Giovanni Bisignani Director General & CEO

International Air Transport Association Annual Report 2010 66th Annual General Meeting Berlin, June 2010

Promoting sustainable forest management. This paper is certified by the Forest Stewardship Council (FSC) and is cellulose based and recyclable.

IATA Board of Governors 06 Simplifying the Business 30 Director General’s Message 08 Cost Efficiency 36 State of the Industry 10 Industry and Financial Services 40 Safety 16 Aviation Solutions 46 Security and Facilitation 20 IATA Membership 50 Regulatory and Public Policy 24 IATA Offices 52 Environment 26

Note: Unless specified otherwise, all dollar ($) figures in this annual report refer to US dollars (US$). Cautious optimism is returning. But challenges continue. We must rebuild the industry on a new and more resilient foundation. Safety, security, and environmental responsibility are the pillars of our industry, which we must constantly strengthen. Shocks and crises have exposed the weakness of the industry structure. The nearly $50 billion loss over the last decade is a blunt case for big change.

Giovanni Bisignani 6

IATA Board of Governors as of 1 May 2010

Khalid Abdullah Almolhem Andrés Conesa Harry Hohmeister SAUDI ARABIAN AEROMEXICO SWISS

Richard Anderson Enrique Cueto Mats Jansson LAN AIRLINES SAS

Gerard Arpey Rob Fyfe Alan Joyce

David Bronczek Naresh Goyal Temel Kotil FEDEX EXPRESS

Chew Choon Seng Peter Hartman Liu Shaoyong AIRLINES KLM

Yang Ho Cho Pedro Heilbron Samer Majali 7

Hussein Massoud Jean-Cyril Spinetta EGYPTAIR AIR

Wolfgang Mayrhuber Glenn Tilton

Titus Naikuni Tony Tyler AIRWAYS

Fernando Pinto José Viegas TAP LAM- AIRLINES

Calin Rovinescu Willie Walsh

Vitaly Saveliev

Tony Tyler Chairman IATA Board of Governors 8

Director General’s Message Airlines lost $9.9 billion in 2009. traffic fell 2.1%, and cargo dropped 9.8%. Average yields tumbled 14%. Industry revenues fell 15%, or $85 billion, to $479 billion.

The scale of the financial shock As cautious optimism returns, IATA is driving efficiencies across comes into focus with a comparison your association is at your side. the value chain. Our work with airports, to the aftermath of the tragic events of air navigation service providers, and We are working to keep your money September 2001. The revenue fall then fuel suppliers yielded $2.1 billion in safe. Over the past decade, IATA handled was 7%, or $23 billion—nearly a quarter cost savings in 2009. But there were $1.7 trillion through the Billing and of what was experienced in 2009. unjustified cost increases of $2.6 billion. Settlement Plan (BSP), Cargo Accounts We will continue to fight to ensure that The volatility of the operating environment Settlement System, and IATA Clearing the burden of efficiency is shared across is characterized by the oil price—the House with more than 99.9% accuracy. the industry value chain. Crisis also led industry’s cost wildcard. From its peak Over the same period, efficiency gains to progress. The Single European Sky of $144 a barrel in 2008, it fell to an cut unit rates 80%. By February 2010, (SES) drew nearer as a consequence average $62 per barrel in 2009. By the IATA had completed the migration of of the volcanic ash crisis that gripped end of April 2010, the spot price was BSP data processing operations for 42 in April 2010. Seeing the need inching toward $90 per barrel. countries to the Accounting Centre of for greater efficiency, Europe committed China Aviation (ACCA), achieving further Signs of progress emerged in the fourth to fast track SES plans, which will deliver cost savings. quarter of 2009, with a traffic rebound $6.5 billion in cost savings. as dramatic as the fall. By March 2010, We are fighting unfair industry cargo and passenger traffic were within taxation. The majority of the $1.8 billion 1% of prerecession highs. But yields saved in taxation during 2009 was from were 13% down. Risks such as the the elimination of a Dutch departure Greek debt crisis and the Icelandic tax. IATA will fight any attempts by volcano eruption remain large unknowns. governments to finance economic Nonetheless, a strong cyclical upturn stimulus packages with increased in all regions except Europe, careful taxes on our industry. capacity management, and a focus on cost efficiency give hope for bottom line improvement in 2010. 9

IATA continues to deliver cost savings In 2009, IATA launched the Global Five airlines have tested them, and we and improve processes. The Simplifying Safety Information Center (GSIC) to expect certification by early 2011. the Business (StB) program is aiming consolidate IATA safety data in one In the meantime, we are preparing for $16.8 billion in annual savings. resource. This approach was expanded for COP16. Our goal is to bring E-ticketing and common use self-service in March 2010, when IATA signed an governments onboard with our ambitious kiosks have already delivered $4 billion agreement with the International Civil targets, which UN Secretary General Ban in annual savings. The next target is Aviation Organization (ICAO), the US Ki-moon commended as a role model at the end of this year, when 100% Federal Aviation Administration, and for other industries to follow. bar-coded boarding passes will deliver the to share safety $1.5 billion in savings. Fast Travel, information. The industry must also be financially the Baggage Improvement Program, sustainable. Profitability is compromised We are also looking beyond the decade and IATA e-freight also are on target. by the antiquated bilateral system’s of crisis to build a more sustainable IATA added a new component to restrictions on market access and industry—environmentally and financially. StB with the launch of e-services. ownership. It perpetuates hyper- The electronic miscellaneous document Environmental responsibility is a fragmentation. The industry’s top 30 will replace paper processes for sales core promise to our . players do not account for even 50% of ancillary services. By 2013, this will Your association played a leading role of the global market in which 1,000-plus deliver $2.9 billion in annual cost savings. by building industry commitment to airlines compete. Consolidation is a must. three sequential targets for aviation and Most importantly, IATA is working to We can now look to the future beyond climate change: improving fuel efficiency make flying even safer. IATA airlines, the crisis with some cautious optimism. 1.5% per annum to 2020, capping net which must pass the IATA Operational The challenge is to build our future with emissions with carbon-neutral growth Safety Audit (IOSA), outperformed the a vision for an industry that is even safer, from 2020, and cutting net emissions global industry with a hull loss rate more environmentally responsible, and in half by 2050 compared with 2005. of one accident for every 1.6 million sustainably profitable. I am confident flights. Building on the success of More importantly, we are delivering that our great industry has the passion IOSA, the IATA Safety Audit for results. Since 2004, IATA’s efforts have and commitment to deliver the success

Ground Operations (ISAGO) is gaining saved over 70 million metric tons of CO2. that our passengers, shippers, and momentum. Twenty-seven governments Biofuels, with the potential to reduce our shareholders expect. and airport authorities have endorsed carbon footprint by up to 80%, show ISAGO, and 160 audits are complete. good progress and the greatest potential.

Giovanni Bisignani Director General & CEO 10

State of the Industry There is evidence of recovery from the deep global recession, but challenges remain.

Passenger markets The recent cyclical downturn An important question was whether the Overall, passenger demand dropped was the deepest experienced by decline in premium travel was a structural 2.1% in 2009. By December, though, the commercial industry since shift or simply a cyclical downturn, to traffic was up 8.4% on the February the 1930s. Early 2009 marked the low be followed by an upturn. This market low and was rising at an annualized rate point for international air travel markets. segment generates a disproportionate of 9% in the first quarter of 2010. The From the early-2008 peak to the early- amount of profit for network airlines, travel upturn during late 2009 and early 2009 trough, premium travel fell 25%. particularly in long-haul markets. 2010 was not even across markets. Economy travel fell 9%, the decline Weak economic activity in Europe, and Many passengers traveling on premium softened by a shift to cheaper seats. to a lesser extent in North America, led seats are on business, which is driven by to travel remaining fragile within and From mid-2009, air travel markets began international trade and financial activity. between these important markets. By to turn upward, boosted by the massive Growth in premium travel fits closely with contrast, strong economic recoveries fiscal and monetary stimulus measures world trade trends. This is consistent in Asia and generated taken by governments. By the end of with the view that the loss of premium robust upturns in travel in those markets. 2009, premium travel had risen 11% passengers early in 2009 was due to Middle Eastern travel markets benefited and economy 7%. But while the number the unprecedented downturn in from regional economic growth and of passengers traveling on economy economic activity and world trade continued market share gains in long- seats was within 3% of the 2008 peak, and not to a structural loss. haul markets connecting over Middle premium travel lagged 17% below its Eastern hubs. previous high point.

Air travel upturn varied by seat class Premium downturn looks cyclical Strength of upturn varied substantially Source: IATA not structural Sources: IATA, CPB by market Source: IATA 11

Cargo markets Capacity Cargo volumes rose strongly toward Airlines responded to the severity of Narrow-body aircraft utilization, mostly the end of 2009, growing 24%. The the recession with an unprecedented in short-haul markets, has recovered first quarter of 2010 has continued this reduction in both passenger and freight to prerecession levels. This mainly upward trend and shows an annualized capacity. By the end of 2009, passenger reflects capacity cuts in US domestic rate of 26%. Despite shrinking by over capacity in international markets had markets and strong demand in intra- one-quarter during the second half of shrunk 5%. Freight capacity was down Asian markets. However, wide-body and 2008, by the end of March 2010 air 10%, and even more at its lowest point freighter utilization—largely in long-haul freight was within one percentage of in mid-2009. markets—was 7–10% lower at the end its 2008 high. of 2009 than in early 2008. These capacity cuts, combined with Notably, air freight rose earlier and more the upturns in demand, led to load In a capital-intensive industry such as rapidly than overall international trade factors rising very sharply from their aviation, high asset utilization is vital to in goods, a typical postrecession trend. early 2009 lows. By the end of the year, profitability. With such a large proportion When recession led to a large inventory load factors had reached record highs. of costs fixed over the short term, low overhang in late 2008, businesses During the first quarter of 2010, capacity aircraft use means higher unit costs. It abruptly stopped shipping components was being added at an annualized pace also represents redundant capacity that and goods. Air freight slumped as a of 6%, but this remains less than the 9% could very easily return to the market result. As that overhang diminished expansion in demand, and so supply- and put downward pressure on yields. through 2009 shipments began to demand conditions were still tightening. rise, to the benefit of air freight. Load factor rises were also driven by The same trend was evident after aircraft underutilization. Aircraft were on the 2001 downturn. the ground longer, largely due to reduced flight frequencies. Around 160 freighters were taken out of the in-service fleet in 2009, but the passenger fleet expanded.

Air freight down and up, driven Airlines significantly downsized Pushing load factors back by inventory cycle Sources: IATA, Haver capacity Source: IATA to record highs Sources: Platts, RBS 12

Yields Revenues Intense competition continues to exert Freight rates are rising and on average IATA estimates that global airline downward pressure on yields. When were higher in the fourth quarter of 2009 revenues fell to $479 billion in 2009, fuel prices were rising steeply in 2008, than at the same time the previous year. an unprecedented fall of $85 billion, or airlines managed to recover their costs However, the upturn has been highly 15%. This represents a two- to three- through raising premium fares, their least concentrated in a few markets, especially year backward step for the industry. price-sensitive market segment. But the in Asia, where the economic recovery Network airlines with significant long- collapse of business travel led to fire has been strong. Trade with Asia is haul services were hard hit during 2009 sales of premium seats. From peak to highly unbalanced, with flows out of Asia because of the larger proportion of trough, average premium fares fell 26%, stronger than inward flows. Together with their revenues made up by premium and economy fares saw a 17% decline. a shortage of cargo capacity in Asia, this passengers and cargo. Despite a This was a measure of the financial has helped freight rates from Southeast second-half upturn in demand, revenues distress network airlines were under Asia to Europe recover to prerecession from premium passengers were down during the first half of 2009. levels. By contrast, rates in the opposite an estimated 30% in 2009, and cargo direction have barely moved from their From their low points, premium and revenues fell 24%. Although the industry depressed levels. This is also true of economy fares (which exclude fuel has seen volumes and yields rising since rates across the North Atlantic between surcharges and taxes) were up 10% by the middle of 2009, there is still a long the relatively weak economies of Europe the end of the year. But it was still 9% way to go before the revenue levels seen and North America. cheaper to travel economy than in early in early 2008 are recovered. For example, 2008 and 20% cheaper to use premium. year-end 2009 revenues from premium On average, passenger and cargo yields passengers were still almost 30% below fell 14% in 2009. the previous peak. They were still over 20% below peak at the end of the first quarter of 2010.

Higher load factors started to push Rise in freight rates is limited Revenues still have a long way fares up from lows Source: PaxIS Plus to a few markets Source: CASS to recover Source: IATA 13

Fuel costs For the past decade, increases in jet Jet kerosene prices did not rise quite As of mid-May 2010, oil futures markets kerosene prices have been the major as far, since the “crack spread” (the are anticipating a rise in spot oil prices driver of costs. Air transport is an energy- difference between jet kerosene and above $88 a barrel by the end of 2010, intensive industry, so when oil prices crude oil prices) narrowed from a very which would be consistent with a further spiked in 2008 fuel made up 33% of high 50% at the start of the year to rise in the price of jet kerosene to over operating costs on average. By the start an unusually low 15% by year-end, $100 a barrel. of 2009, oil prices had fallen back to reflecting the emergence of significant around $40 a barrel as the so-called excess capacity in the refining industry. Great Recession caused energy By the end of 2009, jet kerosene prices demand to slump. were $85 a barrel. This was well down However, from that low point the industry on the 2008 spike of $180 a barrel has faced continuously rising fuel prices. but back to 2006–2007 levels when By year-end 2009, crude oil prices had economic growth and the ability to offset risen 85%, to $74 a barrel, as economic higher costs with higher revenues was recovery began to raise demand and as much stronger. The volatility in fuel prices futures markets, anticipating strengthening has meant airline hedging strategies have economic recovery, added to upward met only moderate success. pressures.

The dimension of the crisis was unprecedented. Airline revenues plummeted by $85 billion from 2008 to 2009. And we lost two years of growth. Giovanni Bisignani

Fuel prices rose throughout the year Sources: Platts, Bloomberg, RBS 14

Cash flow Profits The cash that airlines are able to Asia-Pacific airlines found their cash IATA estimates that capacity cuts generate from operations gives a clear flows hit dramatically by the recession. and lower average fuel prices cut picture of the impact of revenue and cost In addition, fuel hedges locking in prices industry operating costs by more than fluctuations on the bottom line. Earnings that looked low in mid-2008 went wrong the $85 billion fall in revenues in 2009. before interest, tax, and depreciation and as oil prices slumped. In the second half At the operating or earnings before amortization (EBITDA) as a percentage of 2009, many airlines in this region saw income tax (EBIT) level, the industry was of revenues give a close approximation of an equally dramatic upturn. Cash flows in almost back to breakeven, with losses of airline cash flows in a metric that allows this region are back to a healthier 10% a few hundred million dollars, or 0.1% comparison across regions. Airlines in of revenues. of revenues. However, the increase in North America, Europe, and Asia-Pacific debt as airlines raised cash and the European airlines suffered a gentler experienced very different trends in cash widening of credit spreads increased decline in cash flows, partly because flows during 2009. debt interest payments. As a result, the their hedging strategies offered reduction in losses was limited, and The weakest point for the US airlines better protection against the oil price the global industry ended 2009 with was in mid-2008, as record fuel prices fluctuations early on. However, that is estimated net losses of $9.9 billion. hit them at a time when their hedging offering less of an advantage now, and levels were low and the US economy cash flows did not pick up at all during That total obscures some very different was weak. Early and sharp capacity 2009 because of the weak economic financial performances. Europe, from cuts meant they were able to improve recovery. In fact, a number of European having been one of the best-performing their operational cash flows, albeit from economies weakened in the fourth regions in 2008, reported the largest an exceptionally weak level, throughout quarter of 2009, and this has been losses in 2009. US airlines managed to 2009 and in spite of the recession. By reflected in disappointing revenues substantially reduce their losses from the end of 2009, their cash flows were for the European airlines. 2008, thanks to large capacity cuts, but almost back to 2005–2007 levels. were coming from the weakest position. In April 2010, European airlines were However, debt levels and interest rate North America thus generated the hit hardest by the airspace closure in spreads are high for US airlines, so second-largest net losses in 2009. Europe resulting from the eruption of once debt interest and capital spending Asia-Pacific has seen the largest the Icelandic volcano Eyjafjallajökull. At are taken into account these positive rebound in economic growth and air its peak, the disruption affected 29% of operating cash flows turn into further transport demand, but the region was global traffic. The industry is estimated net losses. mired in the deepest recession at the to have lost $1.7 billion in revenues over start of 2009. That impact caused a six-day period. The greatest share of net losses there to be large. this revenue loss was borne by European carriers, whose operations accounted for 70% of the disruptions.

Operational cash flows did not turn Industry net losses shrank to upward in all regions Source: Bloomberg $9.9 billion in 2009 Sources: IATA, ICAO 15

There were small losses for African Major airlines raised $25 billion of caused non-investment grade debt and Middle Eastern airlines. But in Latin the $30 billion in cash by issuing new costs to rise dramatically. This raised the America, a number of airlines continued debt. There was only $5 billion in new airlines’ average cost of capital to 12%, to produce results that were exceptional equity. In addition, around $13 billion well above its normal 7–8%. But weak given the economic environment. This of aircraft assets were sold and leased cash flows meant that in 2009 the return was the one region that managed to be back. This weakened balance sheets, on capital (which is before debt interest profitable in 2009, partly as a result of with leverage rising sharply in all regions. or dividend payments) was only a little economies in the south of the continent For US airlines in particular, where above the 2008 all-time low, at 1.6%. that proved relatively resilient to the leverage is now around 100%, there The return on capital rose throughout recession. are few unencumbered assets against 2009 and is expected to be higher in which to raise future debt. Without new 2010. There is, though, a long way to go equity, balance sheets may be close to Cash and balance sheets before it approaches the cost of capital, exhaustion, which may make significant which is now falling back to more normal Stronger financial markets in 2009 capital spending on re-fleeting more levels. The industry has not managed to allowed major airlines to raise a difficult. produce adequate returns even in peak $30 billion cash cushion by issuing debt For many airlines, particularly in small years. and some equity on capital markets. countries with poorly developed capital Overall, there was evidence of a This allowed major airlines in North markets, national ownership and control strong cyclical upturn by the end of America and Europe, and some in Asia- rules continue to restrict access to 2009. The trend continued in the first Pacific, to raise their cash or near-cash necessary equity. quarter of 2010. However, the structural balances to 20–25% of revenues. That, problems remain and must be addressed. in turn, offered them a secure cushion Financial sustainability against adverse economic conditions and reduced the risk of major airline Financial sustainability for the industry bankruptcy during 2009. means not just generating profit but also paying investors a “normal” return. The capital markets, however, were Such a return is generally benchmarked only open to the major airlines. Banks in as the average cost of equity and debt Europe and North America are still not (the WACC, or weighted average cost lending easily. As a result, many small of capital). In 2009, the industry was and medium-sized airlines are finding as far from achieving this as it has ever accessing credit and establishing secure been, partly because the financial crisis cash balances difficult. Consequently, the industry remains vulnerable to adverse shocks.

Very different financial performances Major airlines raised $30 billion Return on capital remains inadequate by region Sources: IATA, ICAO in cash during 2009 Source: Bloomberg Source: IATA 16

Safety Figures for 2009 demonstrate the industry’s commitment to safety. Constant improvement is the guiding principle.

IATA Operational Safety Audit In 2009, the accident rate for Western- Success in safety is being driven built jet aircraft was the second lowest by global standards, a coordinated in aviation history. IATA member airlines approach, and industry-wide programs. outperformed the industry average with IOSA illustrates the point. It is an a Western-built jet hull accident rate of internationally recognized audit open 0.62 (measured in hull losses per million to all airlines. IATA membership is flights). This is equal to one accident dependent on IOSA registration, with for every 1.6 million flights, compared the association covering the core costs with the global figure of one accident of renewal audits for its members. for every 1.4 million flights (0.71). Global safety data for 2009 shows The 2009 global accident rate is a 17% that IOSA-registered carriers achieved a improvement over the 0.81 rate recorded safety record more than 44% better than in 2008. Compared with 10 years ago, non-IOSA carriers. As of 30 April 2010, the accident rate has been cut 36%. there are 335 carriers on the registry. The only year that the global accident Airlines are able to share information rate was lower was 2006, when it via the IOSA Audit Report, eliminating stood at 0.65. the need for duplicative audits. This has An analysis of the causes of the 2009 led to over $90 million in savings. accidents focused on the following: IATA is continuously looking to >>Pilot handling was noted as a improve the IOSA program to ensure contributing factor in 30% of the that it remains in the forefront of accidents. safety best practices. As part of this continuous improvement, IOSA audits >>Runway excursions accounted for will be structured to focus more on 26% of all accidents. the verification of implementation. >>Maintenance events, such as errors Additionally, the quality-assurance by maintenance crews, played a aspects of the program have been contributing role in approximately enhanced. They will continue to be 11% of the accidents. reviewed for greater efficiency and improved output as well as for better >>Ground damage accounted for consistency by operators in adherence 10% of all accidents. to IOSA standards. The IOSA program is certified under ISO 9001:2008. IATA initiatives—including the IOSA is one of four cornerstone IATA Operational Safety Audit IATA Safety Audit audit programs in ICAO’s Global Safety (IOSA); the IATA Safety Audit for for Ground Operations Information Exchange (GSIE), launched Ground Operations (ISAGO); the in March 2010. The GSIE is designed ISAGO is the industry’s first global new IATA Ground Operations Manual to take advantage of the various standard for the auditing of ground (IGOM); the Runway Excursion Risk strengths of the ICAO, European Union handling companies. ISAGO will bring Reduction Toolkit; the Global Safety (EU), IOSA, and US Federal Aviation similar improvements in safety and Information Center (GSIC); and the Association (FAA) audit programs, while efficiency for ground handlers to those Ground Damage Database (GDDB)— eliminating redundant audit activity. achieved by IOSA for airlines. are addressing these areas of concern. These initiatives are consistent with IOSA has also been mandated at state Ground damage costs the industry IATA’s comprehensive Six-Point level. Countries that include IOSA as $4 billion annually. The primary aim of Safety Program, which focuses part of national safety oversight programs the program is to reduce aircraft ground on infrastructure safety, safety include , Chile, Costa Rica, Egypt, damage and personal injuries. It is also data management and analysis, , Mexico, Panama, Bahrain, important that ISAGO drives down the operations, safety management Syria, Lebanon, and Turkey. number of redundant audits. systems, maintenance, and auditing. 17

Since its launch in February 2008, ISAGO has gained the support of civil aviation authorities in the United Kingdom, France, the Netherlands, Belgium, Austria, Lebanon, Jordan, Ethiopia, Nigeria, Chile, Macau, Hong Kong, Russia, Canada, and the United States. Airports, such as in , are even making ISAGO one of the conditions for issuing an operating license. Since ISAGO’s inception, 160 audits have been conducted. An audit pool has been established with 40 member airlines, consisting of 195 ISAGO- qualified auditors. By the end of 2009, 28 ground handling providers were on the ISAGO registry from 30 different locations around the world. IATA will conduct a minimum of 120 ISAGO audits in 2010. Taking advantage of early program experience, the second edition of the ISAGO Standards Manual was released in late 2009. Two new programs were launched in early 2010 to complement the ISAGO initiative: IGOM and GDDB. IGOM will provide the first global set of ramp procedures, while the GDDB will provide carriers and ground service providers with a global benchmark to use in reducing the cost of ground damage.

Regional safety rate in 2009 Historical safety rate (Industry western-built jet hull (Western-built jet hull losses per million sectors) Source: IATA losses per million sectors) Source: IATA 18

Safety data management Safety Management System and analysis Operations

A Safety Management System (SMS) IATA produces its Safety Report based IATA’s Safety Group and Cabin Safety is a systematic approach to managing on data collected at the beginning Task Force provide strategic and tactical safety. It covers all operator activities, of each year. Data sources include direction to IATA’s Safety, Operations & including areas such as organizational information from audits, accidents, Infrastructure department in developing structures, accountabilities, policies, incidents, and the Flight Data Analysis priorities. and procedures. (FDA) program.The report presents a The Runway Excursion Risk Reduction detailed summary of statistics, trends, The world’s first SMS assessment Toolkit, over 7,000 copies of which and contributing factors involved in the standards for airlines are included in have been distributed worldwide, is previous year’s accidents. Based on the IOSA Standards Manual (ISM) an example of the Safety Group’s these findings, prevention strategies are 3rd edition, which will launch in June recommendations. The toolkit was developed to enhance operational safety. 2010. These standards have been released in 2009 and will be updated validated to be in full compliance with In November 2009, IATA launched the in 2010. ICAO has joined with IATA in ICAO standards. IOSA carriers will GSIC. The web-based GSIC provides producing the updated toolkit as part of therefore benefit from the first globally IATA members with unprecedented a multiyear, comprehensive global runway recognized comprehensive set of ICAO- access to multiple IATA safety databases, safety program. compliant SMS requirements. To enhance including the IATA accident database, The ITQI aims to enhance technical member SMS programs, a new SMS operational safety reports in the Safety training using a competency-based Implementation Guide will provide SMS Trending Evaluation Analysis Data approach. This focuses on training real program examples to assist airlines with Exchange System (STEADES), IOSA, skills while addressing threats presented implementation. ISAGO, and the FDA. It also provides by accident and incident reports and by information to support the IATA Training Working with ICAO, IATA has been flight data collection and reporting. and Qualification Initiative (ITQI). This helping to create regulatory guidance focuses training resources on the for the next step in SMS, which is the critical issues in pilot and maintenance fatigue risk management system (FRMS). technician training. This is a new process to systematically manage crew fatigue, taking into account IATA’s STEADES database consists changes in aircraft capabilities and airline of operational incident reports from operations. Flight crew fatigue has been participating airlines. In 2009, STEADES identified as a contributing factor in a achieved an 83% increase in operational number of recent accidents, and IATA will safety reporting and now has over produce FRMS implementation guidance 100 airline members. It includes over in 2010. 550,000 reports, increasing at a rate of more than 80,000 reports per year. During 2009, IATA held a number of In 2010, IATA will launch through the SMS workshops around the globe. GSIC and STEADES a broad spectrum They were attended by 53 airlines of operational safety benchmarks. and civil aviation authorities (CAAs); Those benchmarks will allow members aerodrome operators; air navigation to compare their performance with service provider (ANSP) representatives; worldwide marks and will expand and maintenance organizations. into cabin safety operations. 19

Maintenance

IATA’s strategy for maintenance operations continues to focus on the implementation of SMS within maintenance organizations and on the training of maintenance technicians through the ITQI program. Such a focus will mitigate specific deficiencies, including technical documentation issues, unrecorded maintenance, the use of bogus parts, unapproved modifications, and the poor training of maintenance personnel.

Infrastructure safety Infrastructure safety is focused on providing effective and safe communications, navigation, surveillance, and systemwide information in support of airline operations. In February 2010, IATA signed a five-year cooperation agreement with Eurocontrol. This agreement closely ties IATA with the development of the Single European SKY ATM Research (SESAR) initiative and integrates IATA’s GSIC-STEADES analysis with Eurocontrol safety information.

IOSA is making a difference. We see it in the numbers. The industry hull loss rate was one accident for every 1.4 million flights. For IATA airlines it was one accident for every 1.6 million flights. And we are committed to make flying even safer. Giovanni Bisignani 20

Security and Facilitation Security measures must be operationally effective, globally harmonized, and cost efficient.

Risk-managed approach In 2009, IATA implemented its new A security management system (SeMS) security and facilitation strategy. The represents a methodical approach to strategy, developed in close cooperation managing security. SeMS includes with airline members, is focused on five security organizational structures, areas: accountabilities, policies, and proce- dures. It aims to create a security culture >>Ensuring a threat-based, risk-managed throughout an organization. Since SeMS approach to security is a requirement of IOSA, all IATA >>Shaping the regulatory framework members have a baseline level of SeMS in place. The efficiencies generated will >>Managing stakeholder relationships save the industry about $135 million >>Applying innovation and technology per year. >>Ensuring security and facilitation are In 2009, IATA’s focus was on effective and cost efficient increasing the level of awareness and support for SeMS among the relevant national authorities. IATA IATA’s initiatives and lobbying work stressed to ICAO contracting states in 2009, particularly in the field of the importance of SeMS and organized passenger data exchange, included special training sessions for regulator successes that totaled over $500 million audiences. Additionally, IATA worked in cost savings or cost avoidance for with its members on updating the SeMS the industry. section of the IOSA Security Manual to ensure that its standards stay relevant to their structures and operations.

The Obama administration is taking a different approach to security by engaging industry. Combining government intelligence with airline operational expertise is the way forward. No government can keep terrorists outside its borders without the cooperation of airlines and other governments. And we cannot keep terrorists off our planes without the help of governments. Giovanni Bisignani 21 22

European regulatory New working relationship developments with the United States In May 2009, France authorized one-stop Aviation security made headlines IATA’s security and facilitation activities security for flights arriving from other EU in late December 2009 with a failed in 2010 will steer toward achieving the countries. The challenge now is to move terrorist plot on a US-bound aircraft. recommendations, which are in line with beyond the EU’s borders into the United Afterwards, IATA urged the US its long-term strategy. Regional meetings States, Canada, and Asia. One-stop Department of Homeland Security (DHS) of IATA, the DHS, and member airline security in France will save the industry and governments around the world to experts have taken place in Santiago and $30 million per year. It ensures that consult with airlines before adopting Abuja, and more are planned. Progress connecting passengers and baggage unrealistic security measures. has already been made on several fronts, adequately screened at departure do not including the formation of an international IATA Director General and CEO have to go through screening a second working group in conjunction with the US Giovanni Bisignani hosted a successful time. Transportation Security Administration. summit with DHS Secretary Janet IATA advocates a structured approach Napolitano on 22 January 2010 at IATA’s where nations conclude recognition headquarters. The meeting agreements on security that allows marked a far more proactive response one-stop security. One of every four from the US administration than passengers at the world’s top 120 previously and resulted in the adoption airports is a connecting passenger, of the following recommendations: so removing this unnecessary layer of >>Maintaining formal continuous redundant controls on a global basis consultation with all airlines could save $1.6 billion per year. It would also increase infrastructure efficiency and >>Refining existing emergency strongly decrease the hassle factor. amendments to better address the international environment The has agreed that when appropriate screening >>Eliminating inefficiencies in technology is available, the EU-wide the data collection process liquids and gels ban for passengers >>Strengthening government-to- using European airports will be lifted. government outreach >>Developing a next-generation checkpoint 23

Innovation and technology Cost and efficiency IATA’s supply chain vision for cargo Early feedback from regulators IATA continues to lead industry security—Secure Freight—gained describes the manual as an essential efforts to ensure that governments’ important ground in 2009. A draft tool in establishing a robust approach requests for passenger data, including Secure Freight Standards Manual to cargo security. Advanced Passenger Information (API) lists the requirements for supply chain and Passenger Name Records, are In parallel, strong support of key stakeholders to become certified. reasonable and adhere to international ICAO contracting states has ensured standards and practices. These requirements are largely based that supply chain security will be in on best practices and are suitable for Amendment 12 to ICAO’s Security As a result of these efforts, the implementation in countries where Annex 17. A new standard was adopted Dominican Republic, South , regulation is lacking or weak. They will by the Aviation Security Panel in March Mexico, Brazil, the United Kingdom, not be duplicative or overlay effective 2010. Malaysia, the first pilot country, Italy, Peru, and Panama aligned their regulations. plans to write a National Secure Freight API requirements with international Program into its national law before the guidelines. More than $250 million in Among other responsibilities, end of 2010. savings or cost avoidance was achieved participating stakeholders will be in 2009 by addressing tactical issues required to related to costs and efficiency. >>Pack air cargo and prepare it for carriage in a secure environment >>Protect air cargo from unauthorized interference >>Create a message confirming the security status of the freight >>Maintain a chain of custody ensuring that Secure Freight is only handled by approved operators >>Agree to be audited against Secure Freight standards by their regulator 24

Regulatory and Public Policy The deep recession highlighted airlines’ need for the same commercial freedoms as other businesses. Granting these freedoms would allow governments to realize the full potential of aviation’s economic and social impact.

Liberalization International air transport is governed In October 2008, IATA hosted its compensation, just as if their flight by a network of antiquated bilateral Agenda for Freedom Summit in , had been cancelled. air service agreements (ASAs) that Turkey, to encourage governments to Deficiencies in Europe’s passenger prevent airlines from operating like other remove the archaic rules that restrict air- rights regulations were clearly evident businesses. More than 3,500 ASAs lines’ ability to enter foreign markets or in April 2010. Over 100,000 flights restrict where airlines can fly, when they to restructure across borders. were cancelled over six days because can fly, and what price they can charge Following that meeting, in November of a volcanic ash cloud over Europe. to fly. 2009, in Montebello, Canada, seven Insurance companies were able to Most countries have placed foreign countries (Chile, Malaysia, Panama, limit their liability, as this was an “act ownership and control restrictions on Singapore, Switzerland, the United of God.” Despite the situation being their airlines specifying the maximum States, and the UAE) signed the completely beyond the control of airlines, percentage of airline shares that can Multilateral Statement of Policy Principles the European Commission insisted be owned by foreign nationals. These regarding the Implementation of Bilateral that airlines continue to provide care to severely limit the ability of airlines to Air Services Agreements. The statement stranded passengers. This strengthened consolidate across borders and raise was also endorsed by the European the industry’s call on the European much-needed capital. Commission. Commission to review this legislation, which places an unfair burden on airlines. Airlines urgently need access to the The policy principles are non-binding same tools as other global enterprises. and address four main areas: In the United States, the Department The benefits of a liberalized airline of Transportation implemented rules that >>Freedom to access capital markets industry are well established. For impose heavy fines on domestic carriers example, IATA estimates that the full >>Freedom to do business for tarmac delays of over three hours. liberalization of the airline industry by Thailand, Brazil, and Chile have also >>Freedom to price services Chile, Singapore, and the United Arab recently considered passenger rights (UAE)—all three signatories of >>Freedom from market distortions legislation. the IATA Agenda for Freedom—would It is understood by all parties, and is Regulations or rules that put pressure result in the addition of approximately 20 clearly stated in the opening sentence on airlines to avoid a three-hour delay million passengers, 200,000 jobs, and of the statement, that a level playing field to escape the obligation to compensate $3.6 billion in GDP growth. is a prerequisite for liberalization. passengers, or to avoid significant In March 2010, the United States and fines, ignore the preference of most the European Union concluded their Passenger rights passengers to get to their destination Second Stage Air Transport Agreement. rather than having their flight cancelled. Unfortunately, both sides agreed to defer Unrealistic passenger rights regulations Delays and cancellations are more often the issue of ownership and control until continue to hinder airlines’ ability to than not outside the control of airlines. the necessary legislative changes in the provide a safe, quality product to their Severe weather, airport congestion, air US restrictions on ownership are made. customers. traffic control delays, airport equipment shortages, and mechanical problems In 2009, IATA worked with the National all contribute to disruption in airline Airlines Council of Canada (NACC) to schedules. provide expert testimony in opposition to proposed legislation that would have The cost of fines will have to be The industry can no longer imposed significant fines on all airlines recouped from passengers, the main afford the restrictions of the operating in Canada for delays or source of airline revenue. And rather bilateral system. Airlines need cancellations, with no accommodation than governments mandating rights, a level playing field and the for weather. While the proposal seems passengers unhappy with their service normal commercial freedoms unlikely to become law, IATA and NACC can simply vote with their wallets and to access markets and global remain vigilant on this issue. choose to take their business to another carrier. capital. Meanwhile, the European Court of Giovanni Bisignani Justice issued a judgment interpreting IATA will continue to oppose, through existing European passenger rights political and legal channels, unnecessary, legislation to mean that passengers counterproductive, inflexible, and costly who reach their destination three hours legislative mandates on how airlines or more after the originally scheduled should address their customers’ needs. arrival time are entitled to monetary 25

Passenger taxation In 2009, IATA secured tax savings for Jordan, for example, introduced a new continues to work with WHO and the industry of $1.79 billion. Most of Terminal User Charge, and the existing ICAO to develop criteria to evaluate the this was due to the Dutch government’s Civil Aviation Fee was increased to efficacy, feasibility, and safety of aircraft cancellation of its Air Passenger compensate for revenue lost because nonchemical disinfection systems. IATA Departure Tax from 1 July 2009, which of a cancelled ticket tax. also held a well-received Aviation Health saved $1.6 billion. KLM was instrumental Conference to highlight the challenges Another concern is the development in this effort. Compared with the multi- and responses to Influenza A (H1N1) in of tourism taxes in the Americas. billion dollar hike in taxes in 2008, the commercial aviation community. Following the introduction of a tourism increases were limited to $252 million fee on select passengers traveling to the In addition, IATA participated in the in 2009. United States, Costa Rica, Nicaragua, WHO’s update of its Guide to Hygiene No major new ticket tax schemes and countries in the Caribbean, tourism and Sanitation in Aviation to ensure that were introduced thanks in part to the tax proposals have multiplied. This has document reflected the operational and economic recession. Disappointingly, a counterproductive effect on tourism technical realities of international aviation. and despite strong industry opposition, numbers and dilutes airlines’ role as Internally, IATA activated its Corporate the UK government continued with a an economic catalyst. Crisis Coordination Group (CCCG) to planned hike in its Air Passenger Duty. ensure the safety of IATA employees This increased total revenues collected Health and pandemic and the continuity of IATA core airline to $3.8 billion annually. preparedness services. The CCCG works closely There have been some other positive with WHO and governmental medical developments in taxation. With effect In 2009, IATA worked closely with the institutions to promote a consistent from 1 January 2010, the Jordan Ticket World Health Organization (WHO) and approach to crises throughout the Aid Tax that had been in place since ICAO to develop specific guidelines industry. May 2009 was withdrawn. The tax had to help airlines address the Influenza been introduced based on the French A (H1N1) pandemic. Public health Solidarity Tax concept but was rescinded measures at key airports were evaluated, by law following airline and IATA protests. and best practices were shared with Other achievements over the year countries around the world. include the reversal of an increase in IATA developed a health declaration the Animal and Plant Health Inspection card for use during the pandemic and (APHIS) fees in the United States following industry protests and the exemption of aeronautical charges from a value-added tax in Indonesia. IATA will continue to be vigilant and to launch robust campaigns against taxation on the international aviation community. Despite the positive developments, 2009 may be merely a lull. Creative yet counterproductive schemes and unfair taxation proposals will persist. 26

Environment Airlines, airports, air navigation service providers, and manufacturers share a common vision for aviation

and climate change. Their commitment includes capping net CO2 emissions from 2020 with carbon- neutral growth and aiming toward a 50% reduction in net CO2 emissions by 2050 compared with 2005.

The industry has witnessed many To attain these goals, IATA is calling UN Secretary General Ban Ki-moon changes since IATA called for a zero- on governments to work through ICAO commended the industry on its emissions future at the 2007 AGM to establish a global framework for leadership position. Aviation is, to in Vancouver. But environmental addressing aviation emissions. The date, the only industry that has been responsibility remains a fundamental industry already has full and effective able to put forward such ambitious promise of aviation. cooperation with ICAO, and the proposals at a global level. organization remains the ideal In June 2009, IATA’s Board of Governors IATA continues to campaign for conduit for environmental work. underlined this commitment by adopting positive economic measures with three sequential goals: All aviation stakeholders are united respect to the environment. It is calling behind the global framework approach. on governments to replace punitive 1. Further improve fuel efficiency an In September 2009, it was presented to taxation with instruments that ensure average of 1.5% annually by 2020 the ICAO High Level Meeting on Climate more investment in research; the 2. Cap net carbon emissions with Change, where it was acknowledged upgrading of air traffic management carbon-neutral growth from 2020 in the final declaration. Three months infrastructure; and the accelerated later, the industry also presented its development and deployment of low- 3. Achieve a 50% reduction in net CO 2 global concept to the United Nations carbon alternative fuels, particularly emissions by 2050 compared with Framework Convention on Climate new-generation biofuels. 2005 Change (UNFCCC) Conference of the Parties (COP)15 meeting in .

Emissions reduction roadmap 27

Four-pillar strategy

1. Technology 3. Infrastructure New technology is integral to the Also in 2009, a major step forward was IATA has continued to work with long-term vision of carbon-free flight. achieved with the technical certification key stakeholders, including ICAO and Introducing increasingly fuel-efficient of fuels containing up to a 50% mix of ANSPs, and in 2009 helped the industry aircraft into the global fleet is the most coal to liquid, gas to liquid, and biomass achieve 266 air route and 253 airport effective way of reducing emissions to liquid using the Fischer-Tropsch and airspace improvements. This resulted over time. Each new generation of process. Full certification of 100% in CO2 emissions reductions of 4.02 airframe and engine combinations biofuels is expected by the beginning million metric tons and savings of brings improvements of 20–30% in fuel of 2011. $682 million. efficiency over the aircraft it replaces. Moreover, IATA is a member of the An important enabler is the ICAO IATA’s research partners are running Roundtable on Sustainable Biofuels Performance-Based Navigation (PBN) performance models to predict the CO 2 that is working to establish agreed-upon program. PBN avoided nearly 400,000 savings of future aircraft. This work will sustainability criteria for biofuels. It is also metric tons of CO in 2009. Airlines help guide IATA’s airline members in 2 taking part with other stakeholders in saved $66 million as a result. PBN’s fleet planning. the EU’s Sustainable Way for Alternative implementation at Chennai Airport in In June 2009, IATA published the Fuel and Energy in Aviation initiative. India alone resulted in 53,000 metric

Technology Roadmap. This document tons of CO2 savings ($9 million saved). outlines the potential environmental PBN also enhances the safety, efficiency, benefits of new technologies and accessibility of airports. for airframes, engines, air traffic 2. Operations IATA is working with ICAO on a management, and alternative fuels. In 2009, IATA’s Green Teams helped global campaign in parallel with

airlines reduce their CO2 emissions by PBN to implement flexible routes that some 8 million metric tons, saving them would change according to winds and Alternative fuels $1.8 billion. The goal is to have all IATA operational requirements. Progress is being made in the members complete the Fuel Efficiency Additionally, the association remains development of alternative, low-carbon Gap Analysis (FEGA). Over 100 airlines engaged in the long-term Single fuels for aviation, especially those derived have so far taken part. The IATA Fuel European Sky ATM Research (SESAR) from biofuels. In 2009, Continental, Book supports recommendations in and Next Generation Air Transportation Airlines, and KLM carried out flight fuel management efficiency. Management System (NextGen) projects tests using various mixes of biofuels. IATA worked with over 120 airlines in in Europe and the United States, ran the first commercial 2009, delivering savings averaging 3% of respectively. The European Parliament flight using a gas-to-liquid fuel. their annual fuel budgets. Improvements has approved a 2012 implementation included better flight management, flight date for Functional Airspace Blocks planning optimization, auxiliary power unit (FABs). These will greatly reduce the usage, maintenance, and aircraft weight complexity in European airspace and management. enhance efficiency. An important EU-US memorandum of understanding should be signed by June 2010. It will further the political resolve to ensure that both SESAR and NextGen are harmonized, interoperable air traffic systems. 28

4. Economic measures ICAO Assembly and COP16 Carbon Offset Program The UNFCCC COP15 meeting in At the end of September 2010, the Heading into 2009, some 30 IATA Copenhagen was the culmination of member states of ICAO will gather in airlines had independently established intense climate change negotiations in Montreal for the 37th triennial assembly. carbon offset schemes. 2009. Although COP15 did not formalize IATA believes that it is vital that the final At the request of the IATA Board of a global treaty, IATA believes that progress assembly declaration is clear on targets, Governors, in 2009 IATA developed was made in gaining support for the in line with the industry’s ambitious and implemented an industry-wide industry’s position. vision. Moreover, it should call on all carbon offset program. The first airline nations to agree to a global framework However, the lack of formalization to launch that program was TAP Portugal, for addressing aviation emissions under could lead governments to establish on 5 June, World Environment Day. For the auspices of ICAO. unilateral emissions trading schemes its efforts, TAP Portugal received the or taxes that do nothing to reduce It is particularly important that measures Planet Earth Award 2010 in UNESCO’s emissions. Such schemes and taxes to accommodate the needs of developing Most Innovative Sustainable Product are not effective incentives. And their countries are established. A decade ago, category. By year-end 2009, 16 airlines lack of harmonization distorts under ICAO’s leadership, governments had signed up to the industry program. competition. agreed to a balanced solution on aircraft These programs will go live during 2010. noise that included extended timelines IATA is working to extend the program IATA will continue to promote for developing nations. This past success to other airlines and Global Distribution alternative positive measures within a could provide guidance for governments Systems (GDSs). global framework and to strongly oppose searching for an inclusive solution on local and regional taxes and levies. The IATA program works behind carbon emissions. an airline’s own web sales portal to The president of the ICAO Council calculate the emissions for a given has established an informal group of flight. This calculation uses ICAO’s 18 member states to develop proposals methodology but the airline’s emissions on addressing climate change for data. The program only offsets emissions presentation to the assembly. For the through UN-certified emissions reduction first time, industry representatives credits, guaranteeing the highest- have been invited to participate in the possible quality and credibility. The meetings. IATA will also contribute to IATA Carbon Offset Program is also the UNFCCC intersessional meetings accredited under the UK government’s taking place during the year. Quality Assurance Scheme for Carbon Offsetting. In December 2010, the UNFCCC COP16 will take place in Cancun, Mexico. The industry will again field a strong delegation to ensure that its position is understood and promoted in the negotiations.

Our strategy has already saved over 70 million metric tons of carbon emissions. UN Secretary General Ban Ki-moon commended aviation’s united efforts on climate change as a role model for others to follow. Giovanni Bisignani 29

European Union Emissions Communicating aviation Trading Scheme and the environment The inclusion of aviation in the European Aviation remains a focal industry In the run-up to the UNFCCC COP15 Union’s Emissions Trading Scheme for the media in environmental meeting in Copenhagen, IATA teamed (EU ETS) from 2012 is affecting every discussions. Effective communication with airlines on a campaign aimed aircraft operator flying into, out of, or is vital to ensuring that the industry’s at delegates and politicians. Some within the EU. IATA is joining many environmental efforts, significant 15 airlines flying to Copenhagen others in the industry—including the US improvements, and ambitious goals utilized seat-back flyers and in-flight administration—in questioning the legality are recognized. entertainment systems as part of the of the scheme under international law. campaign. While the event was running, To this end, IATA has continued Already, IATA has joined US carriers IATA advertised the industry’s position its campaign of installing interactive and the US Air Transport Association in in the International Herald Tribune. environment stands at major airports bringing the first case to the UK courts. There was also an industry position in Europe and Asia. The stands inform wraparound for newspapers distributed Despite the legal uncertainty, in travelers about the industry’s work in in Copenhagen. 2009 airlines were obliged to submit such areas as shortening routes, new monitoring plans to their administering technologies, and biofuels. The stands IATA continues to play a major member country. From 1 January 2010, have appeared at airports in Europe and role inthe industry’s environmental they have had to start monitoring metric Asia. These include , Geneva, communications campaign. The ton–kilometer and emissions data. Hong Kong, Istanbul, Kuala Lumpur, ongoing rebuttal of misleading or Heathrow, , , inaccurate comments in the media IATA continues to press for a global Singapore, and . has been strengthened, and the solution—and to express concern environmental information website about the extraterritorial nature of the (www.enviro.aero­) has been translated EU scheme—while working to support into six languages. The website has also airline members in complying with the been linked to popular portals, such as requirements of the EU ETS. Updated Twitter and YouTube. information is supplied to members on IATA’s website (www.iata.org/mrv). IATA also runs a number of training courses for future verifiers to educate them on airline operations to facilitate their work.

www.iata.org 30

Simplifying the Business Since 2004, Simplifying the Business has delivered on its promise of an improved travel process for airlines and passengers alike. New initiatives will complete the journey.

StB is changing the way the industry Five StB initiatives have the potential to >>The Baggage Improvement operates. The program already saves save the industry a further $12.8 billion Program (BIP) addresses all causes the industry $4 billion annually through a year: of baggage mishandling. The BIP’s the successful completion of 100% goal is to cut baggage mishandling >>Bar-coded boarding passes (BCBPs) electronic ticketing and common-use in half by the end of 2012. Potential eliminate costly magnetic-stripe self-service (CUSS) kiosk projects. annual savings: $1.9 billion boarding passes and offer more choice for passengers. For example, BCBPs >>The Fast Travel program provides can be accessed via the web, a kiosk, passengers with more control over a check-in desk, or a mobile phone. their journeys and saves airlines Potential annual savings: $1.5 billion money through automation. It introduces self-service options in the following areas: bags ready to go StB’s potential annual savings in 2010 ($ billion) (bag registration); document check; flight rebooking; self-boarding; and bag recovery (lost bag registration). Potential annual savings: $1.6 billion >>IATA e-freight replaces paper documents with electronic messages. This makes for faster, more reliable air freight. Potential annual savings: $4.9 billion >>IATA e-services replaces paper miscellaneous documents with electronic versions, simplifying airline accounting and providing easier access to more services for passengers. Potential annual savings: $2.9 billion 31

Simplifying the Business

Initiative Current Status as of 30 April 2010

BCBP (capability) 86% BIP (diagnostic visits) 29 Bags ready to go (capable airlines) 30 Document check (capable airlines) 14 Fast Travel Self-boarding (capable airlines) 17 Bag recovery (capable airlines) 20 Countries and territories 25 IATA e-freight Major airports 50 Documents covered 16 32

Baggage Improvement E-travel Program Fast Travel

An e-travel vision—where airlines no Lost baggage costs the industry more The vision of Fast Travel is to longer issue any paper documents to than $2.5 billion every year according provide passengers with more choice, passengers—guides several StB initiatives. to the 2010 SITA Baggage Report. It is convenience, and control through self- also the second most important factor in service options. Fast Travel is made up The achievement of 100% e-ticketing having a pleasant trip according to the of five projects: in 2008 enabled electronic boarding 2009 IATA Corporate Air Travel Survey passes. Over 25 airlines now issue >>Bags ready to go enables passengers (CATS). mobile BCBPs, where passengers to deliver their bags tagged and ready receive IATA-standard 2-D barcodes In 2009, the BIP team visited 25 for acceptance by a check-in agent, on their mobile phones. Passengers can airports that are mentioned in 28% of speeding up the check-in process then present their phones at security, at mishandling files. The team proposed >>Document check allows passengers the boarding gate, and when they enter solutions that addressed over 90% of to scan travel documents at kiosks the plane. The industry aims to be 100% mishandling issues in some airports, for transmission and validation by BCBP compliant by the end of 2010. proving the methodology of the program government authorities Over time, it is expected that mobile and its solutions toolkit. One example BCBP will increase in use, as it provides is Charles de Gaulle Airport in , >>Flight rebooking allows passengers even greater convenience and flexibility where improved its baggage to obtain a new boarding pass for than self-printed BCBP. performance 40% during the fourth cancelled or delayed flights at a self- quarter of 2009 compared with the same service channel The last step in fulfilling the e-travel vision period in 2008. The BIP team identified is e-services. This is the removal of paper >>Self-boarding provides automated 30 solutions from its baggage toolkit miscellaneous documents. Items such as boarding gates for passengers, as in during its visit, of which 24 were selected excess baggage tickets and lounge access a train or subway station, reducing by Air France for implementation. vouchers require legacy paper processes, boarding lines which adds cost and complexity to In 2010, the BIP will reach out to 35 >>Bag recovery allows passengers to industry distribution systems. airports. Fifteen will receive diagnosis report a missing bag at a kiosk instead visits. The other 20 will be part of the With e-services, these documents will of waiting in line at a baggage service self-help program, featuring workshops be replaced with electronic versions using counter and a solutions toolkit. IATA’s Electronic Miscellaneous Document Over 60 implementations across these (EMD) standard. Passengers will be able By the end of 2012, the BIP will five areas will take place by the end of to book each component of their journey engage airports that account for 85% 2010. through their channel of choice. For of mishandling claims. example, a travel agent could book an economy fare and lounge access without the need to go directly to the airline. The IATA e-services project, approved by the IATA Board in December 2009, will drive the implementation of the EMD standard across the industry. E-services has the following targets: >>All GDSs and 10 airlines must be EMD capable by the end of 2010 >>The industry must be 100% EMD capable by the end of 2012 >>IATA’s distribution systems must have 100% usage of EMDs by the end of 2013 The introduction of the EMD standard will also facilitate further efficiencies in BSPs by replacing virtual Multi- Purpose Documents (vMPDs) and virtual Miscellaneous Change Orders (vMCOs). 33 34

End-to-end IATA e-freight passenger experience Each air cargo shipment can The Joint Passenger Services require more than 30 different paper Conference created the Passenger documents—increasing the cost of air Experience Management Group (PEMG) freight and lengthening transport times. in October 2009 to review the entire IATA e-freight is an industry-wide initiative end-to-end passenger process. The involving airlines, freight forwarders, PEMG—a merger of Fast Travel and ground handlers, shippers, customs Simplifying Passenger Travel—will brokers, and customs authorities. IATA provide industry standards and e-freight replaces paper documents recommended practices that improve with electronic messages, increasing passenger movement across a the speed and the reliability of air freight. 14-step, end-to-end process. By the end of 2010, 44 locations The PEMG will also work to promote and 76 major airports, representing over one-stop security and to increase 80% of international air cargo volumes, passenger preparedness, reducing will be e-freight live. And internationally the time people spend in line. standardized electronic messages will have replaced the 20 paper documents for which there are agreed international standards. 35

Simplifying the Business can save the industry up to $16.8 billion each year and make our processes easier for travelers and shippers. We must continue to take advantage of technology to reinvent our way of doing business with increasing efficiency and convenience. Giovanni Bisignani 36

Cost Efficiency Airport and air navigation infrastructure charges cost airlines at least $54.2 billion a year, about 11% of their total expenditures. Monopoly suppliers must share the burden of change.

Infrastructure charge freezes and real In 2009, IATA’s successful campaigning In Africa, at the joint ICAO/African cost reductions are vital to airlines’ on these principles secured cost savings Civil Aviation Commission (AFCAC) ongoing battle for sustainability. Key of $2.1 billion, including real reductions, Regional Symposium in August 2009, principles, contained in ICAO policies, from airports, ANSPs, and fuel suppliers. IATA expressed concern about the lack must be applied to infrastructure The savings, however, were wiped out of compliance with ICAO airport and air charges: by $2.6 billion in increased charges traffic control (ATC) charging principles from the same areas. across Africa. With IATA support, ICAO >>Transparency and AFCAC will organize user charges >>Cost-related charges Industry-wide policy change workshops to raise awareness among African civil aviation authorities, airports, >>Airline consultation Throughout 2009, IATA successfully and air navigation services regarding >>Equitable charges structure lobbied for a stronger framework for relevant ICAO policies. for all airlines infrastructure charges. In May 2009, the European Commission (EC) proposed a >>Single till Directive on Aviation Security Charges Airports >>Productivity improvements in Europe. It is largely complementary to the EC Airport Charges Directive issued Savings in airport charges of $1.5 billion earlier in the year. It states that the money during 2009 were more than offset by raised by airport security fees should be increases of $2 billion. These increases used exclusively to finance security costs. were caused mainly by a few major cases. New airport development fees and ICAO and the Airports Economics Panel increased airport charges in India added and Air Navigation Services Economics $587 million, a passenger fee increase Panel (AEP/ANSEP) met in December in cost $227 million, and overall 2009 to discuss amendments to the charges increases at London Heathrow ICAO guidance manuals for airport and put $161 million on the bill. The South ANS economics (documents 9161 and African airports company also tabled a 9562), as well as other improvements. proposal for a 133% increase IATA is heavily involved in the final drafting in 2010–11. of the manuals in preparation for their approval at the next AEP/ANSEP in September 2010. 37

The Americas and In Europe, following the UK Competition In India, the Airports Economic Meanwhile, in South America IATA’s Commission’s endorsement of IATA’s Regulatory Authority (AERA) has efforts contributed to $123 million call to break up the BAA monopoly, been established and is actively in cost avoidance at Lima Airport in was sold to Global engaged in setting the appropriate Peru. A close relationship with the Infrastructure Partners, owners of London charges and regulatory framework. regulatory authorities in Brazil should City Airport, for $2.3 billion. The sale of IATA is working closely with AERA ensure an ICAO-compliant regulatory London Stansted and either or to ensure its alignment with ICAO framework and safeguard the upcoming Edinburgh airports has been delayed by principles. Nevertheless, airport commercialization process of Brazilian a BAA appeal to the Competition Appeal charges at and rose airports. Tribunal. dramatically in mid-2009. In North America, the US government IATA is fully engaged in a review to Elsewhere, Singapore Airport responded to the drop in air traffic by reform UK airports’ economic regulations. announced an airline support package releasing $200 million through Economic Objectives include improved competition, for 2010 that includes an average 12.5% Recovery Funds to US airports. This service quality, and cost-effectiveness. landing fee reduction. And Malaysia helped offset airport charges. Airports announced airline cash-back In Canada, the Greater Toronto schemes to promote traffic growth. Airports Authority reduced landing This is in addition to the 50% landing North Asia and Asia-Pacific and terminal charges 10%, saving fee rebates in place from April 2009 airlines an estimated $50 million. The Civil Aviation Administration of China to March 2011. provided various relief measures in 2009 IATA continues to work to address mainly targeted at domestic airlines. In late 2009, agreement was reached the Federal Crown Rent that burdens International airlines received modest with Japan’s Narita International Canadian airports with unjustifiable and relief from a landing fee surcharge Airport on reductions in landing charges. unacceptable costs, which are passed waiver. However, there is little sign of The good news was offset by new on to airlines. passenger security and transit fees. a reversal of the high airport charges IATA is also launching a campaign in force in China since March 2008. with the Arab Air Carriers Organization to tackle civil aviation taxes and charges issues in the Middle East. Six countries— Egypt, Jordan, Lebanon, Saudi Arabia, Syria, and the United Arab Emirates— were identified as priorities. 38

Air navigation service providers Fuel The future Savings achieved in air navigation In 2009, IATA participated in fuel The results of 2009 will be tough charges were almost equal to the campaigns that saved the airline industry to repeat in 2010. Providers and increases, at $550 million and $546 $383 million. Aéroports de Paris and governments will be seeking to fill their million, respectively. Savings came largely London Gatwick agreed to eliminate empty coffers through increased charges from Eurocontrol states and from Russia. unjustified airport fuel fees, saving $187 and new taxes. Adapting to the post- In Russia, airlines saved $44 million million and $52 million, respectively. In crisis economic environment is crucial. because of the devaluation of the ruble. Peru, a government decision to exempt IATA must now focus on long-term IATA applauded 15 Eurocontrol member jet fuel from the excise tax saved $108 agreements for charges and on avoiding countries that froze or reduced their million. the fallout of under-recoveries from 2010 unit rates, saving $378 million. 2009. IATA’s efforts on the regulation of But 19 other European nations wiped fuel supply, supply chain, and refueling The IATA Board of Governors has set a out these benefits with cost increases services bore positive results. The target for 2010 of savings of $2 billion. of $421 million. European Commission made several This includes at least $0.5 billion in real The European Commission is finalizing positive changes to its directive on cost reductions. legislative text for a performance compulsory stock-holding obligations, improvement scheme for European such as reducing the required stock air traffic services. Given the delays in obligation from 120 to 90 days. It implementing the Single European Sky, also rescinded its earlier decision to this scheme must ensure that long- introduce a deadline of 15 minutes awaited improvements in cost efficiency before departure for a customs export and cost control are realized as soon as declaration for jet fuel. Airlines can possible. FABs have been determined, now operate without interruption. and performance targets are due in IATA and industry efforts to increase summer 2010. competition for the supply of jet fuel Achieving the Single European Sky have met with success. The Russian took on a new urgency as a result of the Federation introduced legislation favoring six-day shutdown of airspace in Europe. open markets. This move was mirrored The eruption of the Icelandic volcano in the Ukraine and in Kazakhstan. India in April 2010 forced an extraordinary announced competitive, formula-based meeting of European transport ministers pricing structures, while Ho Chi Minh in early May. The ministers agreed on City (Tan Son Nhat International Airport) political support to fast track the Single welcomed new entrants to a previously European Sky project. Key developments monopolistic market. include the implementation of a IATA also continued work on fuel supply European network manager, adoption reliability. This includes airport-specific of the SESAR deployment strategy improvements, such as the jet fuel within 2010, and the accelerated tankage study for London Heathrow implementation of FABs. Airport. Solutions were also proposed for In Asia-Pacific, Airservices Australia major supply chain bottlenecks in Africa, froze charges for two years up to June the Caribbean, and the United Kingdom. 2011. IATA is in consultation with IATA has launched a fuel fees and Airservices Australia on the development charges database for the industry. A of a best practice service charter. It business case for the global introduction is also discussing with Airways New of the IATA Standard Intoplane Fueling Zealand innovative commercial models Procedures will be completed in 2010. that address ATC charges in a traffic downturn. 39

Airlines pay $54 billion to airports and ANSPs each year. The last financial crisis saw airline revenues plummet by $85 billion. All our partners in the value chain—including airports and ANSPs—must come to the table with efficiency gains that lead to cost reductions. Giovanni Bisignani 40

Industry and Financial Services IATA’s financial systems are improving efficiency and cash flow for the industry at a critical juncture.

Billing and Settlement Plans IATA’s financial services handled IATA’s BSPs are an interface between Also in 2009, 42 BSP locations were approximately $280 billion of the airlines and travel agents. They are an successfully migrated to the Accounting industry’s money in 2009, 20% lower efficient, reliable, and cost-effective Centre of China Aviation (ACCA). ACCA than the previous year’s $350 billion system that simplifies the selling, was already responsible for BSPs in the because of the economic recession. reporting, and remitting procedures People’s Republic of China, in Chinese BSPs accounted for the majority of the of IATA-accredited agents. Taipei, and in the special administrative total at $191 billion. The Cargo Accounts regions of Hong Kong and Macao. All BSPs processed some 459 million Settlement System (CASS), which locations will be served by ACCA’s transactions in 2009. Bad debt on settled $20 billion; the IATA Currency headquarters in , China. sales remained low. New BSPs were Clearance Service (ICCS), which settled implemented in Ghana, Vietnam, and $23 billion; and the IATA Clearing House Kyrgyzstan. There are now 86 BSPs (ICH), which settled $40 billion, also covering 168 countries and territories. Cargo Accounts made significant contributions. Settlement System In December 2009, all BSPs became Precautionary measures instigated in 2008, paperless. Paper documents have been During 2009, IATA added 13 CASS such as opening secondary accounts replaced by vMPDs, supplied via IATA operations to the global network, bringing in all locations as a contingency against BSPlink, and by vMCOs, supplied in the total to 97. Highlights include the bank failures, continued in 2009. Rapid some BSPs via GDSs. The next step is addition of import operations for response teams and business continuity to replace the vMPDs and vMCOs with Australia, Canada, the Netherlands, plans were also readily available. electronic miscellaneous documents. Switzerland, and the United Arab Emirates. BSP/CASS unit charges to airlines 41

Strengthening IATA Currency financial controls Clearance Service The combined value of settlements The secure operation of BSP and CASS The ICCS helps airlines manage processed by CASS in 2009 fell 28% systems is a core function of IATA, with a the repatriation of their worldwide sales from 2008 record levels. Despite the demonstrated track record of operational funds at optimal market exchange rates. economic turmoil of 2009, the collection effectiveness and efficiency. It processed $23.3 billion in 2009 on success remained stable, at 99.98%. behalf of its 264 user airlines. As part of IATA’s ongoing activity and IATA continues to enhance CASS. commitment to operational integrity, a The ICCS is a key component Improvements include electronic fundamental review to further strengthen of airlines’ treasury tools and now and fiscal compliance with these systems has been launched. The covers 105 of IATA’s BSP and CASS various value-added tax requirements review will focus on those aspects of the operations. In 2009, 14 countries were throughout the world. systems related to the receipt of funds added, including coverage of the Eastern from travel agents, their reconciliation, Caribbean region. The ICCS also offers In 2010, CASS will focus on expanding and their settlement to the participating an accelerated repatriation option import operations further as IATA seeks airlines. This is referred to as the for airlines that do not require funds to enhance its value proposition for the Remittance and Settlement (R&S) conversion. cargo community. Seven new operations process. Recommendations resulting in the top 50 international freight markets from the R&S will be presented to the will be implemented, which will further IATA Board of Governors at its June reduce unit charges. 2010 meeting.

IATA’s systems are the financial backbone of the industry. Our mission is to efficiently safeguard the $280 billion that flows through our settlement systems. BSP unit rates have fallen 78% in the last decade, from 34 cents in 2000 to an estimated 7 cents in 2010, even as we are strengthening our controls. Giovanni Bisignani 42 43

IATA’s currency coordination activities IATA Clearing House First & Final Interline Billing

IATA helps airlines repatriate funds The ICH facilitates the offsetting of First & Final Interline Billing enables from highly or restrictively regulated billings between over 350 airlines and airline passenger billings to be settled markets and countries. In 2009, associated companies before those on a first-time basis, avoiding the need according to IATA’s Remittance of billings are settled on a weekly basis. for lengthy billing dispute resolution. Foreign Balances Survey, $610 million This efficiency enables a cash flow This reduces workload in revenue of members’ funds was blocked or saving of over 70% in each weekly accounting and increases the speed delayed, up 106% over 2008. Of this, settlement. In addition, it reduces and the accuracy of management $474 million is in Venezuela, representing industry financial risk by minimizing the reporting and route revenue analysis. 77% of the total outstanding. As of April time and the amount of outstanding In 2009, the number of airlines 2010, IATA has been able to repatriate intercompany debts. $335 million. participating grew from 37 to 42. In 2009, intercompany settlements Processing volumes increased to cover Ghana, Mozambique, the Seychelles, fell 20%, to $40 billion, the largest over 3.5 million interline journeys per and Turkmenistan were dropped from one-year drop on record. The number month on average during the year. the currency coordination report in 2009. of suspensions due to nonpayment The volume of First & Final Interline , , and Uzbekistan were increased substantially over the previous Billing is expected to grow as airlines added. Angola and Sudan’s inclusion year. Losses to participants were less look for simple, automated processes is due to their lack of hard currency, than in 2008, however, because of active to reduce their costs. New services and Uzbekistan has been added for its management and the maintenance of resulting from the completion of the cumbersome restrictions. The countries security deposits wherever justified SIS project are likely to further increase holding the largest amount for repatriation under the regulations. are Venezuela, Ethiopia, Sudan, Algeria, demand. These include the ability to and . IATA, together with airline invoice and settle interline tickets on treasury departments, is driving action Simplified Interline a fully automatic basis. plans to ease the repatriation of funds Settlement from these markets. Simplified Interline Settlement (SIS) PASSENGERS will make interline billing fully electronic. IATA’s air traffic control At present, settlement requires the use of Ground handling and airport Enhancement various outdated and manual processes, and in-flight services and Financing Service leading to difficulties in reconciliation, to Following an extensive review and delays, and to unnecessary costs. update, a completely revamped version The Enhancement and Financing of the Airport Handling Manual (AHM) Service (E&F) helps ANSPs and airports SIS will be linked directly to the ICH. was published 1 January 2010. For lower costs and improve the efficiency Its electronic formats contain sufficient the first time it includes environmental associated with the invoicing and data to allow interline invoices to be standards to be adhered to by airports collection of user charges. The service posted in the accounts and routed to the and ground handlers worldwide. also helps airports and ANSPs secure appropriate department, all automatically. cost-effective financing for investment In 2009, the SIS’s designs and functional IATA members have also adopted in civil aviation infrastructure. In addition, requirements were finalized. Pilot testing radio frequency identification (RFID) airlines benefit from the service through of SIS will start early in 2011, and the specifications for in-flight catering improved data quality and an efficient industry will begin migrating to the equipment management. This will payment process. By the end of 2009, service in summer 2011. enable the tracking, tracing, and IATA’s E&F Service had processed $1.65 preventative maintenance of in-flight billion in approximately 50 countries. When fully implemented, SIS is expected catering equipment on a global scale. to save the industry over $500 million It should allow the industry to realize per year in operating efficiencies and IATA Travel Agent Service $60 million in one-off cost savings reduced costs. It will also eliminate the and $76 million annually. IATA has developed a solution to assist 200 metric tons of associated paper Moreover, IATA issued a toolkit travel agents in collecting their service that has to be shipped around the for the Standard In-Flight Catering fees for credit card sales through BSPs. world annually. Agreement, which details solutions In addition to the collection process, the for all legal issues. This allows energies service offers travel agents a number of to be focused on negotiating the reporting tools to facilitate the tracking commercial clauses, saving both and monitoring of their activities. This airlines and caterers time and money. service is available in 20 countries on four continents. 44

Passenger Agency Program CARGO The Passenger Agency Program IATA Cargo provides leadership for the Key changes have been made to allows the secure distribution of airline global air cargo supply chain. Key areas accommodate the introduction of the tickets and related services through a of focus for 2009 included e-AWB. Aligned with IATA’s objective to network of accredited sales locations. continually simplify the business, further >>Protecting industry money via the The Passenger Agency Conference amendments by the Cargo Agency Cargo Agency Program and CASS (PAConf) establishes the rules for Program will harmonize global standards accreditation. >>Continuing the transformation of the air and procedures wherever possible. For cargo supply chain via IATA e-freight; CASS, new standards for global query In 2009, the PAConf continued Secure Freight; and Cargo 2000 time frames were introduced to enhance to drive forward the adoption of a initiatives billing discipline. competition-compliant set of sales agency rules as part of Resolution >>Creating and managing industry 818g. The conference approved the standards to support the global implementation of the resolution in a supply chain transformation Cargo tariff coordination further 61 countries. As of 1 June 2010, During 2009, cargo tariff phaseout there are 149 countries adhering to Cargo standards activity resulted in a 50% increase the rules. The vision is to migrate the in the number of rates generated remaining 66 countries where feasible During 2009, IATA, through the Cargo individually by carriers, replacing the and at least 32 of those by the end Committee and the Cargo Services previous tariffs agreed to multilaterally. of 2011. Conference, defined the standard The cargo interlining settlement process resolutions, recommended practices, PAConf took a number of actions was modified to accommodate these and electronic messages required as to strengthen the security of monies new tariffs. To effectively distribute these a foundation for IATA e-freight, Cargo collected through BSPs. It established rates on behalf of carriers and to provide 2000, and Secure Freight. rules for the operation of financial a simplified process for forwarders, a advisory groups and approved a large IATA and the International Federation of cargo tariff distribution system project number of changes to local financial Freight Forwarders Associations (FIATA) was launched. Further tariff phaseout criteria. It also agreed to amendments jointly completed the development of the and systems analysis will continue on the remittance conditions for agents, electronic Air Waybill (e-AWB), which is through 2010. and it altered ownership provisions to now an industry standard. The e-AWB help detect fraudulent activities. PAConf can be used to reduce costs and speed Cargo 2000 also approved an automated process up the delivery process. for regular mail votes. The approval Cargo 2000 (C2K) delivers a quality Additionally, a memorandum of recognizes the increased activity caused management system that reduces the understanding was signed with the by the migration of countries to 818g number of steps in the air cargo supply World Customs Organization recognizing and the need to take action on financial chain from 40 to 29 while increasing mutual standards and initiatives and criteria approvals, which were previously reliability. C2K is under the management fostering cooperation. delegated to local bodies. of Cargo Network Services, an IATA Through its Customs Advisory Group subsidiary, and was reorganized in 2009. In recognition of the importance of and the IATA/FIATA Customs Working The C2K board remains an IATA-funded maintaining a neutral dispute arbitration Group, IATA is ensuring that regional interest group. process, PAConf approved an indemnity and national customs administrations provision designed to protect the Overall network shipment growth are aware of international standards and Travel Agency Commissioners in the was up 16%, to13.6 million shipments consider industry requirements when performance of their responsibilities. in 2009. Performance for C2K shipments developing new regulations. improved 1% in each key performance indicator over the 2008 average. Twelve IATA Flex Fares Cargo Agency Program C2K members were recruited in 2009. C2K now has 73 members, accounting IATA Flex Fares have been adopted IATA’s Cargo Agency Program regulates for over 60% of the international air for the majority of IATA routes worldwide. the relationship between airlines and freight market. The result is a global tariff coordination sales agents. Becoming an accredited process that cuts meeting costs, IATA cargo agent bestows industry simplifies fare structures, and shortens the recognition of financial and professional regulatory approval process. competence. The program also gives airlines a worldwide network of approved agents. 45 46

Aviation Solutions IATA’s comprehensive array of aviation solutions promotes a safe and sustainable industry. IATA Training IATA Consulting and Development Institute Corporate publishing IATA Consulting works in three areas The IATA Training and Development IATA’s approximately 250 publications to deliver solutions: airlines, airports, Institute (ITDI) aims to develop human serve as industry standards for authoritative and air traffic management. In 2009, capital for tomorrow’s air transport information related to regulatory matters, IATA Consulting undertook 45 projects industry. ITDI offers internationally safety, operational efficiency, finance, spanning all three focus areas. recognized training programs for areas and more. such as airline and airport management, Key projects in 2009 included the The Airline Coding Directory, Airport safety, security, and cargo as well as development of PBN procedures for Handling Manual, Tax Suite, Travel organization and human performance. 22 airports in Nigeria on behalf of the Information Manual, and Dangerous Nigeria Airspace Management Agency. In 2009, ITDI enrolled over 30,000 Goods Regulations (DGR) are examples The procedures will not only improve the professional and vocational students of IATA’s knowledge-based products. safety of aircraft arrivals and departures from nearly 150 countries in some 500 The IATA DGR publications portfolio is but also reduce CO emissions and disciplines across all market segments. 2 the cornerstone of cargo facilitation and airline expenses by providing enhanced ITDI works closely with business safety information. For example, DGR flight paths. schools, training centers, and major ClearShip, produced in conjunction Fuel efficiency implementations were industry players to develop partnerships with ICAO, is a cutting-edge e-freight- undertaken for several airlines around and cutting-edge training solutions for compatible tool allowing users to create the world in conjunction with IATA’s the changing needs of the industry. a validated dangerous goods declaration. FEGA assessments. The efforts saved It employs 40 dedicated training On average, 10% of dangerous goods the airlines more than $200 million professionals throughout the world. shipments are at risk of fines and delays annually. To deliver its programs, ITDI leverages because of incomplete documentation. a pool of over 200 qualified instructors DGR ClearShip will virtually eliminate IATA Consulting also reviewed the based in 50 locations. this problem. master planning approach and traffic forecast for the third runway at London ITDI priorities for 2010–2011 are to The DGR continues to be adopted by (LHR) on behalf of develop its in-company training delivery more and more members of the supply the London Airports Airline Consultative model and to bring to market innovative chain, selling over 100,000 copies Committee. Alternative sources to fund self-study programs using e-learning annually in several electronic formats the multi-billion dollar project have been technology. ITDI is also launching the first as well as in print. It is offered in six recommended to LHR airlines. International Aviation Human Resources languages and is distributed in virtually Summit in October 2011. every country with commercial aviation In Hong Kong, IATA Consulting activities. supported the airport authority and The International Airline Training government in assessing the potential Fund (IATF) provides training to member IATA’s suite of tax products is equally for a rail link between in developing countries. It is an intrinsic. By consolidating data from International Airport and the nearby independent nonprofit foundation that governments, tax authorities, and more Shenzhen International Airport. supports airlines in meeting industry than 1,600 airports in 190 countries, priorities and achieving a sustainable IATA provides the tools for efficient IATA Consulting also helped an future. and precise settlements, contributing African airline identify potential to the industry’s bottom line. revenue gains and provided hands-on In 2009, the IATF trained 1,457 people expertise and training to implement the through 81 training events. Additionally, The Timatic product suite outlines recommendations. 128 personnel received assistance from the documents customers require the IATF scholarship program, which for their travel. It was further enhanced gives the staff of developing nation by the launch of Timatic AutoCheck in airlines the chance to attend courses 2009. This latest product ensures that at any of the IATA training centers. 100% of international passengers are in compliance with document requirements. Its simple answer format shaves at least 30 seconds off the time needed for checking a passenger’s documents and helps to save over $300 million by quickly identifying inadmissible passengers. 47

Our goal is to help the success of our members with cost-effective solutions in a competitive market. Giovanni Bisignani

80M

70M

60M

50M

40M

30M

20M

10M 48

Strategic Partnership Program Financial services Since 1990, the Strategic Partnership AirportIS is a web-based business Weblink is an IATA solution that extends Program has allowed aviation suppliers intelligence tool used by more than 40 the cost-efficient settlement process of a and service providers to directly international airports for marketing and BSP to an airline agency’s direct sales. contribute to solutions for industry air service development. It was further In 2009, 26 clients used Weblink challenges and priorities. developed and enhanced in 2009. As to settle more than 2.7 million BSP a result, AirportIS provides the most Over 320 aviation suppliers from transactions totaling more than $400 comprehensive available information around the globe are active Strategic million. This equates to savings in on global air passenger flows. Partners. Through their participation distribution costs of more than $15 alongside IATA and its member airlines, Qualitative data is as important as million. The amount saved should grow Strategic Partners set and develop global quantitative data. In 2009, 41,800 to $300 million as the Weblink share industry standards. This assists airlines, international passengers moving through of BSP transactions increases to 10% airports, and other industry stakeholders 32 of the world’s busiest airports were by 2012. in making strategic and resource interviewed by IATA agents for its management choices. Involvement in quarterly airline benchmark survey. the successful Simplifying the Business As a result, IATA helped 18 international program—which met or exceeded all of carriers to identify their products’ value its 2009 board targets—illustrates the drivers, improve their product offerings, relevance of Strategic Partners. and measure how product modifications were received. In 2010, this survey will

be migrated to an online platform to Business intelligence speed up data availability and improve reach. IATA’s business intelligence tools support decision making at airlines. IATA’s most recent business intelligence For example, Cargo Intelligence Services offering is Data AirHouse, a turnkey (CargoIS) taps more than 20 million solution of hardware, software, data, shipment records by agent location, hosting, support, and maintenance average yield, and origin and destination. custom built to a client’s needs. The first CargoIS is used by more than 200 Data AirHouse was implemented in 2009 airlines, representing 75% of the world’s at . cargo volumes. IATA’s Passenger Information Services (PaxIS) is supported by IATA’s worldwide BSP ticket data and various other statistics. PaxIS offers comprehensive, timely, and reliable passenger intelligence information. In 2009, the PaxIS client list comprised over 50 airlines ranging from large network to regional carriers. A potential enhancement to PaxIS is under review and development. The Direct Data Service (DDS) will be based upon data sourced from BSPs but supplemented by data directly contributed by the airlines. 49

101-157

168-181, 500-505 50

IATA Membership as of 1 May 2010

Active Members

Adria Airways Air One British Airways DHL International E.C. Air Pacific Airlines Donavia Dragonair Aero República C.A.L. Cargo Airlines Airline Aeroflot Airways Egyptair Aerolineas Argentinas Aeromexico Emirates Aerosvit Airlines Cathay Pacific CCM Airlines Air Algérie EVA Air China Eastern Federal Express Air Baltic American Airlines Israeli Airlines Sterling Air Canada Armavia Cirrus Airlines CityJet Garuda Air France Atlasjet Airlines Gulf Air (NACIL) Austrian Condor Berlin Air Jamaica Continental Micronesia Hapag Lloyd B&H Airlines COPA Airlines Corsair —Belarusian Airlines Airlines Hong Kong Express Airways Biman Cubana Cyprus Airways Air Blue Panorama Interair Air New Zealand Blue Wings Delta Air Lines Blue1 bmi DHL Air Israir 51

JALways Malmö Aviation SIA— Cargo US Airways Siberia Airlines UT air Jat Airways MEA— Jet Airways fly Silkair JetBlue Méxicana Vladivostok Air Jet Lite MIAT—Mongolian Airlines Airways Volga-Dnepr Airlines VRG Linhas Aéreas Kenya Airways Nigerian Eagle SriLankan Airlines Airlines Wideroe KLM SWISS Xiamen Airlines Korean Air PAL— Syrianair Airways TAAG—Angola Airlines LACSA PGA—Portugália Airlines TACA LAM—Linhas Aéreas de PIA—Pakistan International TACA Peru Associate members Moçambique Airlines TACV Lan Airlines PLUNA TAM—Transportes Aéreos del Austral Lan Argentina Mercosur Lufthansa CityLine Lan Chile Cargo Qantas TAM Linhas Aéreas Lan Perú Qatar Airways TAME—Linea Aérea del Ecuador SATA Air Açores Lan Ecuador Rossiya—Russian Airlines TAP—Air Portugal Lauda Air TAROM Royal Brunei International LOT Polish Airlines THY—Turkish Airlines LTU SAA- TNT Airways Lufthansa SAS Saudi Arabian Airlines TransAsia Airways Air Ukraine International Airlines Malaysia Airlines United Airlines MALEV SIA—Singapore Airlines UPS Airlines 52

IATA Offices

IATA’s 1,300 staff serve its 230 members from 66 offices in 62 countries. A growing number of IATA offices operate under accord de siège agreements, which recognize the important nature of IATA’s work and grant it semi-diplomatic status. Such agreements are in place in Canada, Cote d’Ivoire, Jordan, Kenya, Morocco, Senegal, Singapore, Spain, Switzerland, and Syria.

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 South Africa Tel.: +1 514 874 0202 Tel.: +41 22 770 2525 Asia-Pacific Fax: +1 514 874 9632 Fax: +41 22 798 3553 TripleOne Somerset 111 Somerset Road #14-05 Somerset Wing Singapore 238164

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, Suite 300 No. 1, Dongsanhuang Zhong Road P.O. Box 940587 Washington, D.C. 20004 Chaoyang District 11194 United States of America Beijing 100020 Jordan People’s Republic of China Russia & the CIS The Americas 19-1 Lyalin Lane Europe 703 Waterford Way 105062 Torre Europa Suite 600 Russian Federation Paseo de Castellana 95 Miami, Florida 33126 28046 Madrid United States of America Spain 350 Avenue Louise Louizalaan Brussels 1050 Belgium www.iata.org