emissions future.

This is being implemented through in September 2007. It is being used by 2020 compared with 2005. In IATA’s four-pillar strategy: investing in by the ICAO Group on International 2008, IATA’s fuel programs saved 14.8

technology, flying planes effectively, Aviation and Climate Change to structure million tonnes of carbon dioxide (CO2) building efficient infrastructure, and using its work. In April 2008, the four-pillar emissions—equivalent to $5 billion in fuel positive economic measures. strategy was adopted by the entire cost savings. industry, at the Aviation and Environment The IATA four-pillar strategy became A major challenge for the industry in its Summit. the reference framework for the industry work to reduce emissions is dealing with when the 179 governments at ICAO’s IATA focuses much of its environmental the often punitive economic measures 36th Assembly adopted it unanimously work on reducing emissions. Lowering governments levy on airlines. Introduced fuel burn is a major component of that as environmental measures, most effort. Our target is to achieve at least such initiatives help the environment a 25% improvement in fuel efficiency minimally at best. IATA argues for positive economic measures, firm government action on improving infrastructure, and a global, sectoral approach to emissions reduction. 33

Four-pillar strategy

1. Technology

Technology is the key to achieving flight tests (see table) of such fuels. IATA Using biofuels, however, calls for a new IATA’s long-term vision of zero carbon supports initiatives that offer a net benefit fuel specification defining fuel properties emissions and will account for at least in reducing CO2 over the aircraft lifecycle for safe use. IATA is helping to lead 75% of efficiency improvements. IATA and that do not compete for land or the development of that specification. worked with research institutions and water with the food chain. Certification of an appropriate biofuel by with aircraft, engine, and systems 2010 or 2011 is a real possibility. The potential benefits of biofuels manufacturers to produce its Technology are enormous - an 80% reduction in The commercial production of that biofuel Road Map and a database of aircraft emissions over the fuel’s life-cycle and should be a priority for governments upgrades and fleet renewals to support increased energy security beyond oil alongside research investment. IATA its technological goals. The road map supplies. And a biofuel industry could is urging governments to provide identifies technologies that would be a big generator of employment and effective incentives for the research and enable new aircraft to achieve between wealth for the developing world. development and production of biofuels 20% and 35% potential emission in their tax and regulatory frameworks. reductions by 2020 compared with their predecessors. Such technologies include new-generation engine architectures and Biofuel testing Source: IATA drag-reducing laminar flow technologies. Carrier Aircraft Partners Date Biofuel Blend The updated 2009 IATA Technology B747- Boeing, 23.2.08 coconut & 20% one engine Roadmap will include a detailed 400 GE Aviation babassu assessment of such technologies. Based on the current industry situation, its B747- Boeing, 30.12.08 jatropha 50% one engine focus has shifted to identifying short- 400 Rolls-Royce term technologies available for existing Continental B737- Boeing, 7.1.09 algae with 50% one engine aircraft. These include aerodynamic Airlines 800 GE Aviation, jatropha improvements, weight reductions, CFM, and engine upgrades resulting in fuel Honeywell efficiency improvements of 5% to 10%. UOP IATA set a target in 2007 for 10% JAL B747- Boeing, Pratt 30.1.09 camelina, 50% one engine airline alternative fuel use by 2017. The 300 & Whitney, jatropha & IATA 2008 Report on Alternative Fuels Honeywell algae blend includes an overview of the specification, UOP certification, global production possibilities, and potential for different feedstocks and highlights second- and Our commitment to environmental third-generation biofuels. A number of responsibility is firm and strong. airlines and manufacturers are carrying out innovative evaluation programs and No other industry is as united, responsible or ambitious. Giovanni Bisignani 34

2. Operations 3. Infrastructure

IATA’s Green Teams help airlines reduce IATA continues to focus on short-term press decision makers and the new US fuel burn and emissions. Since 2005, infrastructure savings that can be administration for rapid implementation. Green Teams have conducted 93 achieved using current technologies. At For short-term savings, IATA’s efforts are fuel-efficiency gap analyses (FEGA) the same time, it pursues such longer- on optimizing routes and heightening for savings of between 2% to 15% of term objectives as the Single European efficiencies in airport arrivals and an airline’s yearly fuel budget. In 2008, Sky (SES) and next-generation air traffic departures. In 2008, IATA worked with those teams worked with over 70 airlines, management systems, including the industry partners in optimizing 214 air implementing IATA best practices, Single European Sky ATM Research routes and 103 terminal management distributing guidance material, and (SESAR) Program in Europe and the areas for an annual saving of 3.9 million conducting FEGA on site assessments. Next Generation Air Traffic Management tonnes of CO . They also ran training programs in flight (NextGen) System in the United 2 operations, flight dispatch, engineering, States. But these can only be achieved The design of terminal procedures and maintenance and ground operations with common vision and government with tighter navigation performance to improve fuel conservation measures. cooperation. for arrivals and departures using Performance-Based Navigation (PBN) As a result, 59 airlines reported CO According to the European Commission, 2 is a specific focus. PBN is already savings of 7.4 million tonnes for implementing the SES will save 16 delivering significant savings. 2008. And the 22 FEGA assessments million tonnes of CO each year. So IATA 2 and AirServices Australia had PBN conducted during the year identified continues to push hard for the speedy procedures implemented at Brisbane. further savings of 3.5 million tonnes of implementation of this initiative. And Qantas’s Boeing 737s alone CO . Given 2008’s exceptionally high 2 IATA welcomed the establishment of accomplished remarkable results from fuel prices, these savings cumulatively nine functional airspace blocks in Europe their first 1,612 approaches: 17,300 less represented the equivalent of more than during 2008 as an important step track miles flown and 650 tonnes of CO $3.7 billion. 2 toward implementing the SES. Each will saved. In 2009, IATA will publish the fourth increase airspace capacity 50% and will In August 2008, IATA, , edition of The IATA Fuel Book, which shorten every flight 17.5 kilometers on and the Civil Air Navigation Services provides recommendations for fuel- average, saving 72 kilograms of fuel and Organization (CANSO) signed a fuel- efficiency improvements. They will 226 kilograms of CO . IATA is arguing 2 efficiency plan (FEP). The FEP targets also publish the new Green Team strongly for an effective European enhancing European en route airspace Benchmark Report, which provides network manager to run the new blocks. de-identified information from Green In the United States, similarly, NextGen Team assessments that allows airlines to will save 16 million tonnes of CO when compare their performance and efficiency 2 implemented. IATA thus continues to programs. In addition, the Green Teams will expand their scope, integrating remote support tools, organizing regional fuel-efficiency workshops, and providing enhanced implementation and training support for airlines. 35

design, route network availability, arrival and departure routes, airport operations, and performance monitoring. According to EUROCONTROL, the FEP will garner annual savings of 470,000 tonnes of fuel, 1.5 million tonnes of CO2, and $531 million. A month later, in September 2008, Africa finished implementing Reduced Vertical Separation Minima (RVSM). The RVSM will save approximately 236,000 tonnes of CO2 from African continental airspace. Only a few areas of the world now lack the RVSM. North Korea plans to implement the RVSM in 2009, Iraq in 2010, Russia tentatively in 2011 for domestic flights, and in 2012. The remaining countries of Central Asia will most likely implement the RVSM in conjunction with Russia. 36

4. Economic instruments

There has been much debate on information on its Web site (www.iata. in credible emission-reduction projects. policy options to reduce emissions org/mrv). IATA also held an industry IATA’s target is to pilot the program with from aviation. IATA believes in a global, workshop aimed at formulating a list of 14 airlines by the end of 2009. IATA sectoral approach for the industry. industry best practices for meeting the has also published a Carbon Offset It continues to press governments new emissions reporting requirements at Guidelines brochure that sets out for positive economic incentives to minimum extra cost. standards, metrics, and best practices for support and accelerate research and IATA members wishing to introduce their IATA joined other airline associations in development and the deployment of own offset program. successfully fighting some of the more- new technologies. Negative measures, stringent proposals from the European such as taxes and charges designed to Parliament regarding the ETS. IATA also suppress demand, do nothing to improve prevented a backdoor revision of the environmental performance and rob the ETS’s parameters through a so-called Group on International Aviation industry of scarce resources needed general review in 2013. The review will and Climate Change to invest in fleet renewal and new now take place in 2015. technologies. The 1997 Kyoto Protocol gave ICAO responsibility for dealing with international aviation emissions. In Carbon offsets European Emissions Trading December 2009, the successor Scheme Around 30 international airlines offer to Kyoto will be decided at the UN voluntary carbon offset programs. Framework Convention on Climate The European Union agreed to include These programs allow passengers to Change (UNFCCC) meeting slated aviation in the European Emissions compensate for their proportion of their for Copenhagen. ICAO will present Trading Scheme (ETS) in July 2008. flights’ CO emissions with investments proposals at that event regarding aviation From 2012, every aircraft operator 2 in emission-reduction projects. There emission reductions. flying into, out of, or within the EU will are, however, concerns for the scope be required to pay for some of its CO IATA believes that ICAO and the 2 and quality of these projects. Most emissions. UNFCCC must tackle three challenges. passengers are confused, skeptical, and The first is to marry the unified approach Operators will be given a cap on unwilling to get involved. of the Chicago Convention, that guides emissions based on average annual In response, IATA in 2008 established an ICAO, with the principle of Common but emissions from 2004 to 2006. In 2012, industry-wide offset program. It employs Differentiated Responsibility, that is a the cap will be 97% of this baseline standard methodologies, involves a cornerstone of the UNFCCC process. amount and will be lowered to 95% single customer transaction, and invests The second challenge is to preserve in 2013. Airlines will need carbon allowances to cover their emissions. About 85% of allowances will be free, but airlines will have to buy a further 15% at auction. They also will have to purchase more allowances if their Summary of industry goals relative to 2005 Source: IATA emissions exceed the cap. In addition, the European ETS requires that airlines Traffic Fuel efficiency CO2 intensity CO2 savings produce monitoring plans in 2009 and growth improvement reduction potential start monitoring tonne kilometer and (RTK %) goals (%) goals (%) (Mt/yr) emissions data from 1 January 2010. 2012 40 15 15 200 While IATA continues to press for a global solution, airlines need to prepare 2020 130 29 32 573 for monitoring, reporting and verification requirements. IATA has comprehensive 2050 750 50 n/a 3,926 37

the sectoral approach for international Measurements were taken of the carbon IATA followed its campaign of aviation that was established by Kyoto. footprint at each movement of freight environment advertisements in airline The third is to develop economic along the supply chain. Also measured magazines by installing environment measures that are effective in reducing was the efficiency of the supply chain in stands at major airports in Europe aviation’s emissions. minimizing waste and how the carbon in 2008. The interactive stands footprint varies with passenger aircraft, demonstrate the industry’s work in Meeting these challenges means pure cargo aircraft, and oceangoing such areas as shortening routes and replacing the growing patchwork of shipping. Findings demonstrate the employing new technologies and national green taxes, charges, and efficiency of the supply chain for the biofuels. emissions trading proposals with a global air transport of cut pineapples. The cut system. It means allocating the collected IATA also continues to play a major flowers air cargo supply chain, though, funds to environmental projects. And it role in the cross-industry enviro.aero faces a potential competitive threat from means treating aviation fairly in proportion communications campaign. Activities in sea shipping. to its 2% contribution to global man- 2008 included updating and improving made CO2 emissions. IATA’s next step in this regard will be the www.enviro.aero Web site and a to provide input to ICAO’s work on sustained media blitz whose focus was IATA is working with other industry developing a standard carbon footprint on rebutting inaccurate or misleading organizations to assist ICAO’s 15-nation calculator for the air cargo supply chain. comments in the media. The campaign Group on International Aviation and is garnering positive results. We are Climate Change (GIACC) produce a seeing more accurate and balanced global proposal for aviation emission reporting in the media of aviation’s reductions. Under the umbrella of the Air Communicating aviation contribution to climate change and Transport Action Group (ATAG), IATA steps toward reducing emissions. and its allies have developed industry- and environment wide environmental goals for input to Aviation remains under close scrutiny GIACC. by the media. Effective communication retains a strategic role in ensuring that the perceptions of the industry’s environmental efforts match the reality Air cargo and the environment of its good track record, significant improvements and ambitious goals. During 2008, IATA led a project that measured the carbon footprint for the movement of freight through the air cargo supply chain. Specifically, the project followed pineapples transported Governments around the world from Ghana to the United Kingdom must agree a global solution to and flowers transported from Ecuador reduce aviation emissions. to either the United Kingdom or the Netherlands. We need governments to come on board with alternative fuels, better air navigation and a global approach to positive economic measures. Giovanni Bisignani 38

Cost Efficiency Cost efficiency is especially vital in times of crisis. Worldwide, airlines and their passengers pay at least $48.8 billion a year to airports and Air Navigation Service Providers (ANSPs), about 10% of airline revenues.

Whereas several infrastructure providers, are within the remit of the government. Mumbai and New Delhi airports effective such as the Civil Aviation Authority of This includes waiving the need for full early in 2009. This was followed by the Singapore, Malaysia Airports Holdings cost recovery, removing or reducing the approval of an airport development fee Bhd, and Swedish Airports, have made cost of capital requirements, a fairer at New Delhi airport beginning 1 March much progress in matching airline allocation of meteorological costs, and 2009. These unjustified rate increases efficiency efforts, many others have not. so on. are sure to exacerbate India’s growing economic crisis, which yielded $1.5 In 2008, IATA’s work with major IATA collaborates with organizations billion in airline losses in 2008. airports, ANSPs, fuel suppliers, and such as CANSO and ICAO to achieve governments delivered better service and acceptable pricing levels for aviation In Europe, the industry was hit with a secured $3.5 billion in savings through infrastructure while maintaining and $111 million increase in charges at communication, direct consultation, improving standards of service and Schiphol airport in Amsterdam in 2008. and negotiation. Of that amount, $1.6 performance. Notably in 2008 CANSO Other providers took a more-productive billion was in real cost reductions and issued the Madeira Statement at its approach, particularly airports in Asia. $1.9 billion represented potential cost AGM confirming the commitment of The Air Hub Development Fund discount increases that were avoided. ANSPs to short-term savings measures package at Singapore’s and establishing a CANSO Crisis Following up on the Istanbul Declaration was extended a year to the end of 2009. Action Team. More-robust regulation of and in response to the high price of fuel, What is more, the landing fee discount monopoly providers, however, is clearly IATA launched its Cost Crisis Campaign was increased from 15% to 25%, while still needed to improve cost efficiency. in June 2008. The campaign targeted other discounts and incentive schemes industry stakeholders seeking concrete remain unchanged. The total discount proposals for greater productivity and package is estimated at $87 million. efficiency. It resulted in 13 airports and Airports In Malaysia, the government announced 15 ANSPs freezing or reducing their on 10 March 2009 a two-year 50% charges. Unfortunately, the savings Savings in airport charges of $487 rebate for landing charges effective were overwhelmed by $8.5 billion in million during 2008 were more than 1 April. This initiative is expected to save government tax increases and airport and offset by increases of $831 million. the industry about $53 million. air navigation price hikes globally. Major contributors to the increases were the BAA airports Heathrow ($298 At Hong Kong International Airport, a The global economic recession is million) and Gatwick ($76 million), where relief package of HK$450 million ($58 resulting in significant double-digit charges were raised to the maximum million) was introduced, comprising reductions in traffic for most airports and allowed yield per passenger. HK$200 million for a 10% reduction ANSPs around the world. This is putting in landing and parking charges and intense pressure on unit rates and The industry outcry over BAA’s 86% HK$250 million for interest-free deferred charges, particularly for those providers increase in charges for 2008–13 led payments, starting in April 2009. In with full cost recovery mechanisms. to an independent review by the UK Thailand, Airports of Thailand reduced Competition Commission. On 19 March IATA is pressing all major airports and landing charges and parking fees 20%, 2009, that entity endorsed IATA’s call ANSPs to: saving airlines around $12 million. for breaking up BAA by requiring the >>avoid any increases in unit rates and sale of Gatwick and Stansted airports Also during 2008, the industry won two charges in 2009 and of either Edinburgh or Glasgow major congestion pricing battles, in New airports in Scotland. BAA was expecting York and São Paulo. The US Federal >>apply even greater effort in reducing final binding offers for Gatwick by the Aviation Administration’s plans to auction costs and improving cost efficiency to end of April 2009 and has expressed off 10% of the takeoff and landing generate airline savings a willingness to sell Stansted given a slots at the La Guardia, Kennedy, and >>ensure that the inevitable under- flexible timeline. IATA looks forward to the Newark airports to the highest bidder recoveries that occur in 2009 are expeditious settling of the two sales and to combat congestion were thwarted by addressed in 2010-2011 either by to the renewal of healthy competition in the US Court of Appeals. In December simple removal through write-offs the British airport system. 2008, the court ruled that the auctions or government intervention or by would drive up ticket prices for airline In October 2008, the industry welcomed spreading them over five years so that passengers. legislation in India for setting up that there are no increases in rates and country’s Airport Economic Regulatory In , meanwhile, a lengthy charges in 2010-2011 Authority. However, in a surprise move contract revision process was at last IATA is also pressing governments where and without consulting with airlines, concluded. The 2007 agreement appropriate to take measures to relieve India’s Ministry of Civil Aviation approved between IATA and Argentina’s regulatory airports and ANSPs of cost burdens that a 10% increase in airport charges at body ORSNA and airport concessionaire 39

The failure to implement a Single European Sky is a costly environmental embarrassment that undermines the credibility of Europe’s environmental efforts. Giovanni Bisignani 40

AA2000 for a 30% discount on landing improve the performance of Europe’s recommendations to assess cost-efficient and parking charges went into effect on ATM system. fuel storage at airports, and provided 1 March 2009. industry input to the discussions on The SES vision of unifying the changes to the emergency fuel stock In 2009, IATA will continue its ongoing fragmented European airspace is of regime in Europe. campaigns with major providers in paramount importance to the future of Europe and the Americas. It also will air traffic management. SES Package II engage aviation authorities and providers emphasizes binding national performance in the Middle East and elsewhere to targets, functional airspace blocks, ensure better compliance with ICAO harmonized safety oversight by the Working together policies that call for charges that are European Aviation Safety Agency and transparent, nondiscriminatory, and the Single European Sky ATM Research IATA also successfully worked with based on a cost-recovery model. (SESAR) Program. The package was partner organizations in 2008 to provide formally approved by the European a stronger framework for compliance In Asia-Pacific, IATA continues to seek Parliament on 25 March 2009 and will with and the regulation of infrastructure reductions in charges at airports in enter into force in summer 2009. charges. Significantly, on 19 February Japan, which are the highest in the 2009 the European Commission’s region. IATA also will work with Chinese SESAR will help reduce the $6.8 Airport Charges Directive was issued. authorities to restructure that nation’s billion in annual costs resulting from airport charges and looks forward to the EU ATM inefficiencies that cause, The Directive establishes airport pricing launching of Airport Economic Regulatory among other problems, flight delays. laws for the 27 EU countries and calls Authority in India. To support SESAR, all stakeholders for adherence to ICAO principles. need to equitably fund the necessary However, much remains to be done with $39.4 billion investment. A fair funding supervisory activities at the member model requires a sound business country level. IATA will be pressing for Air Navigation Service Providers case and assurance that long-awaited a proactive approach and monitoring improvements in performance will be developments carefully to ensure the IATA made progress in 2008 in real delivered. earliest-possible implementation of the ANSP reductions of $94 million. Those directive by each EU nation. gains, though, were outweighed by cost At the same time, SESAR’s counterpart Another positive result of IATA’s increases of $715 million. in the United States, NextGen, intends to bring the latest technological collaborative efforts in 2008 was the In Europe, our efforts through advancements to that country’s ATMs approval of recommendations by the EUROCONTROL and its member by 2025. To realize maximum cost ICAO Conference on the Economics countries saved the industry $168 million efficiencies, Europe and the US will need of Airports and Air Navigation Services. from 13 nations. But those savings were to coordinate and harmonize their ATM Those recommendations are designed to offset by cost increases from 20 other systems. enhance cooperation between regulators, countries totaling $411 million. providers, and users and to raise the efficiency and the cost-effectiveness of ATSA Bulgaria set a positive example airport operations and the provision of air in 2009 by signing an agreement with Fuel navigation services. IATA that commits to a 16% reduction in charges over a five-year period. IATA In 2008, the industry was exceptionally The recommendations also call for will continue to support similar long- successful in saving on fuel fees and contracting countries to enshrine the term commitments with other European taxes—to the tune of $1.3 billion. main principles of ICAO’s Policies on providers as a positive contribution That total includes savings secured in Charges for Airports and Air Navigation toward the Single European Sky (SES) Brazil, where the industry convinced Services (Doc 9082) in national initiative. the government to eliminate the PIS/ legislation, regulations, or policies and COFINS social contribution for $411 in all air services agreements between Lengthy discussion among IATA and million in reductions over a five-year countries. other industry bodies at last in 2008 period. In Colombia, the Value Added Tax produced a revised governance structure Given the urgency of the financial and exemption for international flights led to for EUROCONTROL that took effect economic crisis, IATA is fighting harder $213 million in savings, while in India the 1 January 2009. The new structure will than ever for effective and cost-efficient abolishment of the customs duty resulted strengthen the engagement of all industry infrastructure. It invites its airport and in savings of $276 million. stakeholders in air traffic management ANSP partners, governments, and decisions. It will also support the network IATA’s efforts during the year under- international organizations to continue management functions that underpin the pinned these savings. We worked on working with it toward a streamlined, SES Package II legislative proposals to improving fuel-supply reliability, published efficient, and successful aviation industry. 41

Our monopoly partners need incentives with the teeth that drive business decisions and place the cost burden on those that fail to perform. Giovanni Bisignani 42

Industry and Financial Services

Billing and Settlement Plans

IATA’s financial services annually handle So in 2008 IATA conducted a thorough IATA’s Billing and Settlement Plans $350 billion of the industry’s money—the review of its financial services. It also (BSPs) are an interface between airlines lifeblood of the industry. During a crisis, took the precautionary measures training and travel agents. They are an efficient it is more critical than ever that IATA’s a crisis response team, increasing and cost-effective system that simplifies financial services function accurately and requirements for its banking partners, the selling, reporting, and remitting reliably. and of opening secondary accounts in all procedures of IATA-accredited agents. locations as a contingency against bank In 2008, the BSPs handled a record failures. $240 billion and processed 470 million As a result, not a single payment was transactions, an increase of 2.6% over missed amid the financial turmoil of 2007. Bad debt on increased sales in 2008. 2008 was only 0.035% of gross sales. New BSPs were implemented in Gibraltar, Kazakhstan, Macedonia, Syria, and Nigeria. This brings IATA’s total number of BSPs worldwide to 84, with coverage of more than 162 countries and territories. 43

Cargo Accounts Settlement System BSP/CASS unit charges to airlines

During 2008, IATA added a further 10 IATA continued, meanwhile, to add Source: IATA Cargo Accounts Settlement System functionality to the CASSlink data (CASS) operations to the global network, processing solution to make the bringing their total to 86. Highlights correction process more efficient. include the addition of domestic CASS In 2009, CASS expansion will focus operations in the United States and on implementing 10 new operations Brazil; of export operations for Chinese within the top 50 international freight Taipei and Colombia; and of import countries. This should serve as a vehicle operations for Hong Kong, Singapore, to generate significant additional volume and Morocco. and thus lower overall unit charges for The combined value of settlements IATA member airlines. processed by CASS in 2008 was a record of more than $28 billion. The collection success surpassed 99.98%, despite the challenging economic environment. 44 45

IATA Currency Clearance Service IATA Clearing House

The IATA Currency Clearance Service The IATA Clearing House (ICH) enables accounts and precisely routed to the (ICCS) helps airlines to centrally manage the offsetting of billings between appropriate departments. their worldwide cash and to convert more than 350 airlines and associated During 2008, five separate airline currencies at optimal market exchange companies before settlement on a weekly industry groups worked to define their rates. ICCS continued its strong growth basis. This efficiency produces cash flow particular SIS requirements for each of in 2008, clearing a record $30.5 billion. savings exceeding 70% for each weekly their business areas. IATA has translated More than 239 airlines use the service to settlement. It also reduces industry their needs into solutions that will be manage funds collected in 93 countries. financial risk by minimizing the time and implemented in 2009 and 2010. amount of outstanding intercompany In 2008, China, Russia, and 11 other debts. When fully implemented, SIS is expected countries were added to the ICCS to save the airline industry over $500 network. The ICCS also added 6 In 2008, the value of business settled million a year in operating efficiencies countries to its Euro accelerated transfer by the ICH grew to an unprecedented and reduced costs. As well, it will process. $50 billion. Yet despite the jump in value, eliminate the 200 tonnes of settlement- settlements required less than $14.8 related paper shipped around the world billion in cash because of the offset annually. service provided. IATA’s air traffic control and airport enhancement and financing service First & Final Interline Billing Data processing center Our airport enhancement and financing migration (E&F) service helps airports and ANSPs First & Final Interline Billing quickly and China-based Accounting Centre of lower their costs and improve their simply settles airline passenger billings Chinese Aviation (ACCA) won the efficiencies in invoicing and collecting on a first-time basis. It thus avoids tender for processing Global Distribution user charges. The service also helps lengthy billing dispute resolution. This System (GDS) ticket data to calculate them secure cost-effective financing for reduces workload in revenue accounting agent billings and airline settlements. investment in civil aviation infrastructure. and increases the speed and accuracy of Over its 10-year contractual period, it In 2008, IATA’s E&F service processed management reporting and route revenue is expected to save airlines $41 million more than $1.3 billion in over 40 analysis. compared with current processing costs. countries. In 2008, 37 airlines participated in First & The transition from the Australia-based Final Interline Billing. This accounted for UNISYS to ACCA was rolled out on a the service’s processing of an average of BSP-by-BSP basis in 2008 and is on 2.8 million interline journeys a month. IATA industry card schedule. It will be completed in April 2010, and ACCA will then take over the services processing for 42 of IATA’s BSPs in Asia, parts of Europe, and in Canada. IATA processed $66 billion in card Simplified Interline Settlement transactions in 2008. We also launched ACCA will also maintain and develop the a new initiative to meet Payment Card Simplified Interline Settlement (SIS) data processing software for its job. Industry Data Security Standards and makes possible electronic interline billing thereby ensure the continued safety of linked directly to the ICH for settlements. the data our card services process. The electronic formats contain sufficient data to automatically allow interline IATA card services simplify airlines’ invoices to be posted correctly in expansion into new BSPs. Those services facilitate card acceptance and reduce costs through increased Electronic invoicing, First and centralization. IATA CardClear Final Interline Billing, and the consolidates card transactions from Simplified Interline Settlement multiple BSPs and delivers them to the project all aim to help the acquirer chosen by the airline. IATA industry eliminate paper, simplify CardAXS provides for the multicurrency processes and reduce cost. settlement of global Visa and MasterCard airline sales. Giovanni Bisignani 46

PASSENGERS IATA Catering Quality Passenger Agency Program Assurance Audit Cargo Tariff Coordination

The Passenger Agency Program securely IATA Catering Quality Assurance (ICQA) In response to a changing regulatory distributes airline tickets through a global continues to save money for airlines by environment, IATA’s Cargo Tariff network of accredited sales locations. using common food safety and quality Coordination Conference withdrew standards for catering facility audits. In multilaterally agreed IATA industry In 2008, the Passenger Agency 2008, the ICQA conducted 900 audits rates on a number of routes in 2008. Conference (PAConf) approved new on over 230 catering facilities worldwide Specifically, rate withdrawals apply on rules for compliance with competition on behalf of the 11 airlines that have routes between the United States and laws for many countries in Latin America, joined ICQA so far. Nine catering the European Common Aviation Area the Middle East, and Africa. Around facilities worldwide received an ICQA and between Australia and the rest 126 countries are governed by the Caterer Award in 2008 in recognition of of the world. Replacing those rates is new competition-compliant rules. Work their efforts to improve food safety and a program of carrier-specific flagged continues through 2009 to bring as quality. rates that will also form the basis for many other countries under the same interline settlement rates. This strategy of governance with a view to achieving withdrawing rates will be progressively 100% coverage by the end of 2010. rolled out to further markets over the PAConf in addition adopted provisions CARGO coming years. to include travel agencies that operate only on the Internet. It also updated rules Cargo 2000 to ensure that default and irregularity provisions apply to airline direct ticketed Cargo 2000 delivers a simplified quality Cargo standards Internet sales issued on behalf of travel management system that reduces the During 2008, IATA defined a common agents when a BSP airline chooses number of steps in the air cargo supply cargo business process as the to report them through a BSP. And, chain from 40 to 29 while improving foundation in support of IATA e-freight, finally, the conference revised its rules reliability. Cargo 2000 is under the Cargo 2000, and Secure Freight. to allow for any party involved in a travel management of Cargo Network Services The process complies with customs agency commissioner process to seek (CNS), an IATA subsidiary. The Cargo requirements to facilitate international arbitration. 2000 board remains an IATA-funded trade. interest group. Through the Customs Advisory In 2008, Cargo 2000 membership Group and the IATA-FIATA Customs IATA Flex Fares grew 21%, to 70 members. Also during Working Group, IATA is helping the 2008, Cargo 2000’s members oversaw IATA Flex Fares have been adopted for World Customs Organization define more than one million shipments a the majority of IATA routes worldwide, 21st-century customs standards. month under the Cargo 2000 route map with only few exceptions. IATA plans standard. The vision is to help air transport industry to phase out the remaining face-to- supply chain stakeholders become face meetings by June 2010 to provide quality cargo operators. A first step a globally simplified interline tariff toward cultivating quality cargo operators coordination process that cuts meeting Cargo Agency Program is to review and adapt IATA cargo costs, simplifies fare structures, and resolutions and recommended practices, shortens the regulatory approval process. The Cargo Agency Conference adopted a number of program changes regarding making them consistent with those for the correction of CASS billing errors e-freight. in 2008. It also introduced more-rigid Going 100% paperless and better-defined financial review The IATA Board of Governors procedures for accredited cargo agents. recommended that IATA go forward with It continues, meanwhile, to monitor a strategy for an environment in which financial criteria on an ongoing basis and airlines can choose to become 100% to effect adjustments where required. paperless. Beginning June 2009, carriers A new cargo agency agreement was participating in the Multilateral Interline signed between IATA and FIATA in Traffic Agreement will be allowed to 2008. FIATA is a global association declare their intent to stop accepting representing national freight forwarder their interline partners’ paper tickets associations. And the agreement with effective one year from their declaration FIATA is meant to enhance the cargo date. training portfolio offered to freight forwarders. 47

Even in the banking turbulence of 2008 we did not miss a single payment cycle with collection success maintained at close to 100%. Giovanni Bisignani 48

Aviation Solutions IATA’s aviation solutions help its members and businesses enhance revenue, improve efficiency, and promote safe and sustainable operations.

Revenue growth Despite the crisis, growth opportunities is a return on investment framework The DGR and its related publications remain for those who discover them. In that focuses on solutions that can be are among the industry’s most important this vein, IATA’s business intelligence implemented quickly for immediate safety documents. Produced by IATA tools support better decision making results. for 50 years, the DGR is the de facto for network development and effective industry standard, available in various planning processes for passenger traffic Revenue improvement media and in six languages and growth. IATA Consulting helped improve distributed in 178 countries. the design of its new concourse to IATA’s Passenger Information Services increase its capacity. This had the dual Training (PaxIS) are the most powerful decision effect of revenue generation and unit The IATA Training and Development support tools available in the aviation cost reduction. Institute (ITDI) helps to establish a safer, industry. Supported by IATA’s worldwide more-productive work environment at ticket data, PaxIS offers comprehensive, With an architectural firm designing its airlines. ITDI offers a compelling group timely, and reliable passenger intelligence new facility, the carrier wished to validate of internationally recognized training information. PaxIS is used by many of the that form would not impede function. programs for airline management, world’s premier airlines to glean accurate IATA consultants simulated traffic flows operations, compliance, and safety. market intelligence. for aircraft, ground handling, passengers, and baggage. The assessment identified In 2008, ITDI enrolled over 33,000 In 2008, the PaxIS client list comprised and removed bottlenecks that would professional and vocational students over 50 airlines ranging from large have severely limited operations, from nearly 150 countries in around 500 network carriers to low-cost and regional especially during peak periods. disciplines across all market segments. carriers. The result was a heightened customer Over half of all classroom participants IATA’s Global Airline Performance (GAP) service experience, an increase in in 2008 enrolled in safety-related survey benchmarks customer satisfaction available capacity, and a $26 million courses, including Safety Management for airlines operating long-haul routes. improvement in operating profit. Systems for Airlines, Dangerous Goods GAP spans the full travel experience Regulations, and Ground Operations from reservation and check-in to in-flight Distribution cost reduction Audit ISAGO. services and baggage delivery. Weblink is an IATA solution that grants In 2008, 55,000 international passengers travel agencies direct access to an moving through 32 of the world’s busiest airline’s Web site while ensuring that airports were interviewed through transactions are entered through IATA’s Sustainability GAP. GAP helped the 22 participating secure Billing and Settlement Plan international carriers to identify their (BSP). IATA Consulting‘s Fuel Efficiency Gap products’ value drivers, improve their Analysis (FEGA) teams helped uncover In 2008, IATA used Weblink to settle product offerings, and measure how $3.7 billion in potential annual savings 2.5 million transactions totaling product modifications were received. in 2008. Since 2005, 93 FEGAs have $401.5 million for Weblink’s 24 clients taken place at carriers throughout the Building on the need for better business throughout the world. This equates to world and have identified potential intelligence in 2009, IATA launched Data savings in distribution costs of more savings ranging between 2% and 15% AirHouse in 2008. Data AirHouse is than $10 million. That total should grow of airlines’ annual fuel budgets. for airlines that prefer to outsource and to $300 million as the Weblink share of centralize their business intelligence data BSP transactions increases to 10% by Fuel conservation also creates a

on one technical platform but without the 2012. concurrent potential reduction in CO2 associated overhead and implementation emissions. FEGA assessments indicate costs. that the potential fuel savings identified in 2008 are equivalent to a reduction of 3.5

Safety million tonnes of CO2 emissions. Efficiency IATA produced more than 250 Recently, a FEGA team ran a fuel publications during 2008. They include consulting project for an IATA member IATA Consulting’s cost-reducing Go The Airline Coding Directory, The Airline airline and identified potential fuel Teams deliver detailed assessments Handling Manual, World Air Transport savings of $25 million. Process changes of main processes in air and ground Statistics, The Travel Information Manual, in flight operations, flight dispatch, and operations and identify corrective actions and The Dangerous Goods Regulations maintenance and engineering achieved if needed. Crucial to the assessment Manual (DGR). 98% of the identified savings. 49

As businesses in such a difficult environment, what can we do? Cut costs, adjust capacity to demand, simplify processes and encourage innovation everywhere. Giovanni Bisignani 50

IATA Membership as of 1 May 2009

Active Members

Adria Airways Emirates Air Pacific C.A.L. Cargo Airlines Air Sénégal International Airways Aeroflot-Don Nui European Air Transport Aerolíneas Aeromexico EVA Air Aerosvit Airlines Air Cathay Pacific Federal Express CCM Airlines .British European Air Algérie Garuda American Airlines China Eastern Israeli Airlines Lines Air Baltic Armavia Air Air Cirrus Airlines Hapag Lloyd CityJet Atlasjet Airlines Air Contractors (UK) Austrian Hong Kong Express Airways Continental Micronesia IBERIA Air France COPA Airlines (NACIL) B&H Airlines Corsair Inter Air Air Jamaica Air - Belarusian Airlines Cubana Bellview Airlines Airways Israir Biman JALways Air Blue Panorama Jat Airways Blue1 DHL Air Jet Airways Air Blue Wings DHL International E.C. Jet Lite Air New Zealand bmi Dragonair Airlines British Airways Egyptair 51

KLM TAROM Korean Air Royal Brunei MALEV Royal Jordanian Turkish Airlines LACSA Malmö Aviation SA TNT Airways LAM - Linhas Aéreas MAT - SAA - de MEA - SAS TransAsia Airways Lan Airlines SAS Norge Tunis Air Lan Argentina Méxicana Saudi Arabian Airlines Ukraine International Airlines Lan Chile Cargo MIAT - Mongolian Airlines United Airlines Lan Perú UPS Airlines Lan Ecuador SIA - US Airways Lauda Air SIA - UT air Airlines Lithuanian Airlines Virgin Atlantic LOT Polish Airlines Silkair Virgin Nigeria LTU PAL - Air Lufthansa Volga-Dnepr Airlines PGA - Portugália Airlines SriLankan Airlines Wideroe PIA - Pakistan International Xiamen Airlines Airlines PLUNA Swiss Syrianair Qantas TACA TACA Peru Associate Members Rossiya - Russian Airlines TAM - Transportes Aéreos del Mercosur Air Tahiti TAM Linhas Aéreas Austral TAP - Air Portugal Lufthansa CityLine SATA Air Açores 52

IATA Offices

Main Offices Regional Offices Montreal - Head Office Geneva - Executive Offices Africa Sandown Mews East Block 800 Place Victoria 33, Route de l’Aéroport 88 Stella Street P.O. Box 113 P.O. Box 416 Sandton Montréal, Québec H4Z 1M1 CH - 1215 Geneva 15 Airport 2146 Canada Switzerland Tel.: +1 514 874 0202 Tel.: +41 22 770 2525 Asia Pacific Fax: +1 514 874 9632 Fax: +41 22 798 3553 111 Somerset Road, #14-05 Somerset Wing Singapore Power Building Singapore 238164 Singapore

Main Office Regional Office Country Office China & North Asia Middle East & North Africa North America 3F East Tower 52 Al-Hashemiyeen Street 601 Pennsylvania Avenue NW World Financial Center Abdoun North Building No.1, Dongsanhuang Zhong Road P.O. Box 940587 Washington DC 20004 Chaoyang District Amman 1194 United States Beijing 100020 Jordan Russia and CIS People’s Republic of China Latin America & the Caribbean 19-1 Lyalin Lane Europe 701 Waterford Way Moscow 105062 95 Paseo de Castellana Torre , Florida 33126 Russian Federation Europa United States 28046 350 Avenue Louise Louizalaan Brussels 1050 Belgium www.iata.org