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Annual Review 2020 Alexandre de Juniac Director General & CEO International Air Association

Annual Review 2020 76th Annual General Meeting, , November 2020

Note: Unless otherwise specified, all dollar ($) figures refer to US dollars (US$). Summary chapter title Summary Lorem ipsum dolor title on two lines probably

Contents 02 Members’ list 04 Director General’s foreword 06 Chair’s remarks and Board members

10 The industry story in 2020 20 Health and safety in 2020 24 Relief measures in 2020 0401 28 Connectivity in 2020

34 Before the storm: 2019 in review 40 Safety 41 Security 42 Regulations & taxation 44 Infrastructure 46 Environment 48 50 Passenger experience 52

0401 IATA Annual Review 2020 Members’ list Members’ list

A Aegean Air Airlines EuroAtlantic Airways Aero Republica AirBridgeCargo Airlines Air European Air Transport C Aerolineas Argentinas EVA Air CAL Cargo Airlines Aeromexico Camair-Co F World Airlines Angkor Air FedEx Express Air Algerie Capital Airlines Airways AlMasria Universal Airlines Airways ANA Airlines FlyEgypt Air Baltic APG Airlines Air Israeli Airlines Air Airlines Air Caledonie ASKY Airlines G 02 Air ASL Airlines Indonesia Air Caraibes China Eastern GOL Linhas Aereas Air Austral Austrian GX Airlines CityJet H Air Avianca Airlines Air Avianca Peru Airlines Air Airlines Air Airlines Air Cargo Air B Cubana Air Hong Kong Express Air Airways Air Airways D I Air Batik Air Belarusian Airlines DHL Air Biman Bangladesh Airlines DHL IndiGo Air E Air Air Blue Panorama Egyptair Airline Air BoA Boliviana de Aviacion Nui Regional Israir Air Airways

02 IATA Annual Review 2020 Members’ list

J Airlines Airlines Royal Brunei International Airlines MEA TUIfly MIAT Mongolian Airlines RusLine JetBlue MNG Airlines RwandAir Airlines Jin Air S T’way Air U Juneyao Airlines International N Airlines K SAS NCA Nippon Cargo Airways Airlines SATA Air Acores KLM Saudi Arabian Airlines UPS Airlines SaudiGulf Airlines Airlines SCAT Airlines Airways NordStar SF Airlines L Airways LAM Airlines Airlines V O Airlines Vietjet 03 LATAM Airlines Argentina Silk Way West Airlines Airlines LATAM Airlines Brasil SilkAir LATAM Airlines Air Airlines Virgin LATAM Airlines Ecuador Airline LATAM Airlines Group LATAM Airlines Paraguay P LATAM Airlines Peru LATAM Cargo Brasil Somon Air LATAM Cargo W LIAT Airlines SpiceJet PGA Portugalia Airlines SriLankan Airlines LOT Polish Airlines SunExpress WestJet PIA Pakistan International Airlines Wideroe SWISS Wings of Lebanon Lufthansa CityLine Syrianair X T Airlines M Q TAAG Airlines Y TACA YTO Cargo Airlines Airlines TAP TAROM As at November 2020 R International Cargo

03 IATA Annual Review 2020 Director General’s foreword Crises are not new — resilience is in our DNA Alexandre de Juniac, Director General and CEO The aviation industry is in crisis. of people say that they continue to eliminate all but the most essential Our business connects people. feel safe traveling by air. demand. But owing to efforts to control the spread of the novel coronavirus Less outwardly visible, but just The solution is the systematic (COVID-19), we have seen the as important, is our work with predeparture testing of travelers. greatest de-connecting of the regulators to safely ramp- Affordable, fast, accurate, easy-to- world since the Second World War. operations when it becomes use, and scalable tests exist. And Borders are effectively closed. possible. Reactivating thousands IATA is among several providers Lockdowns have been imposed. of grounded aircraft, managing with solutions that governments Freedom of movement has been the qualifications and readiness can trust will provide reliable results severely limited. The impact on avi- of millions of licensed personnel, from tests conducted in other ation has been catastrophic. At the and dealing with a major drain of jurisdictions. IATA continues to work peak of the crisis in April 2020, 90% experienced workers will be key to with partners across the industry to of our business disappeared. safe flying. From the earliest stages give governments the confidence of the crisis, we have worked with that testing is the way to restore Crises, though, are not new to ICAO and regulators on a frame- connectivity during the pandemic. aviation. We have proven our resil- work to do this. ience many times. Today, resilience Longer term, the solution is vac- depends on cines. IATA is collaborating with the 04 global COVAX initiative to develop Sustainability • maintaining our fundamental comprehensive guidance materials commitments to safety and Aviation’s commitment to environ- for the transport of vaccines. The sustainability, mental sustainability has only been airline industry, therefore, will be strengthened in the face of the ready for its greatest-ever logis- • reopening borders, and pandemic. As a result of the historic tical challenge. But policy makers must not be distracted from the • repairing shattered finances. Carbon Offsetting and Reduction Scheme for International Aviation urgent need to reopen borders by (CORSIA), aviation’s carbon emis- the promise of eventual vaccines. sions from international operations Every day that borders remain Safety will not grow beyond 2019 levels. closed does irreparable damage to economies and to peoples’ lives Safety is always aviation’s top pri- Even amid the crisis, IATA worked and livelihoods. ority. This commitment is unaltered with our industry partners to map by the crisis. But it has not been the way to our 2050 goal of cutting unchallenged. Travelers are rightly the industry’s net emissions to Shattered finances concerned about the risks of air half of 2005 levels. And we have travel. Yet the news is reassuring. growing confidence that we can get to net zero as early as 2060. In the meantime, the industry is The data and scientific research grateful to governments for the confirm that the risk of catching Both targets will need the support of governments, particularly in the $173 billion of support provided COVID-19 onboard an aircraft is to airlines. It avoided mass bank- low compared with other indoor area of sustainable aviation fuels (SAF). ruptcies and job losses. Ensuring environments. Measures such as the industry’s financial viability is a wearing masks and cleaning and smart investment. Each aviation job sanitizing the onboard environ- supports 24 more. ment more frequently reduce that Open borders risk further. These are just a few of Many government support pro- the multiple layers of protections The biggest barrier to restarting grams, however, were not designed recommended in the Take-off aviation is the closure of bor- for a crisis of this duration. Airlines guidance materials published by ders caused by travel restric- are expected to lose $118 billion the International Civil Aviation tions or quarantine measures. in 2020 and a further $38 billion in Organization (ICAO) in cooperation Governments, understandably, do 2021. So more government sup- with public health authorities and not want to import COVID-19 via port—in forms that do not further industry representatives, including . But the risk must and can inflate airline debt levels—is needed IATA. And surveys tell us that 86% be managed without measures that to help airlines survive. Without

04 IATA Annual Review 2020 Director General’s foreword

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viable airlines, the economic recov- once again the value of aviation Our slimmer form notwithstanding, ery from COVID-19 will be longer connectivity. When the world cried members can continue to rely on and more painful. out, aviation responded, with at IATA to be a strong voice for the least 46,000 special cargo flights industry, to provide the vital prod- delivering 1.5 million metric tons ucts and services that you depend The business of freedom of medical equipment to fight the on, and to set the global standards virus. Aviation likewise flew nearly for efficient operations. The apex of the COVID-19 crisis th 40,000 repatriation flights to bring coincided with IATA’s 75 anni- some 5.4 million people home to The months ahead will challenge all versary. IATA was founded by 57 their families and loved ones. of us as never before. But resil- visionary airline leaders in April ience is in aviation’s DNA. We will 1945. Today, we boast 290 mem- IATA, too, has felt the impact of reconnect the world. Our mission is bers comprising 82% of the crisis. We have restructured in unchanged. We are the business of traffic. In place of celebrating IATA’s line with the smaller industry that freedom. The pages that follow tell milestone, airlines were proving is likely to emerge from COVID-19. our story.

05 IATA Annual Review 2020 Chair’s remarks Meeting the COVID-19 challenge together , Chair, IATA Board of Governors, Chairman and CEO What is IATA’s role helping the and will resume its role as a global industry through the COVID-19 “force for good.” However, this pandemic? crisis is at the same time a unique chance to further reduce our IATA has proven to be an essential climate impact and to strive for and irreplaceable crisis manager for sustainable and value-oriented the industry in this growth. We have the responsibility pandemic. We act as consultants to take this chance and to make our for both our industry and govern- industry emerging from this crisis ments worldwide. And we advocate more climate friendly. for relief measures like the slot waiver, generate support measures from suppliers, and vote for tests instead of quarantines. IATA is also How should IATA prepare itself to offering a valuable communication bring value to its members in the platform for airline managers, as post-COVID-19 world? well as governments and public Our mission remains unchanged authorities. Not to forget, IATA plays in the future: IATA represents, an important role in ICAO’s Council 06 leads, and serves the global airline Aviation Recovery Task Force. industry. We will continue on this Together, we safeguard airline’s path and positively bring interests in cooperation with civil forward issues like aviation authorities. industry safety, financial settle- ment systems, What sort of airline industry and operational do you think will emerge once standards. demand recovers?

Frankly speaking, no one can pre- dict how long the pandemic will last and how long our industry will suffer from its consequences. A reliable outlook is more difficult than ever before. It depends on the accep- tance for free mobility of COVID-19 negative tested travelers as well as on the development and the avail- ability of an effective vaccine. This will determine how governments go on with travel warnings, entry bans, and lockdowns.

But one thing is for sure: A global society and a modern world economy cannot exist without air transport. Flying has an enormous value for societies, cultures, educa- tion, economies and international understanding.

This is why I’m deeply convinced that the airline industry will recover

06 IATA Annual Review 2020

Chair’s remarks IATA Board of Governors 2019–2020*

But the crisis in which we are in also CHAIR OF THE BOARD Yuji Hirako Anco van der Werff shows very clearly that we need to President and Chief Chief Executive Officer Carsten Spohr Executive Officer Avianca take a common and firm political Chairman and Chief stand. We need to unite our voices Executive Officer Wang Changshun and make our positions better Lufthansa Chairman heard. This applies to overcoming MEMBERS Chief Executive Officer China Southern Airlines Qantas the current crisis, where we have Mohamed Roshdy been successful on the issue of Chief Executive Officer Allan Kilavuka Zakaria slot waivers. It will certainly become Qatar Airways Ag. Group Managing Chairman and Chief particularly important when we Director & Chief Executive Executive Officer Roberto Alvo Officer Egyptair Holding Co think about the impact of the sus- Chief Executive Officer (representing Egyptair) tainability debate. The pandemic LATAM Airlines Group remains a major challenge for the Liu Shaoyong ALSO SERVED entire industry that we can only Walter Cho Chairman Chairman and Chief (To July 2019) meet together. IATA will play its role Executive Officer Christine Ourmières- in unifying and guiding the global Korean Air Rafal Milczarski Widener industry through this challenge. Chief Executive Officer Chief Executive Officer Donald Colleran and President of the Limited President and Chief Management Board Executive Officer LOT Polish Airlines (To August 2019) 07 FedEx Express Rupert Hogg Aside from the pandemic, what Oscar Munoz Chief Executive Officer other issues must the industry Ronojoy Dutta Chairman Cathay Pacific keep top of the agenda? Chief Executive Officer United Airlines IndiGo Airlines (To October 2019) Mehmet Tevfik Nane Saleh N. Al Jasser I see three priorities for our Mohamad El-Hout Chief Executive Officer Director General industry. Chairman and Director Pegasus Airlines Saudi Arabian Airlines General First of all, of course, safety. That Airlines Douglas Parker (To January 2020) has always been the basis for Chairman and Chief Sebastian Mikosz Group Managing Director aviation—and it will remain so in the Martín Executive Officer Chief Executive Officer American Airlines and CEO future. IAG (representing Iberia) Kenya Airways Calin Rovinescu Secondly, sustainability. Our planes Tewolde GebreMariam President and Chief (To March 2020) emit carbon. Therefore, we have Chief Executive Officer Executive Officer Somaskaran Thiagarajan Ethiopian Airlines Appavou an obligation to continue to work Chief Executive Officer for climate-friendly air traffic. And Goh Choon Phong Vitaly Saveliev we need worldwide-harmonized Chief Executive Officer Director General and Chief measures, e.g. CORSIA, to meet Executive Officer Ahmed Adel Chairman and Chief the environmental challenges. The Aeroflot Rickard Gustafson Executive Officer meaning of sustainable aviation President and Chief Ajay Singh Egyptair Holding Co fuels and new technologies for Executive Officer Chairman and Managing (representing Egyptair) further CO2 cannot be emphasized SAS Director enough. SpiceJet Limited Yuji Akasaka Robin Hayes President Thirdly, we need to work on a world- President and Chief Benjamin Smith Executive Officer Chief Executive Officer wide playing field for airlines. JetBlue Airways Air France KLM Enrique Cueto This concerns rules of competition, (representing Air France) Chief Executive Officer traffic rights, taxes, and passen- Pedro Heilbron LATAM Airlines ger and consumer rights. A global Chief Executive Officer Tang Kin Wing Augustus Copa Airlines Chief Executive Officer (To October 2020) industry in a globalized world needs Cathay Pacific Airways Sami Ali Sindi global rules and regulations. María José Hidalgo Limited Acting Director General Gutiérrez Saudi Arabian Airlines Chief Executive Officer Air Europa *As at November 2020

07 IATA Annual Review 2020 Aviation is in crisis.

08 This is the most profound de-connecting of modern society since World War II.

08 IATA Annual Review 2020 09

09 IATA Annual Review 2020 The industry story in 2020 chapter story title Summary The industry

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10 IATA Annual Review 2020 The industry story in 2020 story The industry The great connectivity shutdown The industry story in 2020

COVID-19 is the largest shock to commercial air travel Worldwide revenue passenger kilometers (RPKs) and aviation since world war II flown annually Source: IATA Economics, using data from IATA and ICAO In 2020, the COVID-19 pandemic delivered the largest shock to air travel and the aviation industry since the Second World War. Previously, the adverse impacts on aviation of the 9-11 terrorist attacks and the 2007–08 global financial crisis were thought dramatic. But neither had an impact that compares with what is estimated to be a 66% decline in global revenue passenger kilometers (RPKs) in 2020.

China’s domestic aviation market fell first, at the start of the year, but was recovering by March. As the disease spread, its impact transport was felt globally, begin- ning in February to a low point in April, when passenger traffic was down 94% from the year before and much of the industry was grounded. Recovery since has been disappointingly slow for most markets. 11

Air connectivity collapsed in April 2020 City pair connections in April 2019 Source: IATA Economics, using data under license from Flight The consequences of travel restrictions grounding much Radar 24 of the airline industry in April were widely felt. Air service connections between cities worldwide collapsed. Some service continued in the domestic markets of China, which began recovering in March, and of the . But the majority of scheduled intercontinental connections between cities disappeared. Freight con- tinued to fly, but since around half of air cargo is carried in the holds of passenger flights the near cessation of passenger flights caused a serious problem for the global supply chains our modern economy relies on.

Precrisis air connectivity is essential for the modern City pair connections in April 2020 economy Source: IATA Economics, using data under license from Flight Radar 24 The precrisis route map shows the air connectivity lost, as a result of COVID-19. Most of the air services connect- ing cities in the European single market cross national borders, many of which have travel restrictions preventing a significant resumption of service. Most importantly for world trade, the dense city connections across the North Atlantic and between and have also been slow to reopen because of travel restrictions, especially those resulting from second and third waves of COVID- 19. Many of the 87.7 million jobs aviation was supporting before the crisis are in sectors across economies that rely on good air transport services. It is estimated that more than half of these jobs are at risk in 2020.

11 IATA Annual Review 2020 The industry story in 2020 story The industry

International air travel has shown little sign of International RPKs recovery Source: IATA Economics, using data from IATA Statistics

International air travel was hit to a much greater degree than either domestic air travel or global air cargo. This is the result of governments imposing travel restrictions to prevent the import of COVID-19 from outside their national borders. International RPKs began falling in February. They collapsed in March and in April to a level 98% lower than in the previous year. The subsequent lethargic recovery of international air travel has been extremely disappointing, for airline revenues and for the connectivity of the global economy. Global RPKs remained almost 89% lower by September than a year earlier.

Strongly rising domestic air travel shows a willing- International and domestic RPKs 12 ness to fly Source: IATA Economics, using data from IATA Statistics Domestic air travel has shown a more encouraging rise from its low point in April, which, at 87% less than the previous year, was not as severe as the low point for international air travel. By April, China’s domestic air travel market—the world’s second largest after the US’s domestic market—had been recovering for two months, as COVID-19 was brought under control and travel resumed earlier in that market than in other mar- kets worldwide. But other domestic markets, too, have since April seen a return of air travel, which demon- strates that there is pent-up demand at least for leisure and visiting friends and relatives (VFR) travel.

There is very wide divergence among different Domestic RPKs domestic air travel markets Source: IATA Economics, using data from IATA Statistics

As the year progressed, we saw very different results for air travel in the world’s main domestic air transport markets. China’s air travel market began its recov- ery early, having hit its low point in February, and by September was within 3% of its precrisis level, as China continued to keep COVID-19 cases low. ’s domestic air travel market was fully recovered by late summer, as the normally substantial outflow of tourists did not occur; tourists were instead diverted to vaca- tions at home. Australia’s domestic air travel market, however, had barely improved by September, continu- ing to lag at 89% below the year before. Recovery in the world’s largest domestic market for air travel, the United States, has also been disappointing, largely because air travel there has been hit by second and third waves of COVID-19 cases.

12 IATA Annual Review 2020 The industry story in 2020 story The industry

Second and third waves of COVID-19 have reversed Surging COVID-19 cases in Europe air travel recoveries in many markets Source: IATA Economics, using data from ECDC

The disappointing progress in controlling COVID-19 in most countries has been the principal factor shaping air travel in 2020. Domestic air travel, as just discussed, was largely affected by China’s control of cases and by the second and third waves of cases in the United States. It is in Europe where a surge of second-wave cases is so damaging for a nascent revival of interna- tional air travel.

Europe’s international air travel “bubble” evaporated Growth in passenger km flown, international markets Source: IATA Economics, using data from IATA Statistics 13 The gray lines in the chart opposite show that many international air travel markets remain near their April lows. This is principally because of travel restrictions. In May, the easing of restrictions in Europe for inbound travelers from European countries with a low risk of importing COVID-19 cases generated optimism for a European air travel bubble or corridor. Late sum- mer saw a significant rise in cross-border air travel in Europe, but a second wave of COVID-19 abruptly reversed the trend and brought reimposed travel restrictions. The only other international markets to show signs of revival are those of North and Central America. This probably reflects the introduction of testing rather than quarantine requirements, especially by a number of Central American countries, for interna- tional entry.

Signs indicate pent-up demand for leisure travel UK-, Ticket sales growth, Aug-Oct 2020 COVID-19 will undoubtedly change aspects of air Source: IATA Economics, using data from DDS travel. There are nevertheless signs of pent-up demand for leisure and VFR travel. When the UK government lifted the quarantine requirement for passengers from the Spanish Canary Islands in late October, for example, there was an immediate surge in bookings to and from those islands. In one week in late October, bookings were more than double precrisis levels. Soon after, the UK closed its borders in a second lockdown, but this episode demonstrates a willingness to fly, if permitted.

13 IATA Annual Review 2020 The industry story in 2020 story The industry

Quarantine is equivalent to a travel ban, but testing National variances in net bookings by travel require- boosts air travel ment, 1–5 October 2020 vs. 2019 Source: IATA Economics, using data from DDS Evidence indicates little difference in the adverse impact on international travel between countries with open borders but quarantine requirements and countries with full travel bans. This was the case for European countries and for Paraguay. People, though, are prepared to travel by air if quarantine is replaced with a negative COVID-19 test. In the first two weeks of October, a number of Latin American countries requiring only a negative test experienced substantially higher bookings, by 10–20 percentage points, relative to countries with quarantine or other severe travel restrictions.

14 Air cargo traffic has fallen little because it remains Global passenger and cargo tonne km growth essential Source: IATA Economics, using data from IATA Statistics

Air cargo’s story in 2020 differs from air travel’s. Cargo volumes were down but nowhere near as much as passenger numbers. At air cargo’s low point in April, cargo tonne kilometers (CTKs) flown were down around a quarter. And by September, air cargo volumes had risen to just 8% below the previous year’s figures. Air cargo is, with few exceptions, not a vector for COVID- 19. It remains, moreover, essential to sustaining global supply chains and to transporting medical equipment and pharmaceuticals.

The problem for air cargo is capacity shortage International CTKs Source: IATA Economics, using data from IATA Statistics Air cargo’s main problem in 2020 is a severe shortage of capacity due to the grounding of the passenger fleet. Air freighters are being used to their maximum, with an extra 20% of capacity squeezed out by increasing the average number of hours flown and by adding new freighters to the fleet. In a normal year, nearly half of cargo volumes would be carried in the holds of passen- ger aircraft. That capacity, however, was grounded in April, and the wide-body, long-haul passenger aircraft that usually provide the most cargo capacity have been slow to return, as long-haul passenger routes are lim- ited. As a result, air cargo capacity was still 25% lower by September than in the previous year.

14 IATA Annual Review 2020 The industry story in 2020 story The industry

Air cargo traffic differs widely by trade lane CTK growth by major trade lane Source: IATA Economics, using data from IATA Statistics The robust performance of air cargo relative to passen- ger traffic is unequal across major trade lanes. Most resilient has been the North Pacific market, where typi- cally 90% of air cargo is carried by dedicated freighters. This market, clearly, was barely affected in 2020 by the grounding of the passenger fleet. By contrast, Asia’s manufacturing suppliers and assembly plants are typi- cally served by cargo capacity on international air pas- senger flights. This trade lane, therefore, was hit hard in April and is only gradually recovering. Noteworthy are the stronger recoveries between the Middle East and Asia and in the North Atlantic, where higher cargo yields have made it viable to fly passenger aircraft despite low passenger loads.

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Business confidence supports air cargo demand Business confidence in manufacturing and services (Purchasing Managers’ Index) Demand for air cargo from the global supply chains of Source: IATA Economics, using data from Markit the manufacturing and services industries has been sustained by V-shaped recoveries that reflect growing business confidence amid strong rebounds in output as economies unlock and return to work. Shipping com- ponents and finished goods quickly by air is vital. As of October, business confidence remained above precri- sis levels, buoying air cargo demand in economies such as China’s, the US’s, and ’s. Recent renewed lockdowns in Europe, however, will be damaging, as declining business confidence in France indicates.

15 IATA Annual Review 2020 The industry story in 2020 story The industry

The impact on airline finances is devastating Airline revenues more than 60% below precrisis forecast Strong cargo revenues in 2020—caused by the impact Source: IATA Economics of capacity shortages on yields—did little to offset the collapse in passenger revenues.

Overall operating revenues for the air transport industry have so far declined more than 60% in 2020. Because numerous costs in the airline business, including aircraft fleet and skilled workforce costs, are difficult to reduce, this revenue collapse has plunged the industry into an unprecedented loss.

We estimate that loss will exceed $118 billion at the posttax net level in 2020.

The year’s second quarter was the worst for the indus- try, and improvement has been sluggish during the Airline losses to exceed $118 billion this year second half of the year. Travel restrictions in many air Source: IATA Economics Economic Performance of the Airline 16 travel markets continue to depress revenues. Industry, Midyear 2020

Chinese and Asia- outstripped Domestic market RPKs carriers elsewhere Source: IATA Economics, using data from IATA Statistics

China has been an exception to lackluster revenues. The early and full recovery of its domestic market has played an important role in the business rejuve- nation of Chinese airlines. Yields were poor as these airlines sought to stimulate demand, but as year-end approaches most Chinese airlines have returned to breakeven and are generating positive cash flows. Airlines throughout the Asia-Pacific region have bene- fited from robust cargo revenues because they serve the region’s disproportionate array of manufacturing and assembly plants. Other regions have not had the benefit of resurgent domestic markets or of thriving cargo markets of a size sufficient to offset the collapse of international passenger revenues.

16 IATA Annual Review 2020 The industry story in 2020 story The industry

Government aid has kept airlines on life support in Government aid to airlines, by type 2020 Source: IATA Economics, using using public information and data from SRS Analyser, DDS, FlightRadar 24, TTBS, ACIC, The Given the scale of the air transport industry’s unprec- Airline Analyst annual reports regarding government measures edented loss, many airlines would have failed if not for government aid. In fact, only where government support was minimal, such as in , have there been failures or restructurings under bankruptcy. In , Europe, and parts of Asia, airlines received substantial cash injections from governments. Total aid for airlines in 2020 amounts to about $173 billion and came in various forms. More than half is deferred debt or payments that will need to be reim- bursed as the industry tries to recover.

Airline cash burn was substantial throughout the Airline industry cash burn 17 year Source: IATA Economics

The burden of servicing and repaying the debt incurred in 2020 adds to the ongoing drain of cash from airline operations. It is estimated that airlines burned through more than $50 billion in the year’s second quarter. That was the worst of the crisis, but the third-quarter finan- cial results reveal that the cash burn has not diminished greatly. This is because the restart of many markets was delayed by continued travel restrictions. As airlines restructure costs during the fourth quarter of 2020, the cash burn should diminish. But the further weakness of revenues ahead of any substantial lifting of travel restrictions will limit the reduction.

Airlines at midyear faced running out of cash Monthly cash burn of cash and cash equivalents by end June 2020 The continued cash burn will have severe conse- Source: IATA Economics, using data from The Airline Analyst quences for the ability of many airlines to survive the 2020 winter months. A comparison of the cash and near cash assets of a sample of airlines against the estimated cash burn in the second half of 2020 shows the median (or typical) airlines have merely eight to nine months before their cash reserves are depleted. There are, of course, some airlines with sufficient cash reserves or assets against which to borrow cash from the capital markets to last until a vaccine for COVID-19 contributes to a recovery in airline revenues. For most airlines, though, this is not the case, and they may well run out of cash this winter without further government aid.

17 IATA Annual Review 2020 The industry story in 2020 story The industry The figures in brief Estimated numbers as of 1 November

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The industry story in 2020 19

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20 IATA Annual Review 2020 Health and safety in 2020 Protecting health and safety for all Health and safety in 2020

Safety is always aviation’s num- include mask wearing throughout face coverings during their journeys ber one priority. As the impact of the travel process, enhanced san- for the safety of all passengers and COVID-19 became clear, aviation itization, health declarations, and crew. Some onboard incidents have acted quickly to counter the pan- social distancing where possible. resulted in diversions to offload demic with a series of measures passengers who refused to comply. aimed at ensuring the health safety The Take-off document was of the traveling public and all avia- amended in November with three tion staff. additional recommendations to guide governments in reopening The low risk of in-flight IATA and its industry partners borders: testing for COVID-19, transmission immediately initiated intense dis- implementing public health corri- Research has shown that the risk of cussions with global health author- dors (popularly known as “travel catching COVID-19 on a flight when ities to reassure governments that bubbles”), and extending regulatory wearing a mask remains low. The flying was safe and to harmonize alleviations to March 2021. high flow rate of cabin air from top and standardize required health to bottom, constant filtering of air measures as far as possible. IATA called for the implementation of the Take-off guidelines as the through state-of-the-art high-effi- A strategy was developed involving global standard for safe operations. ciency particulate air (HEPA) filters, layers of protection to mitigate the In Europe, the having all seats face the same risk of viral transmission. In the first Agency (EASA) and direction, wearing a face covering, 21 instance, suspected symptomatic the European Centre for Disease and sanitization of the aircraft all passengers were discouraged from Prevention and Control (ECDC), play a part. traveling, and airlines offered book- agreed to a protocol aligned with HEPA filters have a more than ing flexibility. This ensured that sick the international standards set by 99.9% bacteria/virus removal or at-risk passengers did not feel the June Take-off guidance. efficiency rate, ensuring that the pressured to travel. The guidelines address the entire air supply entering the cabin is IATA next advocated for standard- journey from the passenger’s per- not a pathway for microbes. Air ized, contactless electronic health spective. A complementary charter is exchanged 20–30 times per declarations through government program has been set up by EASA hour on board most aircraft, which web portals or government mobile to monitor the implementation of compares very favorably with the applications. It further noted that the guidelines and provide feed- average office space (average 2–3 health screening using measures back. Over 60 organizations serving times per hour) or schools (average such as nonintrusive temperature millions of passengers have signed 10–15 times per hour). checks can also play an important up to the charter on a voluntary IATA’s data collection on the topic role in dealing with COVID-19. basis. aligns with a peer-reviewed study In the United States, the by Freedman and Wilder-Smith Department of Transportation in the Journal of Travel Medicine. ICAO Council Aviation Recovery issued guidance that was simi- The Freedman and Wilder-Smith Task Force larly aligned with ICAO’s Take-off study looked at Emirates flights guidelines. from to Hong Kong between IATA was part of the ICAO Council 16 June and 5 July 2020. There Aviation Recovery Task Force IATA is clear that to avoid incon- were five flights with seven or more (CART). The first set of CART sistencies countries should not infected passengers, totaling 58 guidelines, on 1 June, put forward a introduce unilateral health safety COVID-positive passengers on the series of recommendations to keep measures. To create a safe envi- eight-hour trips, and yet no other travelers safe in its document, Take- ronment for all, the same guide- passengers picked up the virus. Dr off: Guidance for Air Travel through lines need to be followed at every Freedman was quoted by NPR say- the COVID-19 Public Health Crisis. step of the journey, from origin to ing, “The circumstantial evidence is, Take-off is a temporary, risk-based, destination. your risk is low on a plane, if there is multilayered approach to tackling rigid masking.” the spread of COVID-19 during IATA has also reiterated its recom- air travel. The recommendations mendation to all travelers to wear

21 IATA Annual Review 2020 Health and safety in 2020

Many other studies likewise support Replacing quarantine measures ICAO is asking countries to actively the low transmission findings for with COVID-19 testing share information with each other aircraft travel. , , and as to ensure implementation in a simulations highlight the The imposition of stringent quaran- harmonized manner. These new importance of aircraft design in low tine measures on arriving pas- recommendations combine with infection rates. sengers by many governments in the earlier recommendations, to response to the pandemic has been provide the global standards for the An Airbus simulation of the air in an a major factor in the collapse of air safe operation of international air A320 cabin calculated parameters traffic demand in 2020. Traveler services and the implementation of such as air speed, direction, and opinion research conducted by testing. temperature at 50 million points Rockland Dutton on behalf of IATA in the cabin, up to 1,000 times per consistently shows that quarantine The European Union and other reg- second. The result clearly demon- measures are a barrier to travel. ulators are expected to announce strates that potential exposure is Around 83% of passengers will not protocols for testing before the lower on an aircraft with masking travel if quarantine is in place. end of 2020, and IATA is advocating than when keeping roughly six feet for these to align with CART best apart in an office or classroom. The development and deployment practices. Practical knowledge is Boeing and Embraer researchers of rapid, accurate, affordable, in the meantime being gained from 22 came to a similar conclusion. easy-to-operate, scalable, and the testing programs that already systematic COVID-19 testing on are part of various travel bubble In October, the Harvard University departure is an alternative to quar- or travel corridor schemes around Aviation Public Health Initiative antine measures that would help to the world. The initiative for a single, released a report that substantiates reestablish global air connectivity. unified approach will need airlines, that the layered approach instituted It would also give governments the , equipment manufacturers, on commercial aircraft results in confidence to open their borders and governments to work in total a low risk of SARS-CoV-2 disease without complicated risk models alignment. transmission during flights. that see constant changes in the rules imposed on travel. IATA does not see COVID-19 Another report, by the United testing becoming a permanent States Transportation Command Rockland Dutton’s public opinion fixture in the air travel experience (US Transcom), reveals that a study research revealed strong support but rather an imperative in the conducted in August 2020 found for COVID-19 testing in the travel medium term. Policy makers should that “the overall exposure risk from process. Approximately 65% of consider the economic stimulus aerosolized pathogens, like corona- travelers surveyed agreed that that only aviation can provide when virus, is very low.” quarantine should not be required if prioritizing their testing resources. a person tests negative for COVID- Reestablishing global connectivity Neutralizing the middle seat on 19. Fully 84% agreed that testing will, for example, preserve travel aircraft is not effective in com- should be required of all travelers, and tourism jobs, which account for bating this virus, as it does not and 88% were agreeable to testing 10% of global employment. create the recommended social as part of the travel process. distance. Manufacturer studies demonstrated that cabin air flow ICAO added two recommenda- features combined with mask tions related to COVID-19 testing Health The passports overall wearing create the needed equiv- and public health corridors (PHC) exposure risk alent social distancing the reduce to the second edition of its CART transmission risk to low levels. And Take-off guidelines were developed from aerosolized with airline margins so thin, empty with the advice of the World Health middle seats are not economically Organization (WHO) and published pathogens, like viable. Stripping out one of every in November. The new Manual on three seats reduces capacity to a Testing and Cross Border Risk coronavirus, is maximum of 66%, and most airlines Management Measures is a key need a higher load factor than that enabler of IATA’s call for system- very low. to break even. atic testing before departure for United States Transportation international travelers. On PHCs Command (US Transcom)

22 IATA Annual Review 2020 Health and safety in 2020

23

To reopen borders without quar- The ITP is neither the first nor In Safely Restarting Aviation—ACI antine and restart aviation, gov- only solution available. It is unique, and IATA Joint Approach, the air- ernments need to be confident however, in that it is developed port and airline sectors endorse the that they are mitigating the risk of specifically for the industry, by WHO position that public funding importing COVID-19. This means the industry, leveraging as it does of health measures should be having accurate information on IATA’s position as a trusted industry ensured. This includes but is not passengers’ COVID-19 health partner and core competency of limited to funding infrastructure or status. developing industry standards. operational changes needed for the implementation of such measures. Travelers will need a digital platform that informs them of what tests, Having the cost of health mea- vaccines, and other measures they sures borne by governments will require prior to travel and where Health costs enable the industry to focus its they can access these measures. scarce resources on reconnecting Passengers will also need a means The WHO’s International Health the world and boosting economic of sharing this information in a Regulations require governments to recovery. verifiable and privacy-assured way pay the costs of health measures, with governments. To address this including mandatory testing. Where challenge, IATA is launching the a test is offered on a voluntary IATA Travel Pass (ITP). basis, it should be priced at cost.

23 IATA Annual Review 2020 Relief measures in 2020

24

Government aid

The countries that committed to financial relief for aviation early on in the crisis include Australia, , China, Colombia, Denmark, , Hong Kong, New Zealand, , Qatar, Singapore, Sweden, and the United States. The relief was divided into three broad categories: wage subsidies, equity financing, and tax relief or subsidies.

The US government passed its Coronavirus Aid, Relief, and Economic Security Act (CARES). And through CARES, it provided about $25 billion in financial assistance to the airline industry.

European countries implemented diverse financial packages. The French and Dutch gov- ernments gave €10 billion to Air France/KLM, Germany agreed to a €9 billion rescue deal for Lufthansa, and Sweden initiated a loan guarantee scheme worth about €455 million.

In Asia-Pacific, various governments pledged support for aviation. Authority Hong Kong (AAHK) provided a HK$2 billion fund for the industry there, and the govern- ments of Australia and granted their airlines respite on charges and fees.

24 IATA Annual Review 2020 Relief measures in 2020 Securing financial and regulatory relief Relief measures in 2020

Even before the declaration of assist the industry. The results, Debt levels the global pandemic, the aviation however, were patchy. Some airlines industry was feeling the impact of received aid and averted bank- Airlines that emerge from the crisis sharply slowing demand. Revenue ruptcy, but others got no support. A will do so with higher levels of debt passenger kilometers (RPKs) few of the latter have ceased oper- and with a higher cost of debt. flown collapsed more than 14% ating, and many of the remainder Airlines entered 2020 with cumu- in February. By 5 March, IATA was have severely retrenched services. lative debt of $430 billion, roughly supporting calls for governments Unless there is a significant uptick half their combined annual reve- to instigate airline relief measures in international travel, which looks nues. Relief measures by govern- as the implications of the dramatic unlikely while border restrictions ments have added about $120 slowdown in air traffic became and quarantine regulations are in billion to that total, equivalent to clear. place, governments will need to about 92% of expected revenues consider further financial support in 2021. Tens of millions of jobs in aviation for the industry. and the wider travel and tourism It is necessary, therefore, that relief industry were at risk. And only Governments also need to recon- measures be continued. Moreover, direct financial relief or government sider the conditions that they those measures should focus on salary support schemes would pre- attach to their aid packages. The helping airlines generate working vent an employment catastrophe. cash injection for troubled airlines capital and stimulate demand and 25 from the French government is a not expand their debt. case in point. In return for financial aid, carriers in France were required 2020 financial forecasts Further relief for the air transport to cut their domestic emissions industry is a solid investment for In June, IATA released its first and invest in more fuel-efficient governments looking to boost financial forecast for 2020. The aircraft, which just added to airlines’ economies that have slipped into headline figures—a loss of $84.3 financial hardship. Much of the recession. Each airline job saved billion and revenues down 50%, to government support, in France and supports 24 jobs in the broader $419.0 billion—reinforced the need elsewhere, moreover, was simply in economy, and the Air Transport for financial relief to preserve the the form of loans whose repayment Action Group estimated in its industry and its jobs. IATA revised has only added to industry debt. October Aviation Benefits Beyond its outlook for 2020 in November Borders report that some 4.8 million The industry’s recovery is expected as the full-year impact on the airline aviation workers’ jobs are at risk to be long and challenging. The industry of the COVID-19 pandemic from the pandemic-induced col- crisis of the COVID-19 pandemic, became clearer. The 2020 loss is lapse of air travel demand. which was finally declared as now predicted to be an unprec- such on 11 March, is more pro- edented $118.5 billion, and the It is in the interest of governments tracted than envisaged. Airlines industry’s revenues are estimated to provide ongoing support to are expected neither to turn cash to collapse to $328.0 billion. maintain a viable aviation industry. positive until 2022 nor to see their Preserving airline networks and the traffic levels recover until 2024. jobs of skilled industry workers is crucial if aviation is to continue its In the meantime, the initial govern- Financial support from support of global supply chains and ment cash injections in support governments to effect a return to global eco- of the industry are running out. nomic growth and prosperity. IATA joined forces with industry In October 2020, IATA estimated partner organizations, such as that the average airline had just Airports Council International 8.5 months of cash left. Further and the International Federation government support is required to Regulatory relief of Transport Workers, to argue avoid a catastrophe for the indus- for swift financial support for the try and its employees, direct and In addition to financial assistance, industry. indirect. airlines need temporary regula- tory relief. One of the most useful About $173 billion was pledged by regulatory adjustments that can be various governments to financially granted is a global waiver on the

25 IATA Annual Review 2020 Relief measures in 2020

use-it-or-lose-it 80-20 slot rule. apparent that a slots waiver would Safety Agency published templates The severe uncertainty in their also be required for the 2020 for extending the validity of various markets makes it more necessary winter season (October 2020– licenses and certificates. The than ever for airlines to have the March 2021). IATA called for this ’ General Civil flexibility to alter their schedules to in June and continued to lobby for Aviation Authority, the Civil Aviation meet demand without the pressure it throughout the summer. After Administration of China, the UK Civil of being penalized for not using considerable delay, the European Aviation Authority, and the Agencia allocated slots. Commission (EC) indicated it would Federal de Aviación Civil in grant the waiver, subject to con- are among the regulatory bodies In early March 2020, the industry ditions voluntarily proposed by that have also recognized the need went public with its call for relief airlines and airports. for flexibility in training, crew, air- from the slot rules. Europe was the worthiness, and air traffic manage- focal point, as it contains about A full-season winter slots waiver ment requirements. half of the world’s slot-regulated will avoid the need to fly empty airports. The European Union (EU) aircraft to maintain slot allocations The need for flexibility must be was urged to suspend the 80-20 and enable flights to be operated balanced by the need to mitigate rule for the summer season and in a sustainable manner. It will give any risks associated with prolonged did so on 13 March, following airports and airlines certainty in regulatory alleviation and to retain 26 significant advocacy from IATA planning their schedules, save critical skills. The ICAO Council and airlines. Regulators around the millions of dollars in unnecessary Aviation Recovery Taskforce guid- world, including in Australia, Brazil, costs, and ensure that passengers ance recommends that alleviations China, Mexico, New Zealand, and know what to expect in the tough not extend beyond 31 March 2021 Singapore, then granted similar winter months. unless circumstances dictate oth- waivers. erwise. It also encourages countries There are many other examples to facilitate access to medical and As the crisis continued and traf- of actions by regulators to aid the training facilities, including flight fic numbers stalled, it became industry. The European Aviation simulators.

Government financial aid % of 2019 industry revenues

26 IATA Annual Review 2020 Relief measures in 2020

IATA, meanwhile, introduced its more flexible. All airlines agree that IOSA Support Program, which tem- every traveler should be treated porarily extends IATA Operational fairly and given what they are owed. Safety Audit (IOSA) registrations Flexibility on EU261 and like regu- and, where needed, offers remotely lations elsewhere will ensure this conducted audits. Airlines are and keep aviation viable during this required to complete an IOSA crisis. safety questionnaire at a minimum of every 60 days. The IOSA Support Yet airlines faced a situation in the Program will be maintained and United States similar to the one in adjusted throughout the crisis with- Europe. Authority over US aviation out compromising audit integrity consumer protection regulation and stakeholder acceptance. resides with the Department of Transportation (DOT). And in April 2020, the DOT confirmed that it would continue its long-stand- Vouchers ing policy of requiring carriers to provide prompt cash refunds to As airlines’ cash flow diminished, ticketed passengers when carriers they began asking customers to 27 cancel passengers’ flights or make accept refundable vouchers instead significant changes in flight sched- of monetary refunds. Refundable ules that passengers choose not vouchers enable airlines to pre- to accept. The DOT did, however, serve cash to survive the crisis note the unprecedented nature of and give customers the opportu- the COVID-19 crisis and say that it nity to simply delay their trips as would use its discretion in enforcing necessary. policy. In Europe, IATA requested a tempo- As in Europe, IATA lobbied to sup- rary and clearly drafted adjustment port US airlines. IATA requested that of the EU261 passenger rights the DOT allow airlines flexibility in regulations to permit refundable managing historic levels of refund vouchers as an alternative to cash requests at a time when they face refunds. EU261 was not designed severe cash flow issues. to deal with the mass cancellations caused by government-imposed There is no benefit in airlines run- lockdowns. Some 16 EU nations, ning out of cash. The world requires representing 70% of the EU’s pop- air connectivity. The employment ulation, reflected their recognition of millions of people throughout of this by their support for IATA’s the air transport industry and request. The EC, however, merely the travel and tourism industry issued a statement clarifying the depends on viable airlines. A robust status quo. aviation network is vital if essential resources are to be transported. There is little doubt that EU261 Despite the shutdown and patchy remains unfit for purpose. Its reform relief support provided by govern- is urgent; EU261 must be made ments, the industry has continued to work hard to keep the world moving and to fulfill its mission to connect the globe.

27 IATA Annual Review 2020 Connectivity in 2020 Connectivity

28

Estimated numbers as of 1 November 28 IATA Annual Review 2020 Connectivity in 2020 Connectivity Maintaining connectivity during the pandemic Connectivity in 2020

Ensuring the world keeps flying exchange policies. This gave travel In the early days of the crisis, air agents timely access to voucher cargo was pivotal in supplying per- Despite the unprecedented col- and ticket exchange information sonal protective equipment (PPE) lapse in air traffic demand caused from each participating airline. and medicines to destinations glob- by COVID-19 restrictions, the world ally. Its positive impact continues continues to need air connectiv- All in all, IATA’s proactive responses as the global lockdown persists. ity. And the aviation industry has to the crisis saw it extract about Some 46,000 special flights have responded. Nearly 40,000 dedi- $20 million from the year’s opera- transported 1.5 million metric tons cated repatriation flights carried tional expenses of the IATA settle- of cargo. more than five million people home ment systems to cover staff-related after borders were closed in March. costs and information technology But the number of freighter aircraft Over 250,000 free tickets were (IT) spending. Global Distribution was insufficient to compensate for distributed to medical staff globally Systems, too, were involved in the 40–45% decline in belly-hold to enable the swift and cost-effec- important discussions regarding capacity. So passenger aircraft tive transfer of essential medical and, indeed, supported airline finan- were reconfigured for all-cargo resources. Global supply chains cial liquidity. flights. To help with this, IATA pub- were kept operable by the air cargo lished guidance to deal with regu- network. IATA’s approach to managing latory hurdles. Cargo, for example, its financial settlement systems cannot be carried on seats unless 29 through the pandemic is being approved by civil aviation authori- guided by the principles of Supporting the travel agent ties. Further approvals are required if airlines decide to remove seats. sector • keeping cash flowing while pro- And, of course, the transport of tecting the systems through a IATA’s travel agent partners have dangerous goods in the passenger balanced approach and excep- been as deeply affected by COVID- cabin and the weight restrictions on tional risk management controls 19 disruptions as airlines. Early on overhead compartments had to be at agent, airline, and clearing during the crisis, IATA established considered and approved. bank level; weekly calls with the Passenger Using the passenger cabin for Agency Conference Steering • applying flexible measures given cargo, however, makes a big differ- Group (PSG), which represents the extraordinary circumstances ence to the amount of cargo that airlines, and the Passenger Agency in accordance with IATA resolu- can be carried. Somewhere in the Programme Global Joint Council tions and IATA Clearing House region of 1,000–1,500 extra boxes (PAPGJC), a collaboration of regulations; and airlines, the United Federation of can be accommodated, although Travel Agents (UFTAA), and the • engaging with IATA members getting them into the cabin through World Travel Agents Associations and with governance bodies passenger doors and packing them Alliance (WTAAA). The calls through frequent and regular are further obstacles that can only addressed urgent COVID-19 issues communication. be overcome with a human chain. that airlines and agents were expe- There were and are many chal- riencing and resulted in the follow- lenges for air cargo to tackle. IATA ing initiatives: Revealing how crucial air cargo is works tirelessly with ICAO to urge • Exceptions for late payments to global supply chains and medi- governments worldwide to take the and the late submission of finan- cal response necessary steps to sustain global cial statements and securities by logistics. agents The impact of COVID-19 restric- tions on air connectivity was swift For the most part, there has been • Approval for cash deposits as a and significant for air cargo. Belly good response from governments, temporary solution for agents to hold capacity declined sharply with but operational difficulties persist. bridge gaps in financial security the grounding of passenger flights. Airports, for instance, especially amounts Air cargo nonetheless remains criti- alternative airports used in emer- cal to moving goods and to sustain- gency situations, need to be kept IATA also launched a central repos- ing public health and economies functioning. Many of these second- itory for airline vouchers and ticket worldwide. ary facilities, though, lost service

29 IATA Annual Review 2020 Connectivity in 2020 Connectivity

amid the pandemic and so were effectively shut down. Safely delivering COVID-19

Major hubs, meanwhile, remain vaccines will be the mission of open, but with existing slots and curfews. These need to be changed the century for the global air or waived to allow cargo flights to operate. And because most of the cargo industry. cargo flights are chartered, permits must be fast-tracked. be ready and available, as must This could be a challenge given trained staff. Robust monitoring that, as part of efforts to prevent Crew regulations are another regu- capabilities will also be needed to COVID-19 spread, many govern- latory obstacle. Clearly, crews can’t ensure the integrity of the vaccines. ments have implemented measures observe 14-day quarantine periods. that increase processing times. Exemptions are therefore needed Security arrangements must be in to allow crew members to return place to safeguard vaccine ship- Priorities for border processes home to their families while taking ments from tampering and theft. include the following: The potential volume of those into account all possible safety • Introducing fast-track proce- measures. shipments calls for early planning 30 on security measures to ensure that dures for overflight and landing all security-related precautions are permits for operations carrying scalable. COVID-19 vaccines Transporting vaccines Border processes, meanwhile, • Exempting flight crew members Air cargo’s well-established global demand correct regulatory approv- from quarantine requirements to time- and temperature-sensitive als and customs clearances for the ensure cargo supply chains are distribution systems will be critical timely transport of the vaccines. maintained in carrying COVID-19 vaccines to the world whenever vaccines become available.

The scale of that activity will be vast. In September, IATA Director Air cargo regulatory assistance General Alexandre de Juniac made it clear that “safely delivering The COVID-19 crisis has resulted in unique challenges for the COVID-19 vaccines will be the mis- air cargo industry, particularly in light of government health and sion of the century for the global air safety restrictions. The challenges include delays in getting cargo industry.” charter permits, a lack of exemptions on COVID-19 testing for air cargo crew, and inadequate ground infrastructure to and from and Cold-chain transportation will be within airport environments. vital for vaccines that require con- sistent low temperatures. Facilities In response, IATA is urging governments to and equipment specific to the stor- age and handling of vaccines must • cut the paperwork for charter operations; • exempt cargo crews from quarantine rules that apply to the general population;

• ensure adequate staff and facilities to process cargo efficiently;

• recognize mutually agreed global standards, such as for health certificates and licenses; and

• make alternate airports available even in the absence of pas- senger flights.

30 IATA Annual Review 2020 Connectivity in 2020 Connectivity Guidance for the industry

IATA experts, working with professionals from the airlines and elsewhere in the aviation industry, developed a large number of guidance documents for handling COVID-19.

The COVID-19 hub on iata.org gathers all this information in one easy-to-access list. Among the key documents are the Roadmap for Restarting Aviation, Aircraft disinfection during and post-pandemic, and Guidance for cabin operations during and post-pandemic.

Also accessible from the hub is a COVID-19 dashboard on national and airport restrictions that gives airlines rapid access • Supporting temporary traffic to the latest operational rules being put in place by governments rights for operations carrying worldwide. COVID-19 vaccines where restrictions may apply

• Removing operating hour guidance (see box) and adjusted day. IATA has also launched an curfews for flights carrying its financial systems and consul- alerts service on Timatic so that COVID-19 vaccines to facilitate tancy products to suit the exacting subscribers get real-time notifica- the most flexible global network circumstances under which airlines tions for all travel updates related to operations now find themselves operating. It the pandemic. developed regular bulletins and • Granting priority on arrival of vital communications for internal and These new resources for travel COVID-19 shipments to prevent external use and a suite of info- planning are timely and important. possible temperature excursions graphics for sharing by the indus- The Rockland Dutton survey also due to delays try on social media. As the crisis reveals that more than 80% of travelers are as concerned about • Reducing or eliminating tariffs worsened, moreover, Alexandre de potential quarantines as they are to facilitate the movement of Juniac gave weekly media briefings. about actually catching the virus. COVID-19 vaccines Airlines, too, have worked hard to Other free and commercial prod- 31 Capacity for handling substantial keep passengers informed. The ucts developed by IATA exclusively shipments of COVID-19 vaccines Rockland Dutton survey found that to help airlines negotiate the crisis is also an issue to contend with. 79% of people surveyed agreed include these offerings: Providing a single dose to each of that airlines were being “transpar- ent in communicating measures the planet’s 7.8 billion people will • A free three-month access to that they are taking to keep flying fill 8,000 . Turbulence Aware, a real-time safe.” Land transport will help, of course, database of turbulence reports. especially in developed economies In aid of airline communication, IATA with local manufacturing capacity. • Discounted training to help peo- developed an information hub at But vaccines cannot be delivered ple acquire new skills and new www.iata.org that includes a free globally or in timely fashion without jobs. Some training was even online interactive world map that the significant use of specialized air offered free, and many courses provides travelers with the latest, cargo transport. are available for just $75 in honor country-by-country COVID-19 th of IATA’S 75 anniversary. entry regulations. The map relies on IATA’s Timatic database, which • Free webinars hosted by industry Supporting the industry and contains comprehensive informa- experts on a variety of topics. travelers tion on the documentation required for international travel. • The International Airline Training IATA supports industry efforts to Fund launched a new virtual keep the world connected through- To keep pace with the dynamic training program of 29 courses, out the pandemic and beyond. To COVID-19 situation, IATA updates benefitting 58 African airlines. that end, the association published Timatic more than 200 times per

31 IATA Annual Review 2020 A year of progress — in

32 safety, costs, sustainability... Connecting more people than ever before.

32 IATA Annual Review 2020 33

Normal.

33 IATA Annual Review 2020 2019 in review Before the storm: 2019 in review Growth in passenger volumes but declines in cargo volumes Air transport connected more cities at lower cost in Unique city pairs and the real cost of air transport 2019 Sources: IATA, Schedule Reference Service (SRS) Analyzer

In 2019, airlines continued to increase the number of city-pair routes they operate globally, with more than 22,000 unique city pairs regularly serviced. This was an increase of almost 1,000 over the number of city-pair connections in 2018. Meanwhile, the inflation-adjusted cost of air travel declined a further 2.3% in 2019.

The doubling in air connectivity and the halving of air travel costs over the past two decades have secured aviation’s position as “the business of freedom.” They have led to the democratization of air travel, making it possible for more people to fly more often to more destinations around the world.

34 Supported economic growth and prosperity through Air tourist spending and the value of trade by air tourism and trade Sources: IATA, World Travel & Tourism Council (WTTC), IHS Markit Air transport is central to world tourism and trade. Tourists traveling internationally by air are estimated to have spent about $900 billion in 2019, a solid increase of some 7% over 2018. The additional number of city- pair connections and the lower cost of air transport also boosts trade in goods and services and heightens foreign direct investment and other important eco- nomic flows.

Air transport accounts for only a small proportion, less than 1%, of world trade by volume but for a much larger share by value, at about 35%. In 2019, the value of goods carried by air is estimated to have been slightly above $6.7 trillion.

And was more accessible for more people than ever Accessibility of air travel before Sources: IATA, International Monetary Fund (IMF)

Worldwide air passenger numbers continued to rise in 2019, moving beyond 4.5 billion passenger journeys on a flight-segment basis. In 2000, the average citizen flew just once every 44 months. In 2019, the time between passenger trips had dipped below half that time, to just 20 months.

34 IATA Annual Review 2020 2019 in review

Passenger demand slowed but remained solid RPK versus world GDP growth Sources: IATA, IMF Demand for air passenger services remained solid in 2019, with industry-wide revenue passenger kilometers (RPKs) increasing 4.2%.

RPK growth, however, fell below the long-run industry average growth rate (estimated to be 5.25%–5.50%) for the first time in seven years. Air travel demand in 2019 was adversely affected by a softer global economic backdrop and weaker business confidence amid inter- national trade tensions, especially between the United States and China.

China’s domestic market once again added the most Top 10 increasing O–D markets 35 passenger journeys Source: IATA Direct Data Solutions (DDS)

Despite the moderation in global RPK growth, there were more than 3.9 billion origin–destination (O–D) passenger journeys worldwide in 2019.

Among them, domestic routes within China again provided the largest incremental increase in passen- ger trips. China’s market added more than 30 million journeys during the year, compared with 2018, a brisk annual growth rate of 5.8%. The US domestic mar- ket followed, with almost 27 million more passenger journeys in 2019 than in 2018, growing at a robust 4.6% pace for the year.

The US domestic passenger market continued to be Largest O–D air passenger markets in 2019 the world’s largest Source: IATA DDS

Although China’s domestic market added the most passenger journeys in 2019 compared with 2018, the US domestic market remained the world’s largest single O–D air travel market.

Unsurprisingly, the largest domestic travel markets dominated the O–D rankings for 2019. –UK was the top international country pairing, at number 10. The top 12 markets accounted for almost half of the total number of O–D passenger journeys in 2019.

35 IATA Annual Review 2020 2019 in review

Air cargo volumes declined in 2019 Air cargo versus global goods trade growth Sources: IATA, CPB Air cargo volumes began to decline in the fourth quar- ter of 2018 and continued declining throughout 2019. This resulted in the worst performance for the air cargo segment since the global financial crisis in 2009. Not all air freight sectors were equally affected, however. The e-commerce and pharmaceuticals sectors, for exam- ple, performed well in 2019.

Overall, though, cargo tonne kilometers (CTKs) con- tracted a sizable 3.2% year on year, the first negative result for CTKs since 2012. Global goods trade growth likewise slowed, from 3.7% in 2018 to just 0.9% in 2019, the weakest performance since 2009.

36 Regional differences were evident in passenger and, Regional passenger and freight demand outcomes more so, in cargo outcomes Source: IATA

The mixed fortunes of the air passenger and cargo mar- kets at the global level were reflected in outcomes at the regional level. Passenger market results, however, showed less regional variation than cargo.

With the exception of the Middle East, the air passen- ger growth performance in RPK terms was consistent across regions in 2019. It ranged between 3.9% for North America and 4.8% for Asia-Pacific.

The air cargo growth performance across regions was more mixed. Only the African carriers saw their CTKs increase compared with 2018, at a strong rate of 7.4%. In contrast, airlines based in Asia-Pacific and in the Middle East were the weakest performers in 2019, with volumes falling 5.6% and 4.6%, respectively. Because US-China trade tensions have a profound effect on air cargo developments internationally, it is little surprise that the Asia-Pacific market—a global manufacturing and distribution hub—was heavily affected in 2019.

36 IATA Annual Review 2020 2019 in review

Passenger load factor attained a record high in 2019 Industry-wide passenger and cargo load factors Source: IATA The air passenger market’s available seat kilometers (ASKs) increased a moderate 3.4% globally in 2019 compared with 2018, the slowest pace since 2009. The grounding of the MAX aircraft played a role in this subdued, industry-wide capacity growth outcome. Rising demand, reflected in the 4.2% increase in RPKs, outpaced capacity growth and increased the passenger load factor (PLF) around half a percentage point, to 82.6% for 2019. This was the eighth consecu- tive yearly increase in PLF and a record high.

The contrasting fortunes for air cargo were clear. Available cargo tonne kilometers (ACTKs) increased 2.2% year on year, a pace that was some 5.4 percent- age points faster than the rate of demand growth. As a consequence, the cargo load factor (CLF) declined substantially in 2019, around 2.5 percentage points. 37

Oil prices were steady and moderate for much of World oil and prices 2019 Sources: Datastream, Platts

The yearly average jet fuel price for 2019 was slightly below $80 a barrel. This was down from an average in 2018 that exceeded $86 a barrel and was, overall, a moderate level compared with the past 15 years. What this meant for airlines was that the cumulative unhedged annual fuel bill, excluding handling costs, was $9.5 billion lower in 2019 than in 2018.

The achieved load factor eased slightly but remained Breakeven and achieved load factors solidly above the breakeven level Sources: IATA, The Airline Analyst

The main contributors to airline costs, including oil prices, interest rates, and labor costs, were stable in 2019. And that underpinned an essentially unchanged estimate for the industry-wide breakeven load factor, at 65.9%, compared with 66.0% in 2018.

The record PLF in 2019 was countered by the sharp decline in the CLF. As a result, the combined achieved industry-wide load factor—measured as a share of available tonne kilometers (ATKs)—eased by around half a percentage point, to 69.4%.

37 IATA Annual Review 2020 2019 in review

Air transport’s financial performance was robust, but Industry return on investment and the cost of capital returns remained below the overall cost of capital Sources: IATA, Datastream, The Airline Analyst

The global airline industry experienced another year of robust financial outcomes in 2019. Airlines generated an industry-wide net posttax profit of $25.9 billion, with an operating margin (EBIT) forecast to be 5.1%.

Despite moderating for a fourth consecutive year in 2019 following its peak in 2015, the industry-wide return on invested capital (ROIC) remained elevated relative to historical terms, at 5.7%. The cost of capital eased in 2019, returning to its 2017 level, and remained above the level of ROIC.

38 Regional financial performance was varied Regional profit performance Sources: IATA, The Airline Analyst Globally, the industry’s EBIT decreased in 2019, to an estimated 5.1% of revenues, from 5.7% in 2018. Across regions, industry financial performance remained mixed. continued to lead the way, delivering an operating margin of almost 10% in 2019, up about half a percentage point on the previous year.

Similar to 2018, airlines in Europe, Asia-Pacific, and Latin America recorded moderate profitability, with operating margins ranging from 3.5% to 4.7%. Airlines in the Middle East and in Africa faced more challenging business conditions, and those in the Middle East in particular had an overall negative operating margin of -5.2%.

Latin America joined North America in being the only two regions where airline operating margins improved in 2019 compared with 2018.

38 IATA Annual Review 2020

2019 in review 39 IATA Annual Review 2020 Annual Review IATA 39

and from 2000-2019... and from

During 2019... During The figures in brief in figures The Safety Continuing the strong industry progress Safety

More than 4.5 billion passengers flew safely on 46.8 million flights. All major safety performance indi- cators improved in 2019 compared with 2018 and the average over the 2014–2018 period, as shown in the table opposite.

Toward enhanced skills and safety

In 2019, the International Airline Training Fund (IATF) contributed to developing the skills and strength- ening the capabilities of 3,982 aviation industry professionals from developing nations. The IATF spon- sored 191 events, 110 aimed at 40 enhancing aviation safety and help- ing airlines with IOSA registration.

The IATA Standard Safety Assessment (ISSA) Implementation Training Program gained momen- tum in Latin America. This resulted in six registrations: Twoflex, Amaszonas Línea Aérea Bolivia, , Asta Linhas Aéreas, Rima, and Sansa. *There were also seven fatalities on the ground in the accident involving Busy Bee Congo.

More information on the industry’s safety performance can be found in the IATA Safety Report.

40 IATA Annual Review 2020 Security Learning from evolving threats Security

The partnership between govern- Aviation cybersecurity Conflict zones ments and the aviation industry is the foundation on which a safe, To address cyber threats and Safety and security risks associ- secure, and accessible air transport ensure the civil aviation industry is ated with conflict zones continue network is built. Aviation security resilient to cyberattacks, in 2019 to be major concerns for aircraft policy must learn from evolving the ICAO Aviation Cyber Security operators. The downing of Ukraine Strategy was endorsed. Following International Airlines flight 752 on threats. IATA pursues security th policies based on global standards, the ICAO 40 Assembly, the need departure from in January with an outcome-based risk-mitiga- for countries and the industry to 2020 underscores the imperative tion approach. take further action to counter cyber that airlines require access to rele- threats was emphasized. Therefore, vant and corroborated information ICAO was called upon to develop a from governments to perform accu- cybersecurity action plan to facili- rate risk assessments. tate the adoption of its strategy. IATA and its members support the IATA strongly supports the ICAO evolving changes to Annexes 6, position as the most appropri- 15, and 17 regarding enhanced ate way to drive coherent global risk assessment requirements for dialogue and action on aviation operators in dealing with conflict cybersecurity. The association is zones. In 2019, moreover, IATA 41 collaborating closely with ICAO’s released a security incident data- Secretariat Study Group on base that provides member airlines Cybersecurity (SSGC) and Trust with a tool that collates a range of Framework Study Group (TFSG) to open-source information. That tool contribute to the development of establishes a baseline of informa- the cybersecurity action plan. tion that will help airlines formulate the required safety and security risk assessments.

41 IATA Annual Review 2020 Regulation and taxation Smart regulations for healthier air transport Regulation and taxation

The industry pursued its need Unruly and disruptive passengers Under this MOU, the WSG have for smart regulations and the been rebranded as the Worldwide avoidance of excessive or poorly In 2019, IATA launched public Airport Slot Guidelines (WASG). The targeted taxation in 2019. This awareness campaigns in partner- two last editions of the WSG were resulted in several noteworthy ship with the travel retail indus- published in January and August developments. try and regulators in the United 2019. They incorporate changes Kingdom and Sweden highlight- agreed to through a strategic review ing the consequences of unruly involving airlines, airports, and passenger behavior. Progress was slot coordinators. Those changes Smart industry regulations also made in ratifying update and strengthen the applica- Protocol 14 (MP14), such that MP14 The aim of smart regulations is tion of policy and slot coordination came into force on 1 January 2020, to enable airlines to connect the processes. just six years after its inception. world as efficiently as possible, with MP14 enhances the legal powers IATA will continue to work through resulting benefits to global soci- of countries to deal with offenses the WASB and with its members to ety. A lead tool for promoting the onboard aircraft that land in their influence slot regulations worldwide benefits of smart regulations are territory, even those committed on to ensure that they remain aligned the IATA-developed Air Transport foreign-registered aircraft. with the WASG. Regulatory Competitiveness 42 Indicators reports, which bench- mark national performance across five metrics: Single African Air Transport Taxation Market 1. Passenger facilitation IATA and its members ran cam- The number of African nations paigns to avoid excessive or poorly 2. Cargo facilitation signed up to the Single African targeted taxation with the follow- Air Transport Market (SAATM), an ing significant outcomes totaling 3. Supply chain management African Union initiative to open $152.6 million in savings in 2019: 4. Infrastructure management Africa’s airspace, increased to 31 in 2019. Only 8, however, have • Argentina: removal of a 1.2% tax 5. Regulatory environment implemented the “concrete mea- on credit and debit card pay- sures” mandated by the African ments, for a reduction of $6.9 IATA published the first batch of Civil Aviation Commission. IATA’s million; reports in 2019 in partnership with response has been to publish • : reduction in the Council local industry stakeholders. They reports on the benefits of aviation Tax, constituting a saving of $5.3 focused on Europe and were dis- in numerous African countries that million; tributed among policy makers and highlight how important the SAATM the media. is to increasing such benefits. • Russia: elimination of a 20% val- ue-added tax (VAT) on services rendered to international airlines Slots by airport operators, saving $140.4 million; In June 2019, a crucial step was taken toward reforming the • Bermuda: prevention of the intro- governance of the World Slot duction of a 5% general sales tax Guidelines (WSG). IATA, Airports (GST) on air ticket sales, corre- Council International (ACI), and the sponding to $17.5 million a year. Worldwide Airport Coordinators Group (WWACG) signed a memo- randum of understanding (MOU) to create the Worldwide Airport Slot Board (WASB).

42 IATA Annual Review 2020 Regulation and taxation

Improved access for passengers with disabilities

Safe and dignified travel for all passengers, including those with disabilities, is an airline commitment enshrined in a resolution passed at the 2019 IATA AGM. The principles for accessible air travel endorsed in that resolution were, in turn, adopted by ICAO at its 2019 Triennial Assembly as high-level guidance for regulators.

The IATA resolution also commits airlines to building dialogue with the accessibility community and to bringing together stakeholders from across the aviation sector. Toward the fulfillment of this commitment, in November 2019 IATA established the Accessibility Symposium and designated it an annual event.

Diversity in the workforce 43 Airlines are determined to improve the participation of under-represented groups at all levels of employment and are accelerating this process through nondiscriminatory programs to encourage mentoring and reward talent. The inaugural IATA Diversity and Inclusion Awards in 2019 hon- ored three excellent examples of aviation’s progress in this regard:

• Inspirational Role Model: Christine Ourmières-Widener, CEO, Flybe;

• High Flyer Award: Fadimatou Noutchemo Simo, Founder and President, Young African Aviation Professional Association (YAAPA);

• Diversity & Inclusion Team: .

In September 2019, IATA announced its 25 by 2025 cam- paign, which seeks voluntary participation from IATA- member airlines. Airlines that participate in 25 by 2025 commit chiefly

• to increase the number of women in senior positions by either 25% against current metrics or a minimum repre- sentation of 25% by 2025;

• to raise the number of women in under-represented jobs (e.g., pilots and operations) by either 25% against current metrics or a minimum representation of 25% by 2025;

• to report annually on key diversity metrics.

The first airlines to sign up to the 25 by 2025 campaign were China Eastern, the Lufthansa Group, and Qatar Airways. As of October 2020, 55 airlines have signed onto the campaign.

43 IATA Annual Review 2020 Infrastructure Cost-effective and flexible Infrastructure

The air transport industry needs A vision for the future • ONE ID will enable passengers demand-led, fit-for-purpose, to travel document free using cost-effective infrastructure to The NEXTT (Next Travel biometric recognition. operate and grow. Toward this Technologies) vision outlines how aim, IATA released a new version new technology, interactive deci- • ONE Order will result in the grad- of the IATA Airport Development sion-making, advanced processing, ual disappearance of passenger Reference Manual (ADRM) in March and moving activities off airport will name records (PNRs), e-tickets, 2019. A review, meanwhile, of the meet changing passenger demand and miscellaneous electronic ICAO Airports Economic Manual and customer expectations. In documents in favor of a single focused on ensuring that infrastruc- 2019, a study on the impact on customer order record that holds ture user charges support competi- airport design of deploying the the data elements obtained and tive and cost-efficient air services. NEXTT initiative. ICAO also indi- required for product fulfilment cated support for NEXTT, with the across passengers’ air travel In 2019, IATA participated in cam- President of the Council requesting journeys. paigns related to charges and tax- a briefing, and exposure at the ICAO ation that contributed to an airline world aviation forum and in the • Travel Communications will cost reduction of $1.34 billion. Key 2019 Aviation Benefits report. enable multiple industry stake- achievements included holders to communicate with IATA and Airports Council passengers across all touch 44 • reductions in the en route International (ACI) developed a points of their journey with charges from Eurocontrol and common program for the future accurate, up-to-date information Airservices Australia, totaling on-ground travel experience. Eleven provided by a trusted source. $556 million; key IATA projects were harmonized under this program of infrastruc- • Smart Security will use stand- • reductions in the passenger ture, processes, and business to off technologies and data-driven charge in , bring the NEXTT vision to life. processes to provide seamless, airport charges at airport, efficient, walk-through security and the value-added tax (VAT) • ONE Record will allow all stake- for passengers and their bag- rate on jet fuel at São Paulo air- holders in the air cargo supply gage throughout their journeys. port (totaling $235 million); chain to directly access the ship- ment data they require, all from a • Enhanced Airport Collaborative • removal of VAT in its entirety in digital ecosystem. Decision-Making (A-CDM) will Russia ($140 million). improve the efficiency of the • Interactive Cargo will ”make aircraft turnaround process cargo talk,” with intelligent and flight predictability through systems that self-monitor, send real-time data sharing between Airport real-time alerts, and respond to airport partners, reducing airport Following IATA’s resolution on changes in handling conditions. delays. privatization, adopted at IATA AGM • The Cargo Facility of the Future • CEDAR (Ramp of the Future) will 2018, IATA launched a report with will define what the modern accelerate the modernization of Deloitte providing a framework for cargo facility will look like and ground operation processes. a new model of airport concession how it will be used. contracts. • The Airline Industry Data Model • Baggage Tracking will ensure (AIDM) will provide an agreed- that every bag is tracked upon dictionary for industry throughout its journey to vocabulary, data definitions, and reduce mishandled luggage and their relationships. increase efficiency in baggage operations and has already been agreed to by airlines across the industry.

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45 IATA Annual Review 2020 Environment Pushing for a sustainable future Environment

Developments in 2019–20 Carbon Offsetting and Reduction plans. This was an important show Scheme for International Aviation of industry support and solidarity Awareness of climate change with the ICAO Secretariat ahead of increased in 2019 as the efforts An important breakthrough in the complex discussions at the ICAO of environmental protest groups, first half of 2019 was the agree- Triennial Assembly in September– such as Extinction Rebellion and ment by ICAO on defining the mon- October 2019. In the end, motions the school strike movement led by itoring, reporting, and verification on CORSIA and a long-term goal for Greta Thunberg, gathered momen- (MRV) procedures for its Carbon emissions reductions were passed tum ahead of the Conference of Offsetting and Reduction Scheme at that assembly. the Parties (COP)25 meeting in for International Aviation (CORSIA). December. In support, IATA arranged capac- In January 2020, IATA partnered ity-building workshops to ensure with Xpansiv CBL Holding Group As part of the industry’s engage- that airlines were compliant with to launch the Aviation Carbon ment with environmental groups CORSIA requirements. Exchange (ACE). ACE is a cen- and the general public, the IATA tralized marketplace for CORSIA- Board encouraged an education At the 2019 IATA AGM, member air- eligible emission units where campaign to help travelers become lines reconfirmed their commitment airlines and other aviation stake- more aware of the environmental to the industry’s targets, including holders can trade CO₂ emission 46 impacts of air travel and of the work carbon-neutral growth from 2020 reductions for compliance or the industry is doing to reduce and cutting emissions to half of voluntary offsetting purposes. The emissions. A website, www.flyaware. 2005 levels by 2050. A resolution partnership adopted a phased com, was developed and launched was passed at the AGM urging approach to its different trading by IATA in February 2020 to begin ICAO member nations to support options, with the full integration of this outreach. But the consumer CORSIA, to volunteer to implement CBL Markets’ trading platform and aspects of the campaign were the scheme at the earliest possible IATA’s settlement systems planned paused amid the COVID-19 crisis, stage, and to integrate the MRV for the final quarter of 2020. which grounded much of aviation requirements into their national from March 2020.

Current and projected SAF production

A

B

A: The difference between a low take-up of SAF from production facilities B: Without the correct policy measures, the fuel (lower number) and a high take-up, driven by policy and airline decision-mak- output could be optimized to go to other forms of ing. The top number represents the full possible output of SAF production in transport. The lowest dotted line represents the operation or under construction or advanced planning and financing. least take-up of SAF (output goes to road transport).

46 IATA Annual Review 2020 Environment

As the impact of COVID-19 on Technologies Sustainable fuels 2020 air travel demand emerged, it became clear that this extreme Offsetting remains a vital short- With the industry reliant on liquid shock to air travel threatened to term option for mitigating aviation fuels for most services for the distort the baseline for calculat- carbon emissions. Long term, foreseeable future, the take-up of ing carbon-neutral growth. ICAO however, new technology, includ- sustainable aviation fuels (SAF) responded to prompting from the ing sustainable fuels, will be the will be crucial if the industry is to industry and agreed to modify the solution. IATA published its updated meet its 2050 target of halving CORSIA baseline to reflect only Technology Roadmap in 2019, emissions. SAF offers potential CO₂ 2019 demand levels. This has setting out the milestones for reductions of up to 80% compared resulted in a tougher emissions expected green technology over with traditional jet kerosene. offsetting requirement than would the next 30 years. The roadmap In 2019, the industry marked the have been the case if 2020 had suggests that fully electric com- milestone of more than 250,000 been a year of similar demand mercial aircraft carrying around 50 commercial flights with a SAF blend. growth to 2019. ICAO’s modifica- passengers on short-haul flights Increasing the production of SAF as tion did, however, remove the worst could be in service from 2035 rapidly as possible to stay abreast of the distortion from the collapse onwards, with hybrid propulsion of rising usage remains an indus- in air traffic demand caused by systems in place for long-haul jour- try goal. Throughout 2019, IATA COVID-19. neys also helping to significantly 47 reduce emissions. engaged with fuel producers and political stakeholders to encourage investment in SAF production. The air transport industry, basing itself on 2019 demand, targets 2% SAF fuel use by 2025. IATA estimates that the level of annual production needed to meet this target—some 7 billion litres—will create a tipping point to bring prices down and will encourage a virtuous circle of fur- ther investment and falling prices.

SAF is our biggest emissions reduction opportunity. The time is right to push it forward so that, together, we can achieve major carbon reductions on the way toward fossil fuel-free flight.

Alexandre de Juniac

47 IATA Annual Review 2020 Cargo Binding the global economy together Cargo

Air cargo enables global trade and Safe shipping of lithium batteries Live Animals certification programs supply chains to operate. Goods in 2019 to complement its CEIV to the value of one-third of global In December 2019, IATA formed Pharma program. These three trade—more than $6.7 trillion—are a partnership with the Global programs benchmark the handling carried by air. Shippers Forum, the International of perishables, animals, and phar- Federation of Freight Forwarders maceutical products, respectively. In 2019, airlines saw revenue from Associations, and the International More than 300 organizations are air cargo fall to $102.4 billion, some Air Cargo Association to amplify certified under CEIV Pharma. To $9 billion down from 2018 and in efforts to ensure the safe air date, Cathay Pacific, Cathay Pacific line with falling volumes. Cargo transport of lithium batteries. The Services Limited (CPSL), Hong tonne kilometers (CTKs) flown fell partners launched an incident Kong Air Cargo Terminals Limited for the first time since 2012, reflect- reporting tool to share information (), and Turkish Cargo have ing a general slowdown in global on rogue shippers and an aware- achieved all three CEIV programs. economic activity. In such a chal- ness campaign on the dangers of lenging market, airlines must work shipping undeclared and misde- The digitization of information with their shipping and freight-for- clared lithium batteries. They also and the exchange of smart digital warding partners to modernize and called for governments to crack data were boosted with the launch digitize cargo processes to improve down on manufacturers of coun- of a number of ONE Record test 48 the safety, speed, security, and terfeit batteries and of mislabeled projects in 2019. The vision for ONE efficiency of cargo services. and noncompliant shipments Record is an end-to-end digital introduced into the supply chain by logistics and transport supply chain To this end, IATA promoted the issuing and enforcing criminal sanc- where data is easily and transpar- international adoption and imple- tions on those responsible. ently exchanged in a digital eco- mentation of efficient and effective system of air cargo stakeholders, electronic border measures based communities, and data platforms. on the World Trade Organization Trade Facilitation Agreement. This IATA’s development in 2019 of the Enhanced standards through should address the wide disparity Smart Facility program is meant to benchmarking and sharing in clearance times for international improve transparency on service information shipments. The average time taken levels at 3,500 cargo handling facil- is 2.1 days, but clearance can take In 2019, IATA published enhanced ities. The program reduces audit up to 4.4 days in some markets. special cargo standards regard- frequency, complexity, and cost ing the transport of live animals, and makes information available on perishables, and life sciences ONE Source, a new online platform. commodities. Through ONE Source, shippers can find business partners for their IATA also initiated its Center needs through full disclosure on for Excellence for Independent everything from temperature-con- Validators (CEIV) Fresh and CEIV trolled rooms to IATA certifications.

Certification status

48 IATA Annual Review 2020 Cargo

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49 IATA Annual Review 2020 Passenger experience More choice, more control, more convenience Passenger experience

In 2019, IATA members represented Baggage What can be said is that the crisis through the Customer Experience has accelerated the trend to airline Workstream developed a strategic Also unanimously passed at the retailing. The NDC Leaderboard roadmap for the automation of a 2019 IATA AGM was a resolution to airlines are, on average, conducting growing number of airport pro- support the global deployment of more than 20% of their indirect cesses. These processes include radio frequency identification (RFID) transactions through NDC API. This improved baggage handling and for baggage tracking. The AGM is off an extremely low base and a tracking, a single identity token for also called for the implementation traffic mix that leans heavily toward all travel processes using biomet- of modern baggage messaging domestic, short-haul, leisure, which ric identification, real-time flight standards to more accurately track is favorable to today’s NDC chan- information sent directly to per- passengers’ baggage in real time nels. It also shows that the NDC sonal devices, and seamless border across key points in the journey. continues to be or is perhaps more control. IATA members committed to relevant than ever. transition to bar-coded bag tags The aim is to deliver an ever-more with RFID inlays and to use RFID personalized and convenient data alerts to enact processes with experience that puts the passen- airports and ground handlers that ONE Order ger in control. An added benefit of prevent potential mishandlings. ONE Order is an industry-led initia- implementing the roadmap will be 50 tive to simplify the airline fulfilment, to facilitate the most efficient use of servicing, delivery, and accounting constrained airport infrastructure. New Distribution Capability processes for airline products and services. These processes are The focus for the New Distribution largely unchanged from the era of ONE ID Capability (NDC) for 2019 was paper tickets, even though paper on driving a critical mass of NDC tickets have all but disappeared. The 2019 IATA AGM unanimously transactions. To that end, IATA resolved to accelerate the global established the NDC Leaderboard, In January 2019, IATA launched the implementation of ONE ID, which composed of airlines that seek to ONE Order certification registry to aims at seamless and secure grow their NDC volumes rapidly. provide transparency on ONE Order processing for passengers from The 21 NDC Leaderboard airlines deployments, validate the capability airport door to gate using col- have set a target of powering 20% of supporting IT providers, drive laborative identity management. of their sales by NDC application innovation and monitor progress, This was given a boost when the programming interface (API) by the and support the adoption of ONE 40th ICAO Assembly endorsed the end of 2020. Order. initiative. Progress in 2020 has to date included the development At year-end 2019, NDC The COVID-19 crisis has signifi- of a contactless application and Leaderboard airlines had reached cantly slowed ONE Order imple- the ONE ID Overarching Process 11% of indirect bookings through mentations. Because of a lack of Recommended Practice approved NDC API. The COVID-19 pandemic, resources, the industry is focused by the IATA Travel Board and which led to the virtual shutdown of instead on continuing and maturing Passenger Service Conference. international traffic (even as of this NDC deployments. IATA is there- writing), upended airlines’ commer- fore pivoting ONE Order to make cial strategies as the focus turned it an integral part of a transition to to business survival. It is, there- retailing. This means moving to a fore, not possible to say whether world of offers and orders aligned the 20% target would have been with today’s online retailing best achieved absent COVID-19. practices. ONE Order assures the simplification and the customer service components that are vital to achieving this vision.

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51 IATA Annual Review 2020 Financial services Efficient, customer-centric systems Financial services

IATA Financial Settlement IATA Currency Clearance Services In 2018, IATA began rolling out its Services (IFSS) facilitate payments (ICCS) offer global cash manage- New Generation IATA Settlement to airlines from travel agents and ment that enables more than 340 Systems (NewGen ISS) to modern- freight forwarders, from airlines to airline users to centrally control ize and transform the BSP to ensure airlines, and from airlines to sup- and repatriate their BSP and CASS that it continues to deliver strong pliers. In 2019, the IFSS processed sales, including from countries with value to all participants for years to $449.8 billion. severe currency liquidity issues. come. At the end of 2019, NewGen Overall, the ICCS processed $37.3 ISS had been implemented in some IATA’s Billing and Settlement Plan billion in 2019. 98 BSP markets, representing (BSP) expedites and simplifies the 93.4% of global BSP cash sales. selling, reporting, and remittance IATA’s Simplified Invoicing and procedures of IATA-accredited Settlement (SIS) is a cost-effec- NewGen ISS offers travel agents and improves financial tive electronic invoicing platform control and cash flow for approxi- that removes all paper from the • three levels of travel agent mately 400 participating airlines. In invoicing and settlement of industry accreditation, allowing agents 2019, the BSP processed $237.1 services. In 2019, SIS had more to select the level that best suits billion. At the close of 2019, there than 2,637 participants, including them and to move between lev- were 154 BSP operations covering 443 airlines, 334 suppliers, and els as their business evolves; 180 countries and territories. Their 1,860 others. SIS processed over 52 • a modern risk management overall on-time settlement rate was 1.8 million interline and supplier framework that provides a more 99.994%. The 743 million transac- invoices during the year and settled secure environment for all partic- tions processed through all BSPs $76 billion in volume. ipants, including a remittance during 2019 resulted in an average holding capacity (RHC) for “cash” cost per transaction of $0.065, with IATA’s Enhancement & Financing sales outstanding to the BSP; the cost of some transactions as (E&F) enables air navigation service and low as $0.04. providers (ANSPs) and airports access to IATA’s globally trusted • IATA EasyPay, a new, volun- IATA’s Cargo Account Settlement systems and processes for the tary e-wallet solution for travel System (CASS) simplifies the billing generation of accurate billing data, agents, including GoLite travel and settling of accounts between for standardized e-invoices that agents, for issuing airline tickets airlines and freight forwarders. It can be automatically validated, in the BSP in a way that gives operates through CASSlink, an and for secure fund collection. For agents a fail-safe means to con- advanced, global, web-enabled airlines, the E&F can help avoid late tinue selling even if they reach e-billing solution. In 2019, CASS payment penalties, reconciliation their RHC while offering airlines processed $32.7 billion, with headaches, and disputes through a a low-cost per transaction and an on-time settlement rate of standardized billing process with a faster settlement. 99.996%. At the end of 2019, CASS single point of contact for ques- was processing 96 operations tions or disputes. The E&F pro- In conjunction with NewGen ISS, serving over 180 airlines and 200 cessed $4.2 billion in 2019. IATA introduced Transparency in general sales and service agents Payments (TIP). TIP is focused on (GSSAs) and ground handling providing airlines with increased companies. New Generation IATA Settlement Systems transparency and consent over travel agents. It allows airlines to The IATA Clearing House (ICH) use their own cards for funds settle- provides fast, secure, and cost-ef- IATA’s BSP offers tremendous value ment. As it stands, airlines only see fective settlement services to 463 to the industry by facilitating the the payment settlement costs after airlines, airline-associated com- distribution and settlement of funds the fact, if at all. No form of settle- panies, and airline travel partner between travel agents and airlines. ment is barred by TIP, but agents participants. In 2019, the ICH However, the rules of the BSP were can only use forms to which an air- processed $62.5 billion and had a established decades ago, using a line has previously given consent. financial settlement success rate of one-size-fits-all approach that does 99.996%. not address the different needs, concerns, and risks of today’s air- lines and travel agents.

52 IATA Annual Review 2020 Financial services

BSP CASS

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53 IATA Annual Review 2020 www.iata.org

International Air Transport Association

Annual Review 2020 76th Annual General Meeting, Amsterdam, November 2020