Contents IATA membership 2 The Board of Governors 4 The Director General’s message 6 The state of the industry 8 Feature: The value of connectivity Safety 14 Feature: Implementing Enhanced IOSA Security 20 Feature: The need for a risk-based approach Regulatory policy & taxation 24 Feature: Harmonizing passenger rights requirements Infrastructure 30 Feature: Driving implementation of the Single European Sky Environment 34 Feature: Achieving the goal of carbon-neutral growth Cargo 38 Feature: The roadmap to e-freight The passenger experience 42 Feature: What NDC means for passengers Industry settlement systems 48 Aviation solutions 52 Feature: Enhanced business intelligence through DDS

Note: Unless specified otherwise, all dollar ($) figures refer to US dollars (US$).

Tony Tyler Director General & CEO International Air Transport Association Annual Review 2013 69th Annual General Meeting , June 2013

Disclaimer: Please note, the photographs used in this publication are for illustrative purposes only. The models depicted in these photographs are intended to illustrate the idea of real, everyday people from different cultures and regions. The authors do not intend that any of the views in this publication, or associated to the photographs, are to be held as the views of the models themselves. # “I own a tour company in Fiji. People come from all over the world to see our beautiful islands. We specialize in eco-tourism. Our guides speak at least three languages and have special training in local nature.”

Tourism by air accounts for 25% of Fiji’s GDP, and aviation supports 66,000 jobs on the islands. Globally, aviation directly employs 8.36 million people.

Source: ATAG Aviation Benefits Beyond Borders. IATA Membership at 1 May 2013

ABSA Cargo Air —Belarusian Biman Aero República Blue Panorama Euroatlantic Airways Air Pacific Blue1 European Air Transport Aerolineas Argentinas bmi Regional Aeromexico EVA Air Aerosvit Airlines Airlines Federal Express Aigle Vanuatu C.A.L. Cargo Airlines Air Algérie AirBridgeCargo Airlines Airways Garuda Air Baltic Air AlMasria Universal Airlines ALS China Eastern Hong Kong Express Airways CityJet Israeli Airlines Air InselAir Condor Berlin Interair InterSky Atlasjet Airlines Corsair Air Austral Austrian Cubana Air Cyprus Airways Jat Airways B&H Airlines Bangkok Air DHL Air DHL International E.C. Jet Lite JetBlue Dragonair Egyptair JSC Nordavia—RA /...

2 Juneyao Airlines PAL— International SWISS Airlines PGA—Portugália Airlines Syrianair Air KLM PIA—Pakistan International TAAG—Angola Airlines Airlines TACA Volga-Dnepr Airlines TACA Peru VRG Linhas Aéreas LACSA PrivatAir TACV LAM—Linhas Aéreas de TAM—Transportes Aéreos Wideroe Moçambique del Mercosur Xiamen Airlines LAN Airlines TAM Linhas Aéreas LAN Argentina TAME—Linea Aérea del LAN Cargo Royal Brunei Ecuador LAN Perú TAP LAN Ecuador SAA— TAROM International LOT Polish Airlines THY— SAS SATA Air Açores TNT Airways Lufthansa CityLine SATA Internaçional Saudi Arabian Airlines TransAsia Airways TUIfly Tunis Air Malmö Aviation Ukraine International Airlines Cargo SIA— Airlines SIA Cargo UPS Airlines MEA— Airlines Airlines US Airways fly MIAT—Mongolian Airlines Silkair NIKI Airways Virgin Australia Airlines SriLankan Airlines SunExpress

3 THE BOARD OF GOVERNORS The Chairman’s message

The aviation industry can reflect We should be proud of all on a year of success and these achievements—and we achievement. should be forthright in promot- ing them. Nearly three billion people and 47 million metric tons of cargo At the same time, we must be were transported safely by air clear about the challenges we in 2012. That activity supported face. some 57 million jobs and $2.2 trillion in economic activity— It is essential that we con- about 3.5% of global GDP. tinue to maintain the highest standards of safety, security, Air transport connects busi- and environmental sustainabil- nesses to global markets and ity, as the foundations for our enables worldwide access to growth as an industry. IATA’s time-sensitive products, from 240 members, in cooperation medicines to fresh produce to with governments and other emergency aid. partners, are working toward continuous improvement More than half the world’s tour- through dedicated programs in ists travel by air. And aviation each area. underpins iconic major events, such as the Olympic Games. We must also continue to work with governments to ensure Harder to measure, but equally that policy and regulatory important, is aviation’s role settings encourage rather than in bringing together families restrict aviation’s economic and friends, bridging cultures, contribution. and spreading ideas. Aviation enriches lives, just as it spreads /... prosperity.

Alan Joyce Chairman IATA Board of Governors 2012—2013

4 Many airlines have embarked on for the many economic benefits technically advanced than ever I hope that it will be an inspira- major transformation programs, it generates. before, and our industry’s lead- tion for my successor, and for reshaping their business, ers—with IATA in the forefront— all IATA’s members, as we strive reengaging employees, and Genuine collaboration between are setting out an exciting vision to take this wonderful industry revitalizing customer service. industry and government, for the future. to even greater heights. Many are forging ahead with focused on shared, long-term new investments and new goals, will be vital if aviation is It has been an honor to serve partnerships. to continue creating jobs and as IATA’s Chairman for the driving productivity. past year. In the pages of this Yet aviation’s costs remain high review, you will read about our and margins remain thin. Inef- As I look ahead, I am optimistic association’s many significant ficient infrastructure or poorly about aviation’s capacity to achievements—and its aspi- conceived regulation—however realize its potential. Aviation is rations for the next 12 months well-intentioned—can threaten safer, more efficient, and more and beyond. Alan Joyce the industry’s financial sustain- Chairman ability, which is a prerequisite IATA Board of Governors 2012—2013

IATA Board of Governors 2012—2013

Akbar Al Baker Enrique Cueto Harry Hohmeister Si Xian Min QATAR AIRWAYS LAN AIRLINES S.A. SWISS CHINA SOUTHERN AIRLINES

Khalid Abdullah Almolhem Peter Davies Alan Joyce John Slosar SAUDI ARABIAN AIRLINES QANTAS CATHAY PACIFIC

Richard Anderson German Efromovich Temel Kotil Jean-Cyril Spinetta DELTA AIR LINES AVIANCA TURKISH AIRLINES /KLM (representing AIR FRANCE) Tawfik Assy Christoph Franz Liu Shaoyong EGYPTAIR HOLDING LUFTHANSA Antonio Vázquez COMPANY IBERIA Tewolde Gebremariam Titus Naikuni David Barger ETHIOPIAN AIRLINES KENYA AIRWAYS Willie Walsh JETBLUE International Airlines Group Goh Choon Phong Masaru Onishi (representing BRITISH David Bronczek JAPAN AIRLINES AIRWAYS) FEDEX EXPRESS Naresh Goyal Calin Rovinescu Yang Ho Cho JET AIRWAYS (INDIA) LTD AIR CANADA KOREAN AIR Peter Hartman Emirsyah Satar Andrés Conesa KLM GARUDA AEROMEXICO James Hogan Vitaly G. Saveliev ETIHAD AIRWAYS AEROFLOT

5 THE DIRECTOR GENERAL’S MESSAGE Strong partnerships, strong business.

Airlines are delivering weak is showing signs of strength- With an average of one major single hull loss with a West- profits in difficult times. In ened growth powered primarily accident for every five million ern-built jet in 2012, and the 2012, the industry made an by robust emerging markets. flights on Western-built jets last total accident rate among them aggregate profit of $7.6 billion. year, safety is a clear success was 4.3 times less than that of On revenues of $638 billion, Aviation’s role as a catalyst for story. A common commitment, airlines not on the registry. that’s a 1.2% net profit margin. economic growth has never global standards, and coopera- been clearer. The developed tion delivered the safest year in A similar cooperative approach That airlines made any money economies desperately need aviation history. The IATA Op- between industry and gov- at all with GDP growth at 2.1% economic growth. It is the only erational Safety Audit (IOSA) is ernment is improving security and oil averaging a record high way out of the set of fiscal cri- making a significant contribu- as well. Alignment exists on of $111.8 a barrel (Brent) was ses that they face. And aviation tion to improved performance. the promotion of a risk-based, a major achievement. To put is a critical link to facilitate trade The 380-plus airlines on the data-driven approach. that into perspective, in 2003 with those economies that are IOSA registry did not record a the industry was in the red, with expanding. /... oil at less than $30 a barrel and economic growth at 2.8%. Aviation is a team effort. Its fortunes and its ability to play Profitability is being deliv- this vital role are dependent on ered as a result of efficiency strong partnerships across the gains and improvements to value chain and with govern- the industry’s structure. One ments. In many cases, these illustration of this is that the partnerships are delivering average passenger load factor progress. In others, the industry has increased by some eight faces strong headwinds. percentage points over the last decade.

The current year promises some modest improvement. There is no relief in sight for oil prices. But the global economy

6 This is helping to move forward Airlines are also working Alongside working with To that end, effective 1 July a our two flagship security with the travel value chain to external partners to improve major organizational restruc- programs: Checkpoint of the address the urgent need to the operating environment for turing will take effect. The aim Future and Secure Freight. modernize distribution through IATA’s members, IATA is itself is to be closer to the needs of With regard to the former, we travel agents. Specifically, the determined to be a secure and our members. And that will be have agreed to standards, we New Distribution Capability ever-more reliable partner to achieved with an organization are testing components, and (NDC) initiative aims to develop the industry. This is evident in that is focused on “Global we are planning for a phased XML-messaging standards for continuous efforts to strength- Development, Regional Deliv- rollout commencing in 2014. communication between agents en IATA’s settlement systems ery.” The governance structure Turning to cargo, Kenya, Mexi- and airlines. The goal is to (ISS), on which the industry re- remains unchanged. But you co, Chile, Egypt, the UAE, and enable travel agents to be able lies. In 2012, over $371 billion will see an even more vigorous Jordan have all implemented to offer travel buyers the same was settled through the ISS. IATA focused on delivering Secure Freight pilot projects content-rich shopping expe- The Billing and Settlement Plan value to our 240 members and following that program’s suc- rience that is offered through (BSP)—the largest of the IATA to the industry as a whole. cessful test implementation in airline websites. This cannot be systems—settled nearly $252 Malaysia. offered today because of the billion, with 99.976% accuracy. Two significant aviation limitations of global distribution To improve ISS performance milestones are in the offing. Aviation also made progress systems (GDS’s), which are further, we will complete Annual passenger numbers on its commitment to environ- built on pre-Internet technolo- the migration of back-office are expected to exceed three mental sustainability in 2012. gies. A resolution establishing functions to regional hubs and billion for the first time in 2013. The industry remained united the NDC standards is with the the automation of 96% of ISS And 1 January 2014 will mark behind the goals of improving US Department of Transporta- settlements by the end of 2013. the 100th year of commercial fuel efficiency an average 1.5% tion for approval, and we are Longer term, the conclusion of aviation. annually to 2020, of achieving confident of the outcome given a new data processing agree- carbon-neutral growth from the significant consumer bene- ment is keeping us on track to In a century, aviation has grown 2020 (CNG2020), and of fits that NDC will facilitate. achieve a 27% reduction in unit to be the lifeblood of a global- cutting net emissions in half by fees by 2017 compared with ized economy and a true force 2050 compared with 2005. It appears, however, that we 2010. for good in our world. Your have a more difficult job in con- association remains dedicated Market-based measures vincing governments to alleviate To meet the needs and ex- to its further sustainable devel- (MBMs) will be critical to meet- the burden of high taxes and pectations of its membership, opment as a safe, secure, and ing the CNG2020 commitment. onerous regulations. The Euro- IATA is changing. We remain profitable industry. And because aviation is a pean Commission’s agreement committed to our time-tested global industry it is critical that to drop plans to deviate from mission to represent, lead, and such measures be coordinated the Worldwide Slot Guide- serve the airline industry. But globally. With the European lines in its Airports Package of we have set a vision that is Union having “stopped the regulations was a significant even more ambitious. IATA will clock” on its unilateral plan to achievement. But the industry’s be the force for value creation include international aviation in advocacy agenda remains full. and innovation driving a safe, Tony Tyler its emissions trading scheme The focus is on the global har- secure, and profitable air Director General & CEO in late 2012, the focus of both monization of regulations, and transport industry that sustain- policy makers and the aviation the priority list includes finding ably connects and enriches the industry is on the International a reasonable approach for world. Civil Aviation Organization passenger rights, the universal (ICAO) and its triennial assem- adoption of Montreal Conven- bly later this year. To support tion 1999 (MC99), and the ad- a government-led agreement, herence to ICAO principles by airlines are working hard to find governments in the regulation an industry solution on how to and privatization of monopoly share the burden of CNG2020. infrastructure providers.

7 THE STATE OF THE INDUSTRY The industry story in 2012.

Air travel market growth slowed in 2012 but The majority of that growth outperformed a weak global came from emerging economy. markets.

In 2012, strong economic The picture was very different in Passenger traffic (expressed in The reason for this robustness growth in emerging markets the air freight business, which revenue passenger kilometers) was the strength of emerging resulted in an expansion suffered a second difficult year grew 5.3% in 2012. Although markets. Economic growth of passenger traffic and of shrinking markets, falling the growth rate is in line with and air travel have been weak greater aviation connectivity. utilization, and lower yields. industry trends, it should be in the developed economies. And despite record aircraft noted that the rate of expansion Emerging markets, however, deliveries, asset utilization The good volume performance slowed for the second consec- in , Latin America, and reached new highs, boosted of the passenger business, utive year. Air travel neverthe- , have experienced strong by consolidation and other however, led to better airline less has been unusually robust economic growth. This, in turn, improvements to the indus- profitability than expected. in the face of difficult economic has supported the growth of air try’s structure. Newly deliv- This is especially so given that conditions. In the past 20 years, travel by more than global GDP ered aircraft, meanwhile, also developed economies re- air travel growth has averaged numbers suggest. brought significant efficiency mained weak and jet fuel prices 1.8 times that of global GDP improvements. reached new annual highs. growth. But in 2012, air travel During 2012, 65% of the grew 2.5 times as fast as global growth in passenger numbers Of the three largest markets GDP. in international markets took that together constitute 83% place in markets linked to of global traffic, Asia-Pacific emerging economies. Travel airlines continued to deliver the Global connectivity expanded within Asia accounted for just highest margins and largest further. over half of this growth. Other profits, albeit profits that were important growth markets were lower than in 2011 because Network development contin- between and Asia of the weakness of air freight. ued to improve connectivity for and on segments connecting North American airlines gener- the world’s passengers and Europe and Asia via the Middle ated the second-largest profits economies in 2012. Airlines East. Markets from Africa to the and improved their performance put on new services for a net Middle East and to Asia were as a result of the efficiencies addition of 974 airport pairs, also strong, reflecting the de- resulting from consolidation. taking the seasonal July peak to velopment of new South–South European airlines only just over 40,000 pairs, an increase trade lanes. Another 23% of broke even, largely as a result of 2.5% over the same month 2012’s international air travel of the continued recession in a year earlier. Also comparing growth was generated within the Eurozone. July 2012 to July 2011, flight Europe, which looks odd given frequencies remained relatively the severe recessions in many stable, with an average of just Eurozone economies. It should above two daily flights between be noted that the European each airport pair. growth statistics include pas- sengers originating in , in central and eastern Europe, and in , where growth remained considerably stronger than in the Eurozone.

The picture was similar in do- Freight mestic markets. The developed traffic US market rose just 0.8%. The fastest growth came from such emerging domestic markets as China, at 9.5%, and Brazil, at 8.6%. The exception was a 2.1% decline in air travel in the Indian domestic market, a Passenger reversal resulting from airlines traffic trying to adjust to high costs. Freight tonne kilometers (billions) Revenue passenger kilometers (billions)

Total passenger and air freight traffic, seasonally adjusted (Source: IATA)

8 It was another year of decline for air freight markets, but Business travel growth the value of goods carried and the premium segment increased to an estimated remained strong. $6.4 trillion.

In 2012, the number of inter- The two big premium travel In contrast to passenger travel, In past cycles, the turning point national passengers traveling markets, the North Atlantic air freight volumes were again for air freight’s declining share in premium-class seats rose and within Europe, shrank in weak relative to global eco- in world trade has come when 4.8%, which was slightly down 2012, reflecting the weak- nomic conditions. Growth in the global industrial production on the 2011 growth of 5.5%. ness in the key developed world trade has slowed sharply, cycle turns . It looks like that Economy travel, however, saw economies of those regions. but it still expanded 2.9% in point was reached in late 2012, greater expansion, of 5.8%, The fastest-growing premium 2012. Air freight, measured in after which a slow upturn in the modestly reversing the 2011 travel markets were within and global freight tonne kilometers, air freight market appeared to trend that saw premium travel connected to Africa, South nonetheless shrank 1.5% as begin. grow 0.4 percentage points America, the Middle East, and it lost share to other modes of faster than economy travel. De- Asia. This reflects the strength transport. Most major trade lanes were spite the slowdown in growth, of the economic expansion in weak during 2012. Transatlan- the proportion of passengers in these regions and the structural This pattern is typical of previ- tic air freight was the weakest premium seats held steady at development of new South– ous cycles. Air freight does well market, but the lack of consum- 8%, which meant that premium South trade lanes, as business during economic upturns, when er demand in Europe and the travel maintained its 27% share travel and cargo follow the di- shippers need the speed pro- United States meant that air of air travel revenue. rect investment flows that have vided by air transport and are freight flows also shrank across taken place in recent years. prepared to pay the additional the Pacific and across Europe The slowdown in the growth cost over sea or land transport. –Asia markets. There were, of the premium travel segment During periods of relative eco- though, some areas of strength over the past year resulted nomic calm, however, air freight on thinner trade lanes. Within from a slowdown in busi- grows more slowly than overall Africa, air freight flows saw one ness-related travel. World trade world trade. of the strongest expansions, fol- growth slowed from 6.3% in lowed by trade lanes between 2011 to 2.9% in 2012, and Africa and the Middle East and business confidence trended Asia. Robust economic growth down. Ordinarily, these factors and investment in these regions would have adversely affected and the recent development of business travel, but the strong new trade lanes on an extend- growth in emerging markets ed version of the central Asia generated an expansion of market helped boost regional premium travel. air freight flows in 2012.

Cargo yield Economy passengers

Passenger yield Premium passengers % growth of passenger numbers % change in annual yield ($cents/TKP)

% growth in international premium and economy % change in passenger and cargo yields, passenger numbers (Source: IATA) $cents/tonne kilometer performed (TKP) (Source: IATA)

9 Asset utilization suffered in the air freight business but It was also a year of record Aircraft deliveries rose to was high in the passenger high fuel prices. their highest-ever . business.

The spot price of jet fuel in Hedging is also becoming Partly in response to the sus- The success of the passenger 2012 increased a couple of more problematic because tained high cost of jet fuel, the business became an issue for dollars above the previous of a divergence in the cost delivery of new, fuel-efficient air freight in 2012, as increas- year’s level to average just un- of jet fuel from its traditional aircraft rose to a record level ing amounts of new freight der $130 a barrel. That was in crude oil benchmark of West in 2012, with 1,374 jets and capacity came onto the market large part driven by a rebound Texas Intermediate (WTI). The turboprops delivered. These in the bellies of newly delivered of the price difference, or crack WTI price is falling as new oil new aircraft brought with them passenger aircraft. With freight spread, between crude oil and sources in the US are being an additional 238,000 seats, markets shrinking in the first jet fuel to 16% from the lower exploited. Consequently, the equivalent to adding 7%–8% to three quarters of 2012, that levels of the previous year. The spread between WTI and jet global capacity. High fuel costs additional capacity caused crack spread has been ap- fuel widened compared to the also encouraged airlines to overall freight load factors and proaching 20% as demand for spread between jet fuel and retire or put into storage older the utilization of freight aircraft middle distillates, including jet the other crude oil benchmark, aircraft, however, so the in-ser- to decline further from a year fuel, picks up. Brent crude oil Brent. vice commercial fleet actually earlier. prices edged up to a little less expanded by less than 500 air- than $112 a barrel in 2012. The oil market is going through craft, to end the year at 24,613 The picture was very different dramatic shifts in regional aircraft. The number of available in the passenger business. Fuel hedging strategies had a demand and supply balances. seats rose by 123,000, or a Consolidation in and the negative impact on the fuel bill Social and political changes in little less than 4%. lack of new entries to the air in 2012. Although the average the Middle East and North Afri- passenger business helped spot price increased $2, the ca (MENA) region are increas- the industry keep new capac- actual rise in the fuel bill to air- ing the challenges of bringing ity additions well below the lines was higher, as the hedged supply to market. The influence, growth of passenger traffic. 2011 price had benefited from moreover, of the OPEC cartel This allowed passenger load lower 2010 spot prices. As a remains strong. The sharp but factors to rise to an average result, the industry’s fuel bill temporary dip in oil prices in of 79.1%. The highest level of rose to $209 billion in 2012, mid-2012 followed a dispute seat utilization continued to be or 33% of operating costs. The within OPEC over whether set by North American airlines rise in the price of fuel accounts $100 a barrel was the “right” in international and domestic for over $60 billion of the $70 target price. New, non-OPEC markets—largely the result of billion rise in the industry’s fuel supplies are developing, but in keeping capacity more or less bill since 2010. 2012 the influence of OPEC unchanged. and strong demand from the Brazilian, Russian, Indian, and /... Chinese (BRIC) economies prevented a decline in price.

Brent oil price, $/barrel Commercial airline fleet composition (Source: Platts) (Source: Ascend)

10 Airline profits fell in 2012 but held up better than expected in difficult economic conditions.

At the other end of the spec- It was not surprising that airline in 2012, with net profits of $3.9 ing improvement in business trum, African airlines acceler- profits fell in 2012. Over the billion. But that, too, was a de- confidence has started to be ated the additions of capacity past 20 years, whenever global cline from the previous year and reflected in a slow improve- they brought to international economic growth (aggregated reflected the weakness of air ment in air travel markets, and markets, leading to a small using market exchange rates) freight markets. North American stronger export orders should fall in their load factor, which has fallen to 2% the airline airlines, reflecting the efficien- benefit air cargo markets. was already the lowest of all industry has gone from profit cies brought about by consoli- regions. The largest increase to loss. Global GDP growth in dation, saw an improvement in Headwinds from the wider in load factors was produced 2012 slowed to 2.1%, and the profitability and generated the economic situation and con- by the Middle Eastern airlines, average price of jet fuel rose second-highest net profits, of tinued high jet fuel prices will which managed to fill a greater to a high of $129.5 a barrel. $2.3 billion. European airlines, keep overall travel and cargo proportion of seats despite Profits declined, but a net profit conversely, saw further dete- market growth subdued. But a 12.5% rise in passenger of $7.6 billion was a good per- rioration in their profitability as the direction is positive, and capacity. formance given the economic recessions in Eurozone markets markets connected to emerg- conditions. persisted. Net profits for Euro- ing economies will again show Domestic markets overall saw pean airlines were barely above strong growth. It will be the mixed performances in 2012. The industry’s $7.6 billion of breakeven. With the exception developed markets, especially Airlines in Brazil slowed their net profit was less than the of airlines in Africa, though, air- those linked to the Eurozone, capacity growth and improved $8.8 billion achieved in 2011 lines in all regions did generate that will continue to grow slowly their load factors. In China and and represents a net posttax profits in 2012. in 2013. India, however, load factors margin of just 1.2%. That’s fell as additions to capacity ex- after paying for debt inter- The outlook for the next 12 Airline profitability should ceeded slowing traffic growth. est. The industry’s return on months is slowly improving. nevertheless improve over the Japan’s domestic market has capital was 4%, still way below Business confidence and next 12 months. Much of that failed to recover to pre-earth- the 7%–8% investors would export orders have been rising improvement, of course, will quake levels, and load factors normally consider the minimum from what now seems to be depend on achieving further in Japan remain the lowest of all for an industry with aviation’s their low point in late 2012. efficiency gains and on keeping the major domestic markets. risk profile. Nevertheless, the The Eurozone, though, remains asset utilization high. Consol- industry was profitable when a downside threat to growth, idation, too, will be critical to economic conditions suggest- especially should market generating this better perfor- ed a loss. This is a measure of confidence deteriorate. At the mance, and we anticipate gains the industry’s improvements in moment, however, financial from the mergers and joint efficiency and industry struc- markets seem resilient to the ventures that have taken place ture. There is a long way to continuing uncertainties in recently to boost industry net go before investors receive an Europe, and that has lowered posttax profits above $10 bil- adequate return, but progress the risk of a renewed crisis. lion in 2013. At less than 2% of has been made. Potential threats to growth revenues, however, this margin from the US debt situation generates an inadequate level Asia-Pacific airlines generated and from issues in China have of returns for investors. the highest margins and profits also diminished. The result-

Passenger load factor

Cargo load factor % of annual ASKs % of annual AFTKs

Passenger and cargo load factor on total market Airline net profits, Seasonally Adjusted (Source: IATA) $ billion (Source: IATA)

11 FEATURE: THE VALUE OF CONNECTIVITY Air connectivity is the key to economic growth.

Some governments have Allowed to thrive, air connectiv- Air connectivity opens up new Greater connectivity also makes integrated policies that promote ity inspires a cascade of bene- markets for a country and it easier for them to attract out- the economic development fits for all, from governments to sparks more export activity. side investment. Foreign direct that aviation brings. Other the individual. Nearly 85% of companies investment is a further boon for governments put roadblocks in believe that air services are im- local employment and encour- the way in the form of onerous Take the tourism industry, which portant for their sales, accord- ages competitiveness. taxes, burdensome regulation, is a key driver of economic ing to Oxford Economics. The and tiresome bottlenecks in growth, particularly in devel- number rises to over 90% for The end result of all this activity infrastructure development. oping economies. Nearly 35% Chinese and US firms. is higher-quality products at a of international tourists travel lower cost for the consumer. A As highlighted by Oxford by air, and by 2021 the World And according to UK Trade and strong aviation network is the Economics studies on the Travel and Tourism Council Investment, Fashion heartbeat of the modern world. benefits of aviation covering 59 (WTTC) expects more than Week (LFW) attracts visitors countries, governments must 120 million people globally to from over 25 countries thanks understand that these road- be in direct employment in the to air connectivity. Orders in ex- blocks put jobs and economic tourism industry. cess of $159 million (£100 mil- growth at stake. lion) are estimated to be placed Greater connectivity will only during LFW each season. UK enhance economic benefits. designers export two-thirds of New Zealand, for example, the clothing that they produce, would see a $99.7 million per and overseas sales of the UK annum increase in long-run apparel and textiles industries GDP if it could improve its fre- combined are worth $10.2 quencies and aviation network billion (£6.4 billion) at manufac- to include more destinations of turers’ prices. economic importance. Overall, Oxford Economics suggests At the same time, greater global GDP has been boosted connectivity increases compe- by an additional $200 billion tition and choice in the home thanks to the increase in con- market from foreign-based nectivity in the past 20 years. producers. This encourages domestic companies to adopt best international practice in production and management and to specialize in areas where they possess a comparative advantage.

“Especially in the current economic environment, governments should prioritize connectivity rather than putting regulatory and tax roadblocks in the way.” Brian Pearce, Chief Economist, IATA

12# “I’m from Ghana. I run an organic farm. I fly my produce to sell in Europe. Demand is high, and I get a good price. Business is expanding, and I’m hiring more people.”

An estimated 50,000 to 60,000 small scale producers and large farms in Africa are supported by fresh fruit and vegetable exports to the UK facilitated by air cargo. Globally, air cargo annually transports 47 million tonnes of goods.

Sources: ATAG Aviation Benefits Beyond Borders; IATA. SAFETY Safety is the number one priority for the aviation industry. Efforts are focusing on two causes of accidents: runway excursions and loss of control in flight.

Aviation had its safest year Globally, there were 29.6 mil- Runway excursions repre- industry partners are focused ever in 2012. And efforts lion commercial Western-built sented 28% of all accidents on enhanced pilot training and continue for further improve- jet (WBJ) flights in 2012 and in 2012. Information develop- improved simulators to reduce ments. six hull-loss accidents. This ment, best practices training LOC-I accidents. This joint equates to a hull-loss rate of through regional runway safety effort addresses the major 0.20 per million flights, or one seminars, and an enhanced contributing factors to LOC-I hull loss for every five million IATA Runway Excursion Risk events, including pilot actions flights. This is the lowest rate Reduction (RERR) toolkit are and cockpit coordination during 0.2 in aviation’s history and a 46% vital to reducing this type of critical flight phases, such as improvement over the rate in accident. IATA’s Flight Data adverse weather or following in 2012 2011, which was itself a record eXchange (FDX) program has aircraft malfunction. The IATA year for aviation safety. It should runway-specific system per- LOC Prevention toolkit will be The global hull-loss be noted that the hull-loss rate formance data for over 1,100 launched in May 2014. rate per million flights is now so low that any change airports and is expanding rap- of Western-built jets in the number of hull losses idly. The FDX allows airlines to causes a large percentage identify proactively operational swing compared with the previ- risks, such as meteorological ous year’s performance. conditions, or terrain hazards, and to implement improvements 0 The strong safety performance in their operations or develop notwithstanding, every accident solutions in cooperation with in 2012 is one too many. So there is airports and ANSPs. no room for complacency. The The IATA member or industry and its regulators re- Loss-of-control in-flight (LOC-I) IOSA-registered airline main focused on improvements. accidents are only a small Western-built jet hull-loss rate per million Airlines continue to work with proportion of aviation safety hull-loss accidents flights of Western-built jets the International Civil Aviation accidents. When they happen, Organization (ICAO), airports, however, they result in many fa- air navigation service providers talities. Some 60% of fatalities 11 6 (ANSPs), manufacturers, reg- in the past five years are due to ulators, and multiple interna- LOC-I accidents. IATA, ICAO, 2011 2012 tional safety organizations on , , and other initiatives to raise aviation safety performance worldwide. Total accidents (all aircraft types) 92 75 2011 2012

Fatal accidents on 29.6 million flights Western-built jet hull-loss rate per million sectors, 2002—2012

0.94 22 15 0.80 0.81 2011 2012 0.65 0.61

Total fatalities of 2.97 billion passengers traveled 0.20 486 414 2002 2004 2006 2008 2010 2012 2011 2012

14 Reporting and data analyses help raise safety standards.

With the decrease in the num- from across seven different passing Global Aviation Data In addition to the GSIC, the ber of accidents, techniques safety databases. These data- Management (GADM) platform. GADM will soon include data to improve aviation safety have bases include the IATA acci- The GADM will integrate data from the following airline oper- moved beyond the analyses dent database, the Safety Trend from multiple sources and areas ations: of accidents in isolation to a Evaluation Analysis and Data of aircraft operation into the data-driven analyses of trends Exchange System (STEADES) most comprehensive aircraft • Flight training, multi-crew and the interaction between reports, IOSA and ISAGO audit operational database available. pilot licensing (MPL), and the links in the air transport findings, the FDX, the Ground evidence-based training chain. This approach follows Damage Database (GDDB), Safety improvement is the (EBT) safety management system and a new cabin safety opera- primary purpose of the GADM. • Fuel efficiency (SMS) principles, including risk tional report database. However, the provision of a • Aircraft recovery assessment and risk mitigation wider range of data gives the • Maintenance cost strategies. As such, it establish- More than 470 organizations potential for initiatives in such • ATM efficiency and perfor- es the foundation for perfor- around the globe submit safety areas as fuel and ATM effi- mance-based navigation mance-based management data to the GSIC. Over 90% ciency, operational costs, pilot (PBN) and the ability to conduct more of IATA member carriers are training, and maintenance. predictive analyses. participating.

The approach is supported by The structure of the GSIC will the Global Safety Information help to build an all-encom- Center (GSIC). The GSIC is a IOSA: collection of safety information Audit records from over 2,000 audits and 381 carriers GADM Global Aviation Data Management

ISAGO: Audit records from over 500 Aircraft audits, and from over 140 recovery carriers and ground service Fuel providers G efficiency Flight A training FDX: IOSA Data on 30,000 flights per D ATM month, with rapid growth efficiency (up 200% annually), and M Maintenance over 41 members cost ISAGO Cabin safety STEADES: 160,000 reports annually, Accident and more than 160 carriers FDX

STEADES

GDDB GDDB: 23 member carriers and 1,040 reports annually GSIC databases (growing 20% annually)

Proposed data inputs

15 Fuel quality is being strengthened through joint Audit programs are a key action at ICAO and among element in driving safety key associations and improvements. suppliers.

IATA Audit Programs: The need for standardized The DAQCP is a group of more The Cathay Pacific fuel con- • IOSA: IATA Operational global audits to improve avi- than 100 airlines that perform tamination incident in Sura- Safety Audit ation safety applies as much inspections on approximately baya in spring 2010 triggered • ISAGO: IATA Safety Audit to the ground as to the air. 600 companies that provide significant action within the for Ground Operations Ground damage costs the in- deicing and anti-icing services fuel community. The IFQP • IFQP: IATA Fuel Quality dustry billions of dollars annual- and post-deicing/anti-icing acted proactively to use a draft Pool ly and is the third most common checks at more than 300 global fuel handling standard • IDQP: IATA Drinking Water type of accident after runway airports worldwide. Its main for its mandatory regulatory Quality Pool excursions and either gear-up goal is to ensure that safety fuel audits. Having trained fuel • DAQCP: IATA Deicing/ or gear-collapse landings, rep- guidelines, quality control auditors use the fuel handling Anti-icing Quality Control resenting 13% of all accidents recommendations, and stan- standard increases safety, pro- Pool during the period from 2008 dards of deicing and anti-icing motes audit sharing, and saves to 2012. IATA continues to procedures are followed at all an airline and its suppliers IOSA, which marks its 10th develop its GDDB to collect airports. Active members of this several million dollars annually. anniversary in 2013, is the only and analyze reports of ground pool save an average of 70% Membership in the IFQP has worldwide airline operational damage from participating on their scheduled inspections. grown rapidly, to 125 member safety audit program. The total operators and ground service airlines. accident rate for IOSA carriers providers (GSPs). In addition, in 2012 was 77% lower than the IATA Ground Operations The IATA Technical Fuel Group the rate for non-IOSA opera- Manual (IGOM) was completed likewise took an active role, tors. For IATA members, IOSA in 2012 and complements the developing the ICAO Manual is mandatory. It is, however, a ISAGO program. on Civil Aviation Jet Fuel Sup- global standard recognized well ply in conjunction with Airlines beyond IATA membership: As ISAGO is the global standard 4 America (A4A), Airports of 1 May 2013, 138 (37%) of for the oversight and auditing Council International (ACI), and the 381 airlines on the IOSA of GSPs. It is supported by ICAO. This manual, otherwise registry were non-IATA member 64 governments and airport known as ICAO Doc. 9977, airlines. authorities and aims to improve was issued in November 2012 safety and to manage airline and is a signpost document IOSA standards and best costs. The work of ISAGO with global, industry-recognized practices are constantly pool members allows for report practices. evolving with the cooperation sharing, thus eliminating dupli- of the industry and its regula- cate audits up to 53%. Since The ICAO Manual on Civil tors. A decade of experience ISAGO’s launch in May 2008, Aviation Jet Fuel Supply will with IOSA, in fact, is leading almost 600 audits have been be the basis of a number of to a significant evolution in conducted. They have involved industry initiatives to ensure the program’s implementation. over 125 GSPs at almost 200 that fuel-quality standards The Enhanced IOSA (E-IOSA) registered stations. are enhanced. The industry’s program adds continuous con- Standard Fuel Contract, for formity with ICAO Standards instance, will be updated with and Recommended Practices reference to the manual. And (SARPs) to the audit scope. In major aviation stakeholders will 2012, 10 E-IOSA trial audits launch an industry education were conducted, and, recently, campaign with the manual as two online training modules its basis and comprising an were launched. The rollout of information DVD and technical the complete E-IOSA program training. Industry is scheduled for September average 2015 (see article on page 18 for more information). 0.20

IATA members 0.00

16 Regional variations in safety performance are notable and are being targeted by tailored campaigns.

In 2012, African carriers expe- became part of a document Plan is an IATA Board of Gov- rate of 3.63 per million flights, rienced one hull loss for every known as the Abuja Decla- ernors’ priority for 2013 and or one every 275,000 flights. 270,000 WBJ flights compared ration. This declaration was includes bringing 10 additional That is the second-worst rate of with the industry average endorsed by the African-based airlines into any region. of one accident per every 5 in January 2013 and includes IOSA by 2015. IOSA-regis- million WBJ flights. The poor the following priorities: tered airlines in Africa, including To ensure that aviation safety safety record of some African all IATA members in Africa, have in Russia and the CIS matches carriers has a reputational • Establishment of indepen- a safety record in line with the the safety performances of impact across the industry and dent and sufficiently funded global average. This shows that the world’s safest regions, the is responsible for carriers from civil aviation authorities IOSA can be a driver in improv- following four areas are being certain African countries being • Implementation of effective ing African safety. So far, 10 focused on: banned from flying to the Euro- and transparent safety airlines have been identified for pean Union. oversight systems by all special assistance in reaching • Improved oversight from African countries the IOSA standard. This will be regulators, including the im- IATA is focusing on improving • Completion of IOSA by all provided in cooperation with plementation of harmonized African safety performance for African carriers the IATA Airline Training Fund standards and of audits all carriers by working with the • Implementation of acci- (IATF). • Implementation of ICAO industry and African govern- dent prevention measures national safety programs ments. Key stakeholders on the focused on runway safety In Russia and the Common- and SMS African have commit- and LOC-I wealth of Independent States • Training, particularly for the to implementing the African • Implementation of flight (CIS), there were no WBJ MPL Strategic Improvement Action data analysis (FDA) losses among IATA members. • Investment in technology Plan to improve aviation safety • Implementation of SMS by The region’s all-accident and infrastructure, includ- in Africa. The plan was present- all service providers rate, however, which includes ing warning devices and ed to civil aviation authorities in turboprop planes, Eastern-built improved air navigation Africa during the 2012 African Implementation of the Africa jets, and substantial damage routes. Union ministerial meeting and Strategic Improvement Action accidents, shows an accident

Western-built jet hull-loss rate per million sectors

Commonwealth of Europe Independent States

North America 0.15 0.00 1.06 North Asia 0.00 0.00 0.00 0.00 Middle East & North Africa 0.00

Industry Africa 0.00 average 3.71 2.02 Asia-Pacific 0.20 Latin America 3.27 0.48 0.37 & the Caribbean 0.25 0.42 IATA 1.28 members 0.00 Blue is 2012 0.41 Gray is 2011

17 FEATURE: IMPLEMENTING ENHANCED IOSA Airlines are committed to making the safest mode of transportation even safer.

Aviation had its safest year in More than 2000 IOSA audits ization of auditing principles Airlines that are used to dealing 2012. But it was not perfect. have been performed. The and techniques throughout the with IOSA will have a few There is no complacency when lessons learned have been industry. A proposal has been changes to incorporate. As an it comes to the industry’s num- put into practice, and IOSA put to the IATA Board to make example, they will need to re- ber one priority, and initiatives standards have constantly E-IOSA mandatory for all IOSA lease a conformance report to to improve safety continue improved. A new concept of renewal audits after 1 Septem- the audit organization contain- apace. continuous safety performance ber 2015. ing internal audit results prior to monitoring during the two-year the E-IOSA audit. The IATA Operational Safety audit cycle promises to be a Proof-of-concept workshops Audit (IOSA) has played a significant development. This and live trial audits have proved major role in the industry’s enhanced version of IOSA will the validity of the new con- safety performance since 2003. build on the excellent 2012 cepts. By year-end 2013, 10 In 2012, carriers on the IOSA safety results. airlines will have undergone registry did not suffer a single E-IOSA. Western-built jet hull loss. It is The primary goal of IOSA is an impressive milestone in the unchanged—to improve safety. IATA is developing a plan to quest for a perfect year of zero But Enhanced IOSA (E-IOSA) support airlines in the transition accidents. And it shows that adds the dimension of con- process. The plan includes IOSA is a key component on stant conformity with the IOSA training development and which the quest must be based. Standards and Recommended suggestions for strengthening Practices (ISARPs). airlines’ internal quality depart- ments. Also, Auditor Actions, Under E-IOSA, an airline a tool currently used by IOSA will conduct internal quality auditors, will be made available assurance activities against to the airlines to support them the ISARPs during the 24 in assessing ISARPs internally. months in between two IOSA audits. Ensuring the ISARPs IATA, moreover, will offer a are engrained in day-to-day Partnership for Quality initiative safety performance will in to assist airlines in conforming effect hand back responsibility with E-IOSA. Workshops and to the airlines and strengthen toolkits will be delivered in the their internal quality programs. regions. The focus on ISARPs will also promote the further standard-

“The airlines need to start their preparation for E-IOSA now. It is the next step in evolving the IOSA program to ensure that safety levels continue to improve.” Günther Matschnigg, Senior Vice President, Safety, Operations & Infrastructure, IATA

18 “I’m a metallurgy student at Sheffield University in the UK. I grew up in India. I miss home sometimes, but it’s easy enough flying back when I need to. I’m researching the next generation of advanced alloys, so flying often kind of fits.”

An Oxford Economics study shows that Sheffield’s 9,370 overseas students generate an economic benefit of £120 million for the city’s economy per annum. Globally, 3.6 million students study outside their own country each year.

Sources: Oxford Economics, The Economic Costs and Benefits of International Students; ATAG, Aviation Benefits Beyond Borders. SECURITY Aviation security is being strengthened with a data-driven, risk-based approach. The harmonization of border control data requirements is a top priority.

Security is the responsibility Before 9/11, the average Government demands for regulations aligned with the of individual countries. But checkpoint processed 350 airlines to provide passenger international standards and delivering it effectively re- passengers per hour. Today, data are growing. A total of 42 best practices adopted by quires the cooperation of the the number is below 150. countries now impose Advance ICAO and the World Customs entire value chain and har- Resources are being stretched, Passenger Information (API), Organization (WCO). Brazil monization among govern- and accommodating the and a further 28 countries also adopted a single-window ments. The challenge of de- security footprint in airports are considering such require- approach to data submission livering effective passenger is becoming a challenge. We ments. Nine countries require and committed to eliminating security is being made more must transition from the one- access to Passenger Name and preventing any further non- difficult by two factors. Traffic size-fits-all proscriptive model Record (PNR) data, and as of standard local requirements, is growing and will continue to a data-driven, risk-based April 2013 another 25 were an issue that has been ongoing to do so. And governments approach. This means focus- preparing to enforce such a since 2008. have added onerous pro- ing on desired outcomes, not requirement. cesses to checkpoints that prescribed processes, and rec- In 2013, IATA will continue are largely unchanged since ognizing that the vast majority Global standards exist for the the drive for global standards the 1970s, when the threat of passengers and cargo pose collection and transmission in a coalition that includes was very different. no security threat. of such data. Many countries, associations; though, ignore them. Managing data service providers; ICAO; Such changes require gov- nonstandard requirements adds the WCO; FRONTEX (the ernment and industry to work costs to airlines. What is more, European agency in charge of together as they have done on it is difficult to see a securi- managing external borders); safety. The agenda for 2012 ty benefit from these costly and others. IATA additionally and into 2013 focuses on three deviations from established will develop materials to help areas: standards. governments find innovative ways to collect, store, and 1. The harmonization of gov- IATA and the airlines are transmit passenger data. ernment security standards working with governments to and the provision of data rectify the situation. In 2012, and respect for global for example, IATA worked with agreements Brazil’s civil aviation agency, 2. The development of the ANAC, and with other Brazilian Checkpoint of the Future stakeholders for PNR and API (CoF) 3. The implementation of se- cure supply chains in major markets

Security: what people 51% Most frustrating part of airport security? are thinking think that 5—10 minutes is an acceptable queuing think it’s time at a security point 37% queuing say it’s removing 21% shoes and belts

20 The Checkpoint of the Future One-stop security is a test has moved from a theoretical of harmonized, joined-up program to a practical security processes. project.

Every day, millions of travelers In 2012, several regions and Two years ago, IATA unveiled Concurrent with this develop- who are at transfer airports as countries embraced one-stop its vision for a Checkpoint of ment was the publication of the part of an international con- security and the recognition of the Future. That vision foresees Blueprint for a Checkpoint of necting itinerary are subjected equivalence. One-stop security security resources allocated the Future, which articulates to duplicate and redundant pilot projects were conducted based on risk and air travel- how successive iterations of security screening that wastes in Panama and El Salvador. In ers enjoying an uninterrupted the CoF may look and operate their time and absorbs scarce a major breakthrough, the US, journey through airport security in the years 2014, 2017, and security resources. This can be EU, and agreed to with few hassles and minimal 2020. The blueprint comprises avoided by applying one-stop a mutual recognition of each need to divest through the use 12 modules and covers details security, the principle under other’s cargo security pro- of advanced screening technol- of everything from passenger which passengers and hold grams. The US and Canada ogy and differentiation based risk assessments to advanced baggage are not rescreened signed a similar agreement, and on passenger information. screening technology and lane between flights provided that the EU and Canada carried out design. It offers an ambitious countries recognize the security an initial comparison of their In 2012, the CoF program in- but realistic plan for global screening conducted at the ori- respective security systems. creased its momentum by mov- checkpoint change and im- gin airport as equivalent to their ing from the drawing board to provement. own. IATA continues to work Work with ICAO is under way airport trials of CoF technology. with countries to achieve the in 2013 to promote one-stop The first trials, at Geneva and In 2013, trials of up to 10 benefits of one-stop security. security to other regions and London Heathrow airports, fo- components are planned at countries, particularly the rec- cused on identity management selected airports. They will One-stop security has been ognition of either unilateral or and how biometrics could be provide proof of concept for the approved by the European one-way, one-stop agreements. introduced into the screening key elements of the CoF initial Commission (EC) but has to be Additionally, work is ongoing to process to enable the identifi- version that will be evaluated at adopted on an airport-by-air- provide passengers on flights cation of passengers and their two airports in 2014. port, nation-by-nation basis in from Europe to the US with the risk levels. Subsequent testing, the European Union (EU). It is same one-stop benefits provid- at Schiphol airport, already in place for flights with- ed to passengers traveling in experimented with how laptops in the EU and, unilaterally, for the other direction. and large electrical items could flights from the United States to remain in passengers’ hand Europe. luggage while being efficiently screened.

33% would like to be better informed of security 93% procedures before they think it’s arrive at the airport 73% think dedicated security queuing lanes are a good idea; would share personal for example, “frequent information with governments travelers” or “families to speed up screening with children”

21 Accurate, timely, and The implementation of harmonized data collection is effective cargo supply chain crucial for air cargo security. security regimes is vital.

More than 170 WCO member In the last 18 months, the The long-term vision of the Unfortunately, not all regulators countries have committed to ACAS program has been ex- Secure Freight initiative is an are taking a holistic, data-driven introducing standards to secure panded, and passenger carriers air cargo industry of global supply chain approach. In 2012 and facilitate global trade bearing cargo, all-cargo carri- operators providing secure the EU adopted regulations (known as the SAFE Frame- ers, and freight forwarders are supply chains in accordance known as Air Cargo or Mail work). So advanced electronic participating. The US govern- with internationally adopted Carrier operating into the Union information (AEI) data is in- ment is expected to introduce and recognized standards. The from a Third-Country Airport creasingly being pursued, such legislation on ACAS standards intent is to improve security (ACC3). From 1 July 2014, that countries are facing imple- for all carriers flying cargo into and enhance nations’ aviation airlines will need to ensure mentation challenges. In 2012, the US in 2014. The EU has security regimes. that their operations into the IATA provided capacity-building commenced a voluntary pilot EU from third countries have assistance to a number of program similar to ACAS that is In 2012, the Secure Freight been independently validated customs administrations. IATA expected to become mandatory project successfully concluded to comply with published cargo is also working with the WCO in 2014. IATA supports the its inaugural Malaysia pilot proj- security laws. This includes on further measures to help ACAS program and is calling ect; established subsequent screening or possessing a rec- governments implement AEI. for the EU to use the same pilot projects in Kenya, Mexico, ognized secure supply chain. harmonized standards for its Chile, and Egypt; and obtained The Air Cargo Advance program. recognition for the Secure To assist the aviation industry Screening (ACAS) voluntary Freight guidance material from and regulatory authorities with pilot program provides the To assist with the global such prominent nations as Aus- the ACC3, IATA has estab- data for security risk analysis harmonization and efficiency of tralia and the lished a Center of Excellence prior to the departure of an submitted cargo security data, and by the WCO. for Independent Validators aircraft bound to the US. It the industry and its regulators (CEIV). The CEIV offers commenced shortly after the developed an electronic version As of 1 May 2013, Secure countries an approved training attempted shipment from Ye- of the standard consignment Freight guidance material has program for states that mobi- men of explosives concealed in security declaration (e-CSD) been recognized by the Euro- lizes a number of independent ink cartridges in October 2010 for cargo and mail that provides pean Commission and two pilot validators needed to meet the and was initially conducted with an audit trail of the security projects have been launched, in ACC3 requirements. integrated express carriers. information of a typical supply the United Arab Emirates and chain movement. The e-CSD in Jordan. A significant step identifies which party secured forward is a letter of intent sub- what consignment and how and mitted by Brazil to conduct a when and ensures that security pilot project in the second half measures have been applied of 2013, the first BRICS nation through a harmonized mecha- to do so. IATA’s contribution will nism and a standard template. help shape the ICAO capac- It is anticipated that the e-CSD ity-building strategy for the will be used by authorities to security of air cargo and mail. help provide the advance data Secure Freight’s net economic they require. benefit is substantial. A case study in Malaysia quantified this. It revealed a benefit of from $1 billion to $2 billion over a five-year period for the Malaysian economy, generating a substantial increase in jobs and domestic investment.

22 FEATURE: THE NEED FOR A RISK-BASED APPROACH A risk-based approach is essential to aviation security.

Flying is secure. But a one- Much of the information needed But risk-based security for Trials have proven the viabil- size-fits-all approach is neither to differentiate passengers passengers will find its ultimate ity of some of the individual the best use of resources nor is already being provided to expression in the Check- components of the CoF, and adaptable enough to cope with governments for the purposes point of the Future (CoF). a blueprint targets progress ever-increasing passenger of border control. Advance This next-generation security through milestones in 2104, numbers. Passenger Information (API) checkpoint is being designed 2017, and 2020. and Passenger Name Record in collaboration with govern- To remedy the situation, airlines (PNR) information could also be ments and industry partners are working with governments used to provide automated risk and is premised on risk-based to implement a risk-based assessments that determine the passenger differentiation and approach to security. This level of screening each passen- advanced technology. means differentiating between ger should receive. passengers based on their risk Global standards are being de- profiles. Most passengers pose And known traveler programs, veloped and tested for the CoF, no risk at all. Clearing them with such as PreCheck and Global and adhering to these stan- minimal fuss will allow resourc- Entry in the United States and dards will keep aviation secure. es to be deployed where they Nexus in Canada, are suc- But that doesn’t mean all CoFs will have the biggest impact on cessfully using a risk-based will look the same. Countries reducing risk. approach already. The popular- will implement a version of the ity of these programs—about CoF that is practical. 1.4 million travelers are signed up to Global Entry, for exam- ple—highlights passenger willingness to share data for a defined benefit.

“The current system simply will not be able to cope with the doubling of passenger numbers that we expect to see by 2030. Both governments and industry realize this and are looking at new ways of providing security.” Ken Dunlap, Global Director, Security & Travel Facilitation, IATA

23 REGULATORY POLICY & TAXATION Aviation is a heavily regulated industry.

The proliferation of The EU revision of Regulation Regulation should enable unharmonized passenger 261/2004 is a missed A proposed US rule on aviation to generate rights regulations is not in opportunity to promote ancillary data will cause economic growth. the passenger’s interest. greater connectivity. confusion and increase costs.

Bad or poorly drafted regu- Airlines have a vested interest A European Commission The US Department of Trans- lations undermine aviation’s in getting passengers to their proposal for the revision of the portation (DOT) is expected ability to be a catalyst for destination on time and without EU passenger rights regulation to propose Consumer Rule economic growth. In cooper- incident. Commercial pressures (Regulation 261/2004), re- III. It is understood that this ation with other stakeholders ensure that this is a top priority. leased in March 2013, had two rule will require any airline that positively affected by aviation, And when incidents happen, positive conclusions. Airlines sells tickets through global IATA advocates for fair regula- the same commercial discipline should not be held indefinite- distribution systems (GDS’s) tions that balance the need to encourages airlines to provide ly responsible for care and to provide information to those preserve market competition appropriate assistance. Nev- assistance in circumstances GDS’s on three optional ser- and passenger and employee ertheless, some isolated and completely beyond their control vices: checked baggage fees, rights with the ability of aviation extraordinary incidents have and the impact of a delay on a advance seat selection, and to grow and serve communities caused governments to regu- passenger varies with journey advance boarding. The rule is directly and indirectly. late the industry on passenger length. not expected to require that rights. airlines make these products Unfortunately, several negative available for sale through To be effective, passenger conclusions also emerged. The GDS’s, only that the prices and rights regulations for a glob- most damaging would see the other pertinent details must be al network industry such as first carrier on a journey take displayed. aviation must be transparent full responsibility to compen- and based on internationally sate travelers for any delays IATA continues to argue that agreed-to principles. Over 50 or missed connections before airlines already provide this countries have aviation-specific they reach their destination. information on their websites passenger protection of some These potential liabilities could and that the legacy systems kind. The regulations are not discourage regional airlines used by the GDS’s cannot harmonized, and some have from offering interline connec- adequately or accurately dis- extraterritorial provisions. This tions to long-haul destinations play it. The rule thus will result creates difficulties for airlines and are a departure from global in passenger confusion; will and confusion among passen- standards. IATA will be advo- ignore market developments, gers. The unintended negative cating with industry partners for including the New Distribution consequences of multiple a more balanced approach as Capability (NDC); will stifle new consumer protection rules the proposal moves through the entry in the distribution area; can be significant. Additional legislative process. and will not be justified in terms costs need to be recouped, of costs and benefits. for example, and mitigation strategies for onerous delay penalties could see increased flight cancellations or reduced interline connectivity (see article on page 29 for more details). In 2013, the industry has begun developing a common com- mitment to a minimum set of passenger rights standards to help governments harmonize their requirements globally.

24 Regulations that deal with Montreal Convention 1999: unruly passengers need a global industry needs a updating. single liability regime.

In the past five years, the in- IATA is participating in ICAO Montreal Convention 1999 A decade after MC99 came stances of unruly and disruptive discussions on revisions. To (MC99) is a modernization into force, however, only 103 behavior on board aircraft have date, guidance material and and unification of the different of the 190 ICAO-contracting increased dramatically. Such recommended practices to treaty regimes covering airline states, or just 54% of the total, behavior can create serious enhance the prevention of un- liability that have developed have adopted it. A number of safety and security risks for ruly passenger behavior and im- haphazardly since 1929. The fast-growing aviation markets airlines. The international legal prove the management of such global ratification of MC99 in Asia, such as Thailand, the framework for dealing with incidents have been developed is an industry priority. MC99 Philippines, Indonesia, and unruly passengers ( at ICAO by the industry. gives consumers better Vietnam, have yet to sign up. Convention 1963) needs protection and compensation Russia is another notable modernization. and facilitates faster air cargo absentee. This means that a shipments, while airlines enjoy patchwork of liability regimes greater certainty about the rules exists around the world. The re- affecting their liability. It also sult is confusion and complexity establishes the legal framework in determining which regime allowing airlines to make use of covers a particular passenger electronic documentation for or cargo itinerary. Claims han- shipments, thereby reducing dling and litigation from claims costs and increasing efficiency. or accidents are unnecessarily complicated.

MC99: current treaty ratification status (member states by region)

Europe

North America 43 10 North Asia 2 0 Middle East & North Africa 2 0 11 7

Africa Asia-Pacific Latin America & the Caribbean 13 37 12 22 18 14

Ratified Non-ratified

25 Governments should not Deviating from accepted stand in the way of liberal slot management rules will Collaboration is the key to market developments. negatively affect passengers. tackling US customs delays.

The ICAO Sixth Worldwide Air The lack of capacity in the Also in 2012, the industry There are repeated instances of Transport Conference in March airport system to cope with worked closely with the Indian, long customs lines at US gate- 2013 supported the liberaliza- increasing demand is a major Colombian, and Brazilian way airports. So IATA; Airlines tion of airline ownership and concern. There are 160 airports governments to promote WSG for America (A4A); Airports control restrictions. formally designated as Level policies and principles when Council International–North 3 (most congested, requir- they draft and publish their America (ACI-NA); and the US A fully liberalized industry ing slots), and this number is slot regulations. The Chinese Travel Association formed a co- regime will take years, if not expected to grow significantly slot management system alition to work closely with US decades, to achieve. In the over the next five years. also needs to be aligned with Customs and Border Protection meantime, countries should the WSG, and a number of (CBP) to address this issue. consider actions to enhance IATA’s Worldwide Slot Guide- constructive meetings were connectivity and therefore the lines (WSG) is the accepted held in 2012 that made notable The CBP has faced significant economic and social benefits of global standard for the policies, progress in this regard. budget shortfalls, and IATA and aviation. In this tough econom- principles, and procedures of A4A have consistently opposed ic environment, airlines are airport slot management. any suggestion regarding the showing that with innovative raising of user fees to address tie-ups they generate consum- A European Commission pro- this challenge, particularly as er benefits and become more posal for a new slot regulation sea and land borders do not viable businesses. includes a plan to deviate from pay user fees. In 2012, the the WSG by replacing the CBP provided the coalition with LAN/TAM in South America 80-20 “use it or lose it” slot rule data from five airports that the is breaking the mold through with an 85-15 rule. In the first coalition will study to explore its consolidation. Qantas and reading, the industry success- ways to deal with the CBP’s Emirates have established a fully argued that it was not clear challenge and the issue of cooperative agreement. Fran- how 85-15 would achieve a lineups. chising is yet another possible greater utilization rate than the way forward. Governments 95% achieved under 80-20. President Obama’s fiscal 2014 should not stand in the way of We hope, therefore, that this budget proposal includes these developments but should idea will be withdrawn in the funding for 1,600 new customs consider how the global and next draft of the proposal. officers and an increase in user hypercompetitive nature of the fees to fund an additional 1,877 airline business will require a officers. IATA will oppose any consistent approach by compe- increase to user fees and will tition authorities. seek to ensure that the 1,600 new officers are deployed at airports rather than at land or sea borders.

26 Taxation

Unwarranted or excessive tax- Taxation initiatives that specif- ICAO policies on jet fuel, Value-added tax (VAT) and ation on international air trans- ically penalize the aviation in- meanwhile, direct countries not other sales taxes should not port has a negative impact on dustry adversely affect econom- to impose taxes on uplift for in- be levied on international air economic and social develop- ic growth. The latest increase ternational flights. In 2012, the transport either. The Europe- ment. IATA, in conjunction with in the UK air passenger duty industry had some success in an Commission has provided industry partners, is running a (APD) in 2013 will cost the UK removing or reducing taxes on assurance that the exemption number of campaigns to per- economy $459 million (£300 fuel for international operations for intra-EU air travel will remain suade governments to reduce million) per year in lost GDP in Latin America and in North during the ongoing review of or withdraw such taxes. and lead to 7,000 job losses. America. The reduction of a the EU VAT Directive. And the The Northern Ireland Assembly tax on jet fuel in the Domini- Seychelles government exempt- In the United States, the recognized the negative impact can Republic will save airlines ed international travel when it Obama administration’s fiscal of APD when it set its rate to some $45 million per year. In recently replaced a 15% sales year 2014 budget proposal zero for all flights from Northern Canada, the elimination of a tax tax on air tickets with a 15% seeks a $5.5 billion increase in Ireland to protect the only direct on international jet fuel in the VAT. IATA continues, however, aviation taxes and fees above flight from Belfast to the United province of British Columbia to challenge India’s service tax, the $19 billion paid by commer- States. and Austria will save airlines an estimated which is levied on air tickets, cial aviation in 2012. Although reduced their environmental $15 million annually. Ontario, fuel, and airport and air naviga- the proposal is not expected taxes in 2012, but these taxes however, still applies its provin- tion services. to pass, the fact that aviation is should be removed completely. cial fuel tax, an annual penalty seen as a source of yet more of $52 million on the province’s In Africa, there is an increas- tax revenue at a time when the Tourism taxes also defeat economy. ing number of proposals for government should be focused their purpose. The Australian so-called solidarity taxes. on the industry as a generator government acknowledged this In Brazil, the use of parity pric- Nine countries in the region of jobs is a concern. when it dropped plans to fund ing linked to the cost of import- have followed the example of a tourism marketing campaign ing jet fuel from the US Gulf France and implemented duties through an annual inflation-in- Coast has resulted in a gross on air travel to fund the fight dexed increase in its passenger distortion of the market. Ap- against HIV/AIDS, malaria, and movement charge from 2013. proximately 75% of the jet fuel tuberculosis. The latest country Other governments have yet to supplied to airlines in Brazil is to implement such a tax was see the wisdom of this move. produced at Brazilian refineries, Chad, in March 2013. These Jamaica, for example, recently not imported. Yet on average taxes are discriminatory and doubled its tourism tax, costing fuel accounts for 43% of the impede the development of air passengers an extra $22 operating cost of airlines there. aviation links that would boost million annually. This represents an estimated economic growth. The industry $400 million annual cost penal- favors voluntary schemes. ty on Brazil’s competitiveness. IATA is campaigning for Brazil to change its pricing formula to reflect market realities.

27 “I’ve always wanted to see the Taj Mahal. I can remember seeing it in films when I was young. It was a really long flight but, wow, what a place.”

Every year, more than 200,000 people visit the Taj Mahal from overseas. Globally, aviation- related tourism supports 34.5 million jobs.

Sources: UNESCO figures; ATAG, Aviation Benefits Beyond Borders. FEATURE: HARMONIZING PASSENGER RIGHTS REQUIREMENTS Passengers suffer from the consequences of poorly drafted regulation.

Airlines want to get passen- It is not only the lack of harmo- It proposes that in cases of But with aviation already gers to their destinations on nization that is a concern but connecting flights the complete arguably the most regulated time. But occasional delays or also the perverse incentives burden for compensation for consumer-facing industry in the cancellations are inevitable. some of these regulations delays should fall on the opera- world, it is hoped that market When that happens, there is provide. In the United States, tor of the first flight. forces will prove the founda- a legitimate role for govern- draconian tarmac delay rules tion for most passenger rights ments to regulate protections have increased cancellations This is contrary to the Montreal revisions around the world. for consumers. But too often, up to 24% because, under Convention and will discourage a lack of joined-up thinking certain circumstances, a can- regional operators from offering Australia and Singapore have among governments has cre- cellation becomes preferable to connecting flights, disrupt- resisted the urge to pass ated a complex patchwork of a heavy fine. But it means that ing passenger convenience. punitive legislation. They have regulation that disadvantages passengers have to rebook on Furthermore, it suggests that put their faith in the market to passengers as well as airlines. a flight later in the day or even diversions could count as apply the necessary pressure More than 50 countries have the following day, depending cancellations, which has clear on service levels and passen- their own versions of passenger on space and frequency, rather safety implications. ger care. rights regulations, the majority than just suffering a delay of a of which have come into force few hours. There is some hope. IATA is in the last seven years. pressing for the adoption of There is no monopoly on bad globally harmonized core prin- is a case in point. In regulation. IATA has long been ciples on consumer protection. August 2012, the country intro- a critic of European Union (EU) A Working Group operating duced an Aviation Services Law Regulation 261/2004, which under the IATA Industry Affairs that covers all flights bound for places the financial burden on Committee identified these and departing from Israel irre- airlines for delays even in cases core principles and presented spective of the airline operating where the causes of the delay them to the Sixth Worldwide the flight or the city from where are beyond the airlines’ direct ICAO Air Transport Confer- it started. So, for a flight that control. ence. They include ensuring originates in the United States, that consumer protection stops over in Europe, and ends A European Commission regulations are in accordance its journey in Israel, all three of proposed revision of EU 261 with the existing international the jurisdictions could legiti- acknowledges that airlines frameworks on air carrier liabil- mately argue that their laws are should not be held indefinitely ity, namely the -Hague applicable. responsible for assistance regime and Montreal Conven- in circumstances completely tion 1999, and avoiding extra- beyond their control. But overall territorial legislation that creates the proposed revision amounts overlapping regimes. to a missed opportunity.

“In many ways, a competitive airline market is self-regulating. Commercial discipline is the most effective protector of consumer rights.” Thomas Windmuller, Senior Vice President, Member & Government Relations, IATA

29 INFRASTRUCTURE More than ever, working with partners is critical to connectivity. Airspace capacity improvements are vital in fast-growing markets.

Partnerships with infrastruc- Europe sees some of the Aircraft movements in the Mid- meet future air transport de- ture providers are critical to fiercest debates over airport dle East and Asia-Pacific have mand. IATA advocated strongly enabling the industry to meet development. Airlines and IATA increased dramatically in recent on behalf of member airlines rising demand for connec- are campaigning for a third years in response to passenger for the development of the tivity. runway to relieve the 99% con- demand. That, in turn, has put seamless planning activity and gestion at London Heathrow. pressure on ATM infrastructure. is active in the development of A number of significant ca- In September, the UK coali- In the Middle East, there are the Seamless Asia Plan. pacity development projects tion government announced around 30 different projects to are under way at airports or an Airports Commission to increase airspace capacity and The megaprojects, meanwhile, in air traffic management “examine how the UK’s status efficiency out of Dubai, with of NextGen in the United States (ATM). Discussions with as a leading global aviation hub similar programs under way in and of the Single European Sky businesses and trade unions can be maintained.” IATA will and Doha. A key (SES) continue to develop, but to promote the benefits of be submitting evidence to that project for improving capacity only slowly. The benefits of the responsible, sustainable commission throughout 2013. in Asia-Pacific is the Seam- enhanced capacity of NextGen growth at constrained air- less Asian Skies initiative. Its have been estimated at $77 ports will continue. Germany also faces capacity primary objective is to increase billion from reduced delays over challenges. A much needed airspace and infrastructure the period 2011–2030. new airport for Berlin is not ex- capacity by standardizing ser- pected to open until 2015, and vices, harmonizing regulations, The SES has set four high-level there are doubts that the full and ensuring interoperable ATM goals to be met by 2020: opening capacity of the airport across the Asia-Pacific region. will be realized. IATA also works Seamless Asian Skies differs • A threefold increase in closely with aviation stakehold- from other, single-sky global capacity where needed ers in Germany to communicate programs in that countries will • An improvement in safety the economic consequences of retain their sovereignty of air- performance by a factor the decision to ban night flights space and service provision. of 10 at airport. • A 10% reduction in the The Asia-Pacific Seamless effects flights have on the In the Asia-Pacific region, IATA ATM Planning Group, formed in environment is supportive of plans for a third 2011, is finalizing the Seamless • A reduction in the cost of runway at Hong Kong Inter- Asia Plan for presentation to ATM services to airspace national Airport. IATA will also the Asia-Pacific Air Navigation users of at least 50% provide input to the Australian Planning and Implementa- government’s consultation on a tion Regional Group in late (See article on page 33 for new masterplan to address the June 2013. The plan includes information on SES develop- terminal and airfield require- a timeline for air navigation ments.) IATA, the airlines, and ments for Airport for the infrastructure improvements aviation stakeholder groups next 20 years. consistent with ICAO’s Aviation continue to press for stronger System Block Upgrades. Those political action to ensure that Work is expected to commence improvements are to airspace these vital projects succeed. in 2014 on the new capacity across the region to Daxing airport. IATA has met with the management team to examine the proposals for the airport, which is scheduled to open in 2017. In the intervening period, Beijing Capital Air- port will commission T3D and optimize its existing terminal infrastructure. The airport has agreed to the establishment of a joint working group to include airport, airline, and IATA repre- sentation.

30 But a number of challenges There were some examples remain to ensure that ICAO of cooperation in the setting policies on transparency and of airport charges. user consultation are upheld.

Infrastructure charges must be There were numerous exam- In 2012, civil aviation authori- five times the estimated price. set at levels that enable airlines ples of this cooperative system ties in Mongolia and Pakistan IATA is neutral when it comes to satisfy demand for connec- working well in 2012: unilaterally increased their to airport ownership, and a tivity, that provide a reasonable charges. The combined annual concession model probably return on investment, and that • Seoul Incheon Airport estimated cost to airlines: near- provided the best opportunity allow for sufficient investment and the Greater Toronto ly $130 million. to address deficiencies at São in future developments and Airports Authority agreed to Paulo-Guarulhos, Viracopos, service quality. plans that will save airlines Prefinancing to support poten- and Brasilia ahead of the 2014 $64 million and $355 mil- tial development is a recurring FIFA World Cup. But the sale Because infrastructure provid- lion, respectively, through problem. ICAO principles are of these airports was flawed in ers often enjoy monopoly or 2015 clear that today’s passengers several respects: quasi-monopoly status, gov- • Following airline input, should not have to pay for ernments and regulators have a Lima’s airport recognized infrastructure that may benefit • Aeronautical revenues vital role to play in maintaining that there is no need for a passengers tomorrow. Benin, are capped, but in other vigorous oversight of charges proposed second runway Cameroon, the Democratic Re- essential operational areas and development. Airlines, fur- because its runway capac- public of the Congo, Gambia, and services, such as fuel thermore, require a formal role ity is not being fully utilized Guinea-Bissau, Mali, Niger, supply areas and airport in capital investment decisions, • Similarly, the long-stand- Sierra Leone, and Togo all have space used by airlines, the since it is they who will be pay- ing campaign with South development charges ranging charges are only monitored ing for those investments. Africa airports (ACSA) has from $9 per passenger to over • Airlines were not given allowed the deferral of two $50. Senegal’s airport develop- a formal role in capital ICAO principles have been large CAPEX programs ment fee stands at about $68 investment decisions at the established to ensure trans- that would have adversely per passenger—the highest in airports parency and a proper role for affected charges Africa. • There is a potential conflict customers in the decision-mak- of interest between the ing process on infrastructure Another challenge exists in regulator that sets the price investment and charges. This Brazil, where in 2012 the and the government that partnership can be mutually government sold concessions receives dividends beneficial while enhancing the for three airports that raised • It has been proposed that passenger’s experience. concessionaires have to pay into a development fund to cross-subsidize smaller airports, which is against ICAO guidelines Industry taxation: and adds to airline costs without a correspond- $37 million ing gain in capacity or efficiency

/... Fuel fees & taxes: $241 million

$878 Airport charges: million $475 million Total cost reductions achieved in 2012

ANSP charges: $125 million

31 Air traffic management Transparent prices and charges remain too high, competition in the supply of particularly in Europe. jet fuel are essential.

Governments in Indonesia, the The 50% reduction in air Elsewhere, results are mixed. Fuel is 33% of airlines’ operat- Philippines, Vietnam, South navigation charges envisioned ASECNA, which manages the ing costs. For an industry with Korea, and elsewhere are by the European Commission’s airspace of 17 French-speak- wafer-thin profit margins, trans- likewise looking to the private SES project are under threat ing African countries, from parency on the components of sector to raise funds. But there from a lack of will among Euro- Madagascar to Senegal, froze fuel prices and confidence in needs to be a good reason for pean states and air navigation charges in 2013 for the eighth the reported market price of the privatization, such as efficiency service providers (ANSPs). consecutive year and com- product are essential to secur- improvements or private-sector European ANSPs’ failure to mitted to long-term cost-effi- ing significant savings. investment. It also is imperative meet even watered-down ciencies. But in Brazil, airlines to have effective and trans- cost-efficiency targets in the absorbed a 150% increase With these objectives in mind, parent economic regulation in first reference period of the in en route charges in 2012 the airline industry actively place prior to privatization. This SES Performance Scheme, and would have suffered a participated in 2012 in the must ensure focus on efficiency 2012–2014, and their resis- further 83.8% increase in 2013 consultations conducted by the and cost control. tance to more ambitious targets had not the industry’s strong International Organization of for the second reference pe- advocacy efforts persuaded Securities Commissions (IOS- IATA continues to remind riod, 2015–2019, threaten to the Brazilian government to CO) on behalf of the G-20. providers of their obligations undermine the SES’s progress. cancel the additional increase. The purpose of those proceed- to consult with users and to Approach charges in Brazil, ings was to understand the maintain full transparency on At a time when the European meanwhile, rose 13.2% in shortcomings of market price charges. In 2013, IATA will sup- economies can least afford 2012, with no increase in sight discovery mechanisms and to port this work by tackling the it, European ATM is costing for 2013. Brazil’s government, arrive at guiding principles for root causes of high charges. airlines and their passengers an though, has set guidelines for oil price reporting agencies Efforts will include lobbying extra $6.5 billion (€5 billion) a future increases that will be tied (PRAs). The IOSCO guidelines governments to scrutinize year in inefficiencies. to the consumer price index. for PRAs have been issued, privatization and concession and key international PRAs models. As highlighted in a 2013 have agreed to a voluntary industry report, A Blueprint for code of conduct. It is expected In India, the decision by the a Single European Sky, the that these developments will Airports Economic Regulatory solution is a binding perfor- improve user confidence in Authority to allow the returns mance scheme administered by price reporting going forward. over five years at Delhi Airport a single independent regulator. to be recovered in under two A more unified European air- In Angola, IATA has worked years contributed significant- space, moreover, should be put with the state oil company, ly to that airport’s enormous in place by reducing the current Sonangol, to secure reductions 346% increase in charges in 63 air traffic control centers in fuel storage, into-plane, and 2012. IATA continues to appeal to not more than 40. IATA will inventory costs. The effort has this and other increases. It is continue to lobby for these saved airlines operating to the also asking the Indian gov- changes in 2013 and will work country an estimated $110 ernment to consider using the with the European Commission million annually. IATA continues 46% of top-line revenues paid in driving top-down change in to work with the Angolan gov- to the government as a conces- European airspace (see article ernment on further rationalizing sion fee to alleviate the pain of on page 33). costs. Delhi’s increases. By engaging with Indian The tariff hike in Delhi was authorities to provide open followed by a fresh round of access to jet fuel infrastructure charge increases at other Indi- at Kolkata and Chennai airports, an airports, including at IATA enabled private-sector and Chennai. This significant- suppliers to enter India’s fuel ly raises the overall cost of market in 2012. The industry operations in India, and IATA is has also succeeded in ensuring appealing these increases. competitive markets in eastern Europe, with achievements in Poland and Russia being of significance.

32 FEATURE: DRIVING IMPLEMENTATION OF THE SINGLE EUROPEAN SKY Swift progress on the SES is essential for travelers and the European economy.

The full implementation of a eliminated with SES come with Single Sky Committee en- Third, next-generation systems Single European Sky (SES) a cost—some $6.5 billion. With dorsed weakened performance must be implemented. These promises substantial benefits. demand growth to 20 million and charging scheme regula- will facilitate more efficient flights a year, that figure will tions for air navigation services routes and flight profiles that Aircraft will arrive within one expand to $11.5 billion. On for 2015–2019. will reduce fuel usage by an minute of the planned arrival top of that, there is a broader average of 300 kilograms per time regardless of weather economic benefit from research SES must move from debate flight. Multiplied by millions of conditions. On average, travel and development and improved to delivery. IATA, along with the flights a year, the potential car- time will be reduced by 10 min- connectivity as airline net- Association of European Air- bon savings are in the millions utes. And each of the 20 million works expand more easily and lines and the European Regions of tonnes. flights per year will be handled sustainably to meet evolving Airline Association, published a with even greater levels of demand. report, A Blueprint for the Sin- There is a timely political and safety. gle European Sky. It anticipates economic outcome that should The European Commission that technical hurdles will be place this at the top of Europe’s Travelers will benefit immedi- understands the need to boost overcome but suggests three recovery agenda. The modern- ately from this. And so will the European competitiveness key reforms are essential to ization and rationalization of the European economy and the and is pushing for top-down achieving SES. ATM supply chain is estimated airlines that provide it with glob- change in SES implementation. to generate more than 300,000 al connectivity. The problem is at state level. First, an independent Euro- additional jobs across the Euro- Guided more by shortsighted pean regulator must establish pean aviation sector. Today, the inefficiencies in interests, European countries a binding and robust perfor- European air traffic manage- are resisting change, watering mance system for air navigation Unnecessary delays for passen- ment (ATM) that could be down targets, and delaying the charges. gers, endless discussions, and benefits that SES will bring. weak targets should no longer Second, air traffic manage- be tolerated. European ATM In essence, European countries ment structures need to be reforms must be implemented are propping up inefficient, rationalized. The number of air to the benefit of consumers, state-owned air navigation traffic control centers in Europe airlines, and Europe as a whole. service provider (ANSP) should be reduced from 63 to monopolies over the needs no more than 40. The ratio- of travelers and the economy. nalization process would also Most European ANSPs did enhance safety and environ- not meet soft cost-efficiency mental performance through targets, for 2012–2014. And, reduced transfer points, im- under pressure from national proved information sharing, and governments, the European better matching of resources to demand.

“We expect ANSPs to get on with the job of reforming European ATM, including rationalization of control centers from 63 to 40, and introducing competition for services.” Peter Curran, Assistant Director, Infrastructure, Europe, IATA

33 ENVIRONMENT The aviation industry is committed to reducing its environmental impact.

Environmental responsibil- The strategy will deliver three One of the most significant The aviation industry believes ity is a key element of the consecutive carbon emissions events of 2012 was the No- that an offsetting scheme with- industry’s “license to grow.” reduction goals: vember announcement that the out a revenue-raising element That means managing and European Commission (EC) would be the quickest and reducing aviation’s environ- 1. Improving fuel efficiency by was “stopping the clock” on simplest to introduce and ad- mental footprint. an average of 1.5% annu- the inclusion of international minister. Such a scheme would ally to 2020 aviation in its emissions trading generate maximum environmen- Noise and air quality remain 2. Capping net emissions scheme (ETS). Europe’s tal benefits in the shortest time. important environmental through carbon-neutral governments recognized that challenges. But carbon emis- growth from 2020 their environmental goals with Should no global agreement on sions are at the top of the 3. Cutting net emissions in respect to aviation could best a single measure be reached at public agenda and are thus half by 2050, compared be met with a global measure the upcoming ICAO Assembly, the main focus of IATA’s en- with 2005 agreed to through ICAO. a framework to provide guide- vironmental work. To address lines for the implementation of the 2% contribution to man- No other industry has agreed The EC also realized that its national or regional schemes made carbon emissions for to such ambitious global goals. unilateral action to extend its might be considered. which aviation is responsible, To achieve them, however, the scheme beyond its borders in 2009 the industry adopted industry requires the support risked retaliation from non-EU To avoid the development of a a four-pillar strategy consist- of governments in the way of governments, who regarded the patchwork of uncoordinated, ing of technology, infrastruc- globally aligned and coordinat- move as an infringement of their overlapping, disputed policy ture, operational improve- ed policies. sovereignty. Its suspension of measures, any such framework ments, and market-based the EU ETS, therefore, has giv- will need to recognize the measures. A globally agreed economic en ICAO some breathing space historical and future contribu- measure to encourage carbon to find a global solution. tions made by aviation through emissions reductions is critical its participation in a multiplicity to achieving carbon-neutral A High Level Group of coun- of schemes. It will also need to growth from 2020. tries and experts within ICAO ensure environmental integrity, has been working to evaluate to minimize distortion and the options on market-based mea- administrative burden, to limit sures (MBMs) for presentation the allowable economic mea- at the ICAO Assembly later in sures to those that are cost-ef- 2013. The three main options fective, and—importantly—to on the table as of 1 May 2013 not impede progress to a single are as follows: global MBM.

• A mandatory offsetting Throughout 2012 and into scheme 2013, IATA worked with its • A mandatory offsetting members and the wider aviation scheme with additional industry to provide input to revenue raising ICAO and its member states, • A global emissions trading offering technical advice when scheme invited to do so. IATA also has helped to facilitate airline discussions on the options for delivering carbon-neutral growth from 2020 (CNG2020; 12 1.7% 40 see article on page 37). million tonnes of fuel efficiency thousand carbon emissions improvement flights

The amount of carbon 12 million tonnes of CO2 12 million tonnes of emissions saved by global equates to a 1.7% fuel carbon emissions is the aviation in 2012 through a efficiency improvement equivalent of 40,000 combination of increased and surpasses the 2012 round-trip New York to load factors, improved industry target of 1.5% London flights aircraft performance, and better “in-air” operations 34 The four-pillar strategy is on track. But more supportive government policies are needed, particularly for biofuel production and airspace efficiency.

Political interest has centered Navigation Services Organi- trans-regional areas and then Biofuel-powered flights by on MBMs. But the other pillars zation. This workshop is a next globally should have significant various airlines, meanwhile, of the emissions reduction step from the Global PBN Go operational and environmental continued throughout 2012 strategy—technological innova- Teams that operated previously, benefits as airborne holding with the aim of achieving a tion, operational improvement, and it focuses on training and and other airborne delays are better understanding of han- and infrastructure investment— guiding multidisciplinary teams eliminated or reduced. The dling biofuels across the supply must also be addressed. to implement PBN. implementation of FUA relies on chain. A notable achievement effective coordination between was the series of biofuel flights In 2012, the technological pillar Investment in air traffic man- civil and military authorities to that took ICAO Secretary-Gen- achieved a significant boost agement infrastructure, when ensure that airspace is used as eral Raymond Benjamin to the with the agreement in July of coupled with operational efficiently as possible, there- Rio+20 Summit. a fuel-burn metric as a step- reform, could lead to significant fore reducing fuel burn and the ping-stone toward an ICAO fuel-burn reductions. Programs emissions of airline users. A number of companies have CO2 standard for new aircraft. such as NextGen in the US and announced plans to further Once adopted in 2016, the the Seamless Asian Sky initia- In addition, airlines and industry biofuel production and re- standard will be used to ensure tive could yield significant fuel stakeholders are working to search. But the industry needs that new aircraft meet a base- savings. The Single European modify service priority levels a greater commitment from line for CO2 emissions. Getting Sky has a target to reduce from “first-come, first-served” governments to encourage the diverse global stakeholders environmental impact 10% per to “most capable, best-served.” the ramp-up to the large-scale to agree to the metric was a flight; however, progress has This evolutionary concept is aviation biofuel projects that significant challenge, and IATA been slow (see article on page expected to provide operational will bring costs down to a level assisted ICAO with the techni- 33). and environmental benefits to where biofuel is competitive cal discussions. aircraft operators, including with jet kerosene. Elsewhere, efforts are con- those that have invested in ad- Operational improvements, tinuing to improve air traffic vanced capabilities, leading to Offsetting remains a useful op- particularly the implementation flow management (ATFM) greater network efficiencies. tion for individuals to contribute of performance-based naviga- and flexible use of airspace to mitigating climate impacts. tion (PBN) at airports to reduce (FUA). Expanding the scope To assist airlines in offering fuel burn and noise, while of localized ATFM to collabo- passengers a consistent, enhancing safety, are a high rative regional and eventually environmentally robust offset- priority. A PBN workshop has ting scheme, IATA has helped been developed in collabora- them to develop a standardized tion with ICAO and the Civil Air process.

Emissions reduction roadmap

No action

More efficient aircraft Flying smarter

Carbon-neutral growth Biofuels Economic measures

-50% by 2050 indexed to equal 100 in 2005 2 CO

35 Environmental best practices The carbon footprint of Noise issues remain will be promoted through a goods transported by air is a concern for many new assessment program. attracting consumer interest. communities.

Many airlines have recognized less of the level of development The air cargo supply chain is Noise is tackled through a the benefits of environmental of their environmental manage- developing a common calcula- “balanced approach,” approved management systems (EMS), ment initiatives. Airlines are able tion method for the reporting of by ICAO in 2001, that calls but the standards and frame- to phase in the implementation CO2 emissions for goods trans- on local authorities to address works for EMS are challenging of the IEnvA in two stages, both ported by air. New regulatory noise problems at airports by to implement in the airline verified by independent assess- requirements are also coming considering all available mea- industry context. To overcome ments undertaken by approved into force, such as Grenelle II in sures, including technological this impediment, in 2011–2012 Environmental Assessment France. From October 2013, all change, operational proce- IATA utilized the internal sys- Organizations (EAOs). transport services that originate dures, and land-use planning tems and quality processes from or terminate at a French and management. Major prog- of its certification programs The first group of airlines has airport must communicate the ress made in recent months has to develop standards and an gone through the independent CO2 emissions related to their involved technology. In 2012, assessment program. The initial IEnvA process. In 2013, the aim transport services. The Grenelle ICAO agreed on a new noise pilot group for the IATA Envi- is to encourage more airlines to II law means that not only air- standard (Chapter 14) for large ronmental Assessment (IEnvA) join the program and to contin- lines but also travel agents and new aircraft coming into service program comprised seven ually improve the standards. freight forwarders must inform in 2017 and for regional aircraft airlines. their customers of the CO2 coming into service in 2020. emissions associated with the Whereas the time taken to The aim of the IEnvA program is transport services they provide. agree to a 10-decibel reduction to improve airline environmental between the previous two noise management practices and effi- In March 2013, IATA was man- chapters spanned 29 years, it ciency performance at the com- dated to develop a common took only half that time to agree pany level by setting internal carbon calculation methodol- on Chapter 14 and its further targets, implementing manage- ogy. As part of that mission, 7-decibel reduction. ment programs, and providing IATA joined the advisory board access to best practices and of Carbon Footprint of Freight information sharing among Transport (COFRET), a Euro- airlines. The IEnvA consists of pean project looking at the cal- a modular approach so that culation of the carbon footprint airlines can benefit from it in the along the entire supply chain. most relevant areas of their op- erations. As such, the IEnvA is applicable to all airlines regard-

36 FEATURE: ACHIEVING THE GOAL OF CARBON-NEUTRAL GROWTH Aviation has pledged to achieve carbon-neutral growth from 2020.

The industry’s four pillar regional schemes and the 1,500 passenger flights have Such changes add up across strategy on climate change European Emissions Trading been conducted that prove the an entire fleet. A recent eval- provides the framework for Scheme (EU ETS) in particu- viability of biofuels. These fuels uation undertaken by ICAO hitting the CNG2020 target. lar. With the “clock stopped” can reduce CO2 emissions independent experts on opera- Improvements in technology, on the EU ETS, attention has 80% over their complete life tional goals has estimated the operations, and infrastruc- turned to the elements that cycle compared with normal worldwide operational fuel and ture will work in conjunction would make up a global MBM jet fuel and would represent CO2 reduction potential to be with market-based measures scheme. These are being de- a major step on the road to 12.75%. (MBMs) to achieve CNG2020. bated at ICAO, with a decision CNG2020. The biofuels ball Each pillar will make a signifi- expected later in 2013. is now firmly in the court of Infrastructure gains will come cant contribution to CNG (see governments. most obviously through Next- emissions reduction roadmap In the meantime, work will Gen and the Single Europe- chart on page 35) and to the continue on the other three Operationally, most improve- an Sky, the major air traffic industry’s ultimate goal of re- pillars. Technology innovations ment will come from improved management (ATM) projects in ducing CO2 emissions 50% by offer almost unlimited potential flight procedures using perfor- the United States and Europe, 2050 compared with 2005. and will be the long-term solu- mance-based navigation. This respectively. The Civil Air Nav- tion. There is no telling what includes green departures, igation Services Organization MBMs are fundamental to technologies might be on offer optimized trajectories, and estimates airspace efficiency at achieving CNG in the short in the future, but new aircraft, continuous descent approach- 92%–94%, so even small gains term. While the other three lighter composite materials, and es. Many of these procedures in efficiency would represent pillars will make an enormous new engine designs are already are already in place in various millions of tonnes of CO2 contribution and have already making their mark and contrib- regions and making a signifi- savings. decoupled traffic growth from uting to CNG2020. The high cant impact. Every minute of emissions, MBMs will be the cost of jet fuel, which reached saved flying time reduces CO2 clinching pillar. 33% of total operating costs in emissions by 100 kilograms. 2012, provides a strong incen- Even though MBMs are antic- tive for change. But the minor savings are no ipated to be a temporary mea- less important. Projects include sure, the industry has focused The high jet fuel price is also reducing taxiing time and more on the successful implementa- narrowing the gap with the efficient use of auxiliary power. tion of a global MBM solution. current cost of biofuels. But One airline has even saved

It has campaigned against biofuels are not commercially 30,000 tonnes of CO2 annually viable yet. A policy framework by replacing its catering trolleys that promotes biofuel usage with a new lightweight model. is absolutely essential. Over

“Market-based measures are a key element of the strategy to achieve carbon neutral growth from 2020. Governments, working through ICAO, must design a global MBM that allows the industry to achieve its aim.” Paul Steele, Director, Aviation Environment, IATA

37 CARGO Air cargo is focused on its value proposition: speed, reliability, efficiency. The industry is focused on developing partnerships to Efficiency is being driven strengthen air cargo. through e-freight.

Air cargo transported goods The Global Air Cargo Advisory Reflecting the need for Air freight’s value proposition of valued at $6.4 trillion in Group (GACAG) comprises cross-industry collaboration, speed, reliability, and efficiency 2012. That impressive figure the International Federation of the World Cargo Symposium is being reinforced through masks two years of declining Freight Forwarders Associa- (WCS), hosted by IATA, has e-commerce and digital data volumes resulting from a tions (FIATA); The International evolved to become a major transfer technologies—known sluggish global economy and Air Cargo Association (TIACA); industry decision-making event. as e-freight. a modal shift from air to sea the Global Shippers Forum The event also serves to raise transport. (GSF); and IATA. Their work is the profile of air cargo with gov- In 2012, GACAG endorsed focused on the priority areas ernments as a strategic partner, an e-freight roadmap based of e-commerce, customs and helping to ensure that cargo on three key initiatives. IATA is trade facilitation, security, and has the regulatory environment leading the first two: expanding sustainability. and infrastructure needed to the global e-freight network and successfully drive growth. eliminating paper-based core Since its inception in March transport documents. FIATA 2011, GACAG has firmly es- Related to this, the “Air Cargo and the GSF are jointly leading tablished itself as the air cargo Makes It Happen” campaign the third initiative, which is to industry’s primary stakeholder was launched in 2012 with digitize commercial documents voice in dealing with govern- similar goals. And in 2013 the (see article on page 40 for ments and international organi- first Future Air Cargo Executive more information). zations on unified industry posi- Summit (FACES) was held to tions. Its major accomplishment showcase the important role To expand the global e-freight is the e-freight roadmap. But it that future leaders will play network, it is necessary for also plays an important role in in the growth of the air cargo more countries to ratify Montre- helping to drive the implemen- industry. al Convention 1999 (MC99). tation of industry standards. MC99 supports the removal of paper documents accompany- ing shipments. The industry is focused on persuading govern- ments in such cargo markets as Bangladesh, Indonesia, the Philippines, Russia, , Thailand, and Vietnam to ratify this treaty. In addition, to help demonstrate the benefits of e-freight IATA will support e-freight proof-of-concept pilot projects in two of the BRICS 12 countries, China being most percent critical. /... Air cargo accounts for 12% of all industry revenues $6.4 trillion The value of goods carried by air cargo in 2012, which is a third of all goods by value transported globally

38 Safety is being enhanced through strict compliance with enhanced dangerous The Cargo Agency Program goods regulations. is being modernized.

Airlines are taking the lead The challenge of adhering to To address the mail issue, IATA In collaboration with FIATA, in eliminating the paper core the Dangerous Goods Regula- worked with ICAO and the IATA is evolving the Cargo transport documents by moving tions (DGR) is growing. This is Universal Postal Union (UPU) Agency Program to better toward the 100% adoption of particularly so amid the growth to establish requirements for address contemporary issues the e-Air Waybill (e-AWB). In in manufacturing from emerg- postal administrations to devel- of accreditation, governance, 2012, Cathay Pacific, Emir- ing economies, the changing op and implement appropriate training, and supplier and buyer ates, and Singapore Airlines nature of business with the dangerous goods training and collaboration. The program will reached more than 75% exponential growth of e-com- controls to prevent such prod- respond to industry customer e-AWB penetration out of merce, and the technological ucts from entering the air mail demands; preserve the Cargo their main hub airports. Many changes that have seen lithium stream. The training and the Accounts Settlement System other airlines reached more batteries become the power control procedures are subject (CASS); protect member than 20% e-AWB penetration. source of choice in a vast array to review and approval by na- funds; and create a collabora- Case studies based on those of consumer and industrial tional civil aviation authorities. tive environment where cargo successes reveal an average devices. service standards and solutions 20% efficiency gain for airlines, IATA also sought to address can be universally implemented freight forwarders, and ground In 2012, there were a number undeclared dangerous goods to improve safety, security, and handlers when moving to a of incidents where dangerous incidents and to promote indus- operational efficiency. paperless environment. In some goods were either not pack- try engagement on the carriage cases, the efficiency gains aged correctly or not identi- of lithium batteries. IATA con- Other benefits of the mod- exceeded 44%. fied as dangerous goods and ducted a series of informational ernized program include a instead offered as items of events and in 2013 will issue a simplified governance structure To facilitate the adoption of the general cargo or as standard lithium battery guidance manual that enables shared account- e-AWB, FIATA and IATA jointly air mail parcels. Some of these that provides practical detail ability and reduces the global developed a multilateral e-AWB shipments resulted in fires and on regulations for transporting administrative workload. Given agreement that in March 2013 in mercury leakages in aircraft. lithium batteries. that 80% of freight transactions was adopted by the Cargo Ser- are performed under a princi- vices Conference as Resolution IATA is working to ensure that In 2013, IATA will continue pal-to-principal relationship, 672. The multilateral agreement continued strict compliance to work with ICAO to identi- the proposed Cargo Agency will enable parties to utilize with the DGR is widespread fy possible improvements to and Air Cargo Programs aim e-AWBs under a common within the industry and embed- the DGR to further enhance to better administer an industry and internationally recognized ded in the standard opera- safety. Additional workshops on involving a buyer and seller legal framework, removing tional practices of airlines. The dangerous goods and lithium relationship. the burden of signing multiple development of the DGR over batteries are planned to facili- bilateral e-AWB agreements. several decades has enabled tate the industry’s outreach to In 2012, the Cargo Agency Recognizing that the necessary almost every type of poten- educate shippers and manufac- Program obtained the support standards were in place for tially hazardous material to be turers on lithium batteries. And of the Cargo Committee and the e-AWB, the IATA Board of shipped safely. The challenge is again IATA will work closely of the IATA Board. In 2013, the Governors in 2012 endorsed a for the whole air cargo supply with the UPU to heighten safety goal is to draft new resolutions target of 20% e-AWB pene- chain to adhere strictly to the regulations for air mail. and program rules for the Car- tration worldwide where legally requirements of the DGR. go Agency Program and for the feasible for 2013. IATA-FIATA Air Cargo Program (IFACP). Final approval for those resolutions and rules will be sought from the Cargo Agency Conference (CAC) in the fourth quarter of 2013 or in early 2014. Assuming approv- al is obtained from the CAC, regional implementation of the programs will begin in 2014.

39 FEATURE: THE ROADMAP TO E-FREIGHT E-freight will put an end to paper-based processes in air cargo.

Some 50 million tonnes of The first element of the e-freight introduction of the IATA Multi- Once 100% e-freight has cargo are transported annually. roadmap is engaging regulators lateral e-AWB Agreement. been achieved, governments It doesn’t need another 7,800 and governments to ensure a and industry partners will tonnes of paperwork to make it legal framework that supports Previously, penetration was benefit from increased levels happen. paperless cargo. The goal is to held back by the need for of information, reliability, and achieve 80% network coverage individual agreements between security. Freight forwarders To ensure the success of by volume. As of 1 May, pene- airlines, freight forwarders, and could get savings of around e-freight, the Global Air Cargo tration stands at 37%. airports. The IATA Multilateral $2 per shipment if e-freight is Advisory Group (GACAG)— e-AWB Agreement clears this combined with an e-archiving consisting of IATA, the Interna- The focus is on China and In- blockage by providing a single system. And customer service tional Air Cargo Association, dia. Both countries have ratified standard agreement that air- will be transformed too. Total the Global Shippers’ Forum, Montreal Convention 1999, a lines and freight forwarders can productivity gains for the overall and the International Feder- key enabler of paperless trans- sign once with IATA to enter document handling process ation of Freight Forwarders actions, but this agreement into e-AWB agreements with all once everything is implement- Associations—has developed a hasn’t yet been embedded in parties. ed, including airline and ground roadmap to 100% e-freight that their regulatory frameworks. In handling activities, is estimated defines the approach, structure, China, for example, customs With the e-AWB in place, the at 48%. and targets for the e-freight regulations do not recognize third element of the roadmap program. electronic documentation. It is calls for the entire cargo pouch a similar situation in India. The of documentation—up to 30 goal is to work with government documents—to go electronic. and industry players to pilot This includes individual docu- e-freight in both countries by ments for each area of cargo, the end of 2013. such as flowers or dangerous goods. Converting all docu- The second element of e-freight ments to an electronic form is is digitizing the air waybill doc- a huge undertaking, involving ument. At the end of 2012, the tens of thousands of freight electronic air waybill (e-AWB) forwarders and millions of ship- had achieved 7.2% penetration. pers. But once e-AWBs are in The aim is to achieve 20% by universal use and the benefits the end of 2013 and 100% of digitization is clear, progress penetration by the end of 2015. is expected to be swift. These are ambitious targets, but the industry has taken an enormous step forward with the

“E-freight is the single most important project in improving air cargo’s competitiveness. The roadmap provides the targets that will help us realize the e-freight vision.” Des Vertannes, Global Head of Cargo, IATA

40 “I’m a doctor, and I’m also part of a team that sets up medical and vaccination centers in disaster-hit areas. The last project was in Haiti after the big earthquake.”

The day after the Haiti earthquake struck, air traffic controllers arrived and over the next 12 days coordinated 2,500 flights carrying over 2,000 tonnes of emergency supplies.

Source: Colonel Buck Elton, Haiti: Boots on the Ground Perspective. THE PASSENGER EXPERIENCE Passengers want control of their journeys.

The enhanced provision of The New Distribution passenger data and real-time Capability benefits information for passengers passengers, airlines, and will match government and travel agents. customer expectations.

Technology is making it pos- The Internet has fundamentally to customers on an airline web- The global security agenda in sible to improve the passen- reshaped the way sellers and site. This denies consumers the decade since 9/11 has led ger experience and to reduce consumers interact. Today, using the indirect channel the governments to request more costs in the face of rising 40% of ticket sales by value opportunity to know about the Advance Passenger Informa- passenger numbers and come directly through airline many innovations in which air- tion (API—see information on more onerous security re- websites. Airlines use their lines are investing. In many in- page 20). An ICAO standard quirements. It is also helping websites to provide consumers stances, GDS’s cannot provide defines the 40 elements of API. the industry to meet the ris- with their complete range of complete product information, Many governments, however, ing expectations of travelers services and product innova- let alone comparison shopping have chosen to add further accustomed to having more tions. They are, moreover, able for personalized offers. requirements, leading to a lack control in other areas of their to tailor their offers to meet a of consistency in the type and lives through amenities such customer’s particular needs. To eliminate this gap, IATA is the transmission method and as e-commerce and self-ser- This is similar to the experience leading an industry initiative frequency of the information vice banking. that customers have when to develop a new data trans- provided. The industry is work- accessing any leading retail mission standard. The New Dis- ing with governments to agree In November 2012, the website. tribution Capability (NDC) will to harmonized requirements Passenger Services Con- enable airlines to offer the full and a consistent data transmis- ference endorsed a white But the majority—some 60% by range of their services to cus- sion process. paper titled The New Simpli- value—of airline sales remain tomers regardless of custom- fying the Business Program. in the indirect channel, through ers’ choice of buying channel As mobile connectivity increas- That document discusses online and brick-and-mortar (see article on page 47). es, customers expect real-time a Simplifying the Business travel agents. Travel agents ac- notification of delays or sched- (StB) program that builds on cess offers that are put togeth- The NDC standards have the ule disruptions. Forthcoming the success of the origi- er by global distribution system potential to create benefits regulation in the United States nal StB initiatives to make (GDS) companies. There are for all parties in the airline- and potential legislation in conveniences such as kiosks, three main GDS’s outside GDS-agent relationship. But Europe will require airlines to e-tickets, and bar-coded China. They use pre-Internet the NDC does not mandate inform passengers of disrup- boarding passes common- messaging standards based changes to the industry—it tions where possible. Although place within five program on EDIFACT and Teletype that will be for the market to judge airlines have access to the areas: a new distribution were at the cutting edge of whether new entrants or new contact details of about 50% model, the enhanced pro- technology in the 1970s. Today, business arrangements will be of their passengers through vision of passenger data, those standards are severely successful. direct sales and frequent flier better access to real-time limited compared with what is programs, they typically don’t information for passengers, possible with the XML messag- As required under a US have access to passenger a hassle-free ground expe- ing used to power the Internet. Department of Transporta- contact details from sales in rience, and a seamless end- tion (DOT) rule, IATA filed for the indirect channel. IATA is to-end customer journey with As a result, GDS’s are unable DOT approval of Resolution working with the value chain a focus on interoperability to provide easily the same 787, which is the foundation to update reservations stan- across the value chain. sophisticated shopping expe- standard for NDC. The public dards so that agents can input rience or rich content available comment process ensures a passenger contact details. The robust and transparent hearing new standards will be present- for the opinions of all interested ed for approval by the relevant parties. IATA welcomes the industry conferences at the end scrutiny of DOT and all others of 2013. who choose to comment on this resolution. Another project in the area of granting passengers better access to real-time information is the Ease of Access to Travel Information project. It looks at ways airlines and airports can offer passengers information on such issues as waiting times $36.1 11.3% and delays to allow passengers billion increase to take appropriate action. The size of the airline Ancillary sales jumped ancillary sales market 11.3% over 2011 in 2012 42 Empowering passengers

He booked through an online travel agency. But if the flight’s delayed, he wants a text message alert from the airline. He’d be happy to check in his bag As many as 68% of travelers want but worries about losing it. updates directly from the carrier. Fully 81% of passengers want to When he flies with his daughter, he’s track their baggage in real time. interested in priority boarding.

Fully 69% of air travelers say they buy ancillary products to person- alize their journeys.

She lost her boarding pass. Luckily, she has an NFC*-enabled mobile phone, so it’s easier to get another.

Almost 1 in 3 devices are NFC She checked in on her iPhone and equipped. printed her boarding pass at a kiosk.

Nearly 75% of passengers prefer *Near-field communication to check in on the Internet or at a kiosk.

Source: Survey data from the IATA Global Passenger Survey 2012. 43 A hassle-free ground experience is being made possible through improved self-service options and optimized security processes.

Passengers’ demands for and self-service registration of rates were cut from 19 bags To complement the Checkpoint self-service options throughout mishandled bags. per 1,000 passengers to 9 of the Future (CoF) project their journeys, from boarding bags for every 1,000 passen- (see page 21), the Passenger pass to baggage collection, are Over 100 airline-airport pairs gers. Facilitation project works with increasing. IATA’s Fast Travel implemented Fast Travel proj- airports to optimize facilities to initiative is helping airlines ects in 2012. The Fast Travel In 2013, BIP is being replaced keep costs constant even as to meet these expectations program is moving toward by the InBag Program, which passenger numbers increase. through six specific projects: the mass implementation of has three objectives. The first is In 2012, Passenger Facilitation check-in, travel document self-service. The 2013 target is to continue to reduce baggage performed security access scanning, bags ready-to-go for 20% of passengers to have mishandling. The new target, diagnoses at 5 airports and with baggage self-tagging, access to four of the six Fast for 2016, is a rate of 4.5 bags assisted in the implementation self-boarding, flight rebooking Travel options. per 1,000 passengers. The of automated border controls when itineraries are interrupted, second aim of the program is to (ABC) at 10 airports. IATA is fo- The Baggage Improvement improve the efficiency of bag- cusing in 2013 on working with Program (BIP), meanwhile, gage operations and the third partners to implement ABC at was successfully completed in to enable baggage handling in- 15 airports and on conducting 2012. Over BIP’s 2007–2012 novation by developing modern security access diagnoses at period, baggage mishandling standards for communications 10 airports. 19 and systems design that make innovation easier. The ability to Three additional projects are mishandlings offer an ancillary product, such being developed through 2013 as a baggage delivery service to move toward the hassle-free per thousand from the airport to a hotel, is an vision. E-borders will help passengers example of such innovation. governments provide e-visa programs. Single Token will en- in 2007 able passengers to go through all the airport processes using a single piece of identification, whether an e-passport, biomet- rics, or e-boarding pass. And Check Out will automatically check in passengers at the time 9 they book their flights. mishandlings per thousand passengers 4.5 in 2012 mishandlings per thousand passengers target for 2016

44 Partnerships across the travel chain are being enhanced to ensure a E-services marks the final seamless end-to-end journey step on the path to paperless for the customer. travel.

Modern travel often involves The e-services project is the A benefit of the EMD standard In 2012, 80 airlines imple- many partners. A trip, for last step in removing paper beyond its standardization mented EMD and the overall example, may start with a train documents from the passen- is that it enables the sale of capability covered some 75% ride to the airport, followed by a ger’s journey. The process a range of optional services of passenger volumes. From flight and then a rental car or a began with e-ticketing and con- through travel agents, from the end of 2013, IATA’s Billing bus connection to a cruise ship tinued with bar-coded boarding additional legroom while flying and Settlement Plan (BSP) will or a hotel. A disruption at any passes. E-services will now to a car service when you reach only accept EMD for process- point in the trip may require the eliminate a range of paper your destination. It should be ing. Where needed, however, alteration of plans for the rest of miscellaneous documents, such noted, however, that EMD is workaround solutions will be the journey. as those for excess baggage focused on the back-office implemented. tickets or lounge access. Elec- functions that accompany the There is, however, no single tronic versions of these docu- selling of ancillary services communications vehicle that ments exist, but they are built through travel agents. It is not a links travelers to all the partners on differing standards and are substitute for the broader NDC along their travel chain. For- thus difficult to apply to interline messaging standards being midable technical challenges journeys. The e-services project developed. The EMD standard, stand in the way of creating is mobilizing the industry to however, also makes possible such a communications vehicle. adopt IATA’s electronic mis- lower costs, due to simpli- As a first step, airlines, systems cellaneous documents (EMD) fied revenue accounting and providers, and other partners in standard. back-office processing, while the travel chain must collec- allowing for the faster track- tively develop a “common-lan- ing and attribution of ancillary guage” industry data model by revenues. which their diverse systems can communicate to facilitate joint business, interlining, codeshare, and other types of collaboration. 831 million Global

380 million Asia-Pacific

193 million China

Estimated additional passenger volume in 2016 (compared with 2011)

45 “I sell mobile phone accessories over the Internet. The products are manufactured in China, and we guarantee worldwide delivery in seven days. I’m in Asia a lot looking for new ideas and gadgets.”

China and Hong Kong between them handle 6 million tonnes of air freight annually. Chinese air cargo growth will average 3.8% over the next five years. Globally, air cargo carries goods to the value of $6.4 trillion annually.

Sources: IATA Global Traffic Forecast; IATA figures. FEATURE: WHAT NDC MEANS FOR PASSENGERS Air travelers should benefit from targeted travel offers from every sales channel.

Air travelers should benefit from The simple reason for this dis- Greater transparency and But the system doesn’t re- targeted, personalized offers crepancy is that travel agents choice for consumers will allow quire this level of disclosure. no matter the sales channel of don’t have access to the same them to comparison shop Passengers can simply book a choice. information. In effect, airline among airlines armed with ticket with the minimum level of customers purchasing through the full scope of the airlines’ information if they wish. A passenger booking through travel agents—a channel that product offers and not just the an airline website already accounts for about 60% of tick- base airfare and schedule. This IATA welcomes participation accepts personalized sales as et sales by value—are denied is no more than the modern and input in the NDC from all the norm, with a whole range of the opportunity to understand passenger expects. And airlines participants in the travel value options on offer. But booking the true value of an airline and travel agents must be able chain, including travel agents, through a travel agent typical- product. It is an unacceptable to meet these expectations. agent associations, airlines, ly will get only the price and state of affairs for a 21st-century GDSs, and other technology schedule. business serving a 21st-century Passengers will have the option providers. customer. to provide personal information when using an online travel The New Distribution Capa- site or speaking to a travel bility (NDC) is an IATA-led, agent. If they do so, they could collaborative industry initiative receive targeted, personalized that will enable travel agents to offers through a two-way flow offer consumers the same rich of information with the airline, content airlines already offer something that isn’t possible on their own websites. The with the current global distribu- NDC defines a new messaging tion system (GDS) setup. standard between airlines and travel agents that will allow airlines and third parties to display more information on flight options and services than is currently available through the agency channel, meaning that customers will be better informed.

“With the NDC, customers can get the same travel options, regardless of whether they shop through an airline website or visit a travel agent.” Eric Leopold, Director, Passenger, IATA

47 INDUSTRY SETTLEMENT SYSTEMS Global aviation relies on trusted financial services. Offsetting billings and Reforms to strengthen managing currency clearance further the reliability of IATA’s helps maintain smooth settlement systems are firmly operations. established.

Airlines require robust, reli- IATA is the industry’s trusted To reduce risk and transaction Enhancing the security and able, and speedy settlement partner for efficient, reliable, fees, IATA operates the IATA reliability of the IATA Settlement systems to ensure that their and cost-effective means to Clearing House (ICH). The Systems (ISS) has been an cash flow is not disrupted. simplify the selling, reporting, ICH facilitates the offsetting ongoing project for the past That is a formidable chal- and remitting procedures of of billings between more than 15 years. In the latest step, lenge given that the global, airline tickets and air waybills. 350 airlines and around 90 made possible by advances in interconnected structure of In 2012, $251.8 billion was associated companies and re- technology and financial infra- the airline business involves settled in the Billing and Set- duces industry financial risk by structure and systems, IATA the transfer of billions of tlement Plan (BSP) and $31.7 minimizing the time and money has consolidated remittance dollars in ticket sales from billion in the Cargo Accounts involved in outstanding inter- and settlement services to five third-party sales points, such Settlement System (CASS). company debts. In 2012, ICH regional hubs: Amman, Beijing, as travel agents and freight IATA operates BSPs in 177 billings transactions throughput , Miami, and Singapore. forwarders, and, to facilitate countries and territories and grew almost 5%, to $51.9 This Strengthening ISS (SISS) interlining, among airlines. CASS in 83 countries and ter- billion. This is a record for the initiative has now moved into ritories around the world. More ICH. As a result of the offset the next stage, involving migrat- than 400 BSP and 270 CASS provided by the netting service, ing the remaining ISS activities, airlines participated in IATA’s the amount of cash required to including agency management, settlement systems in 2012, settle these billings was only risk management, billing and together with more than 60,000 $16.1 billion, giving a net offset reporting, invoicing, collection, BSP and over 16,000 CASS ratio of almost 70%. The ICH’s and customer service, from agents. The settlement success settlement success rate was IATA local offices to the re- rates were 99.976% for the 99.996%. gional hubs. The migrations are BSP and 99.989% for CASS. taking place in four waves. The For consumers, this means that Fluctuations in global exchange first wave has been success- travel—no matter how complex rates can be considerable, fully completed. The remaining the itinerary and how many and businesses remitting large are planned to be completed by borders are crossed—can be sums in multiple currencies re- December 2013. purchased in a single currency. quire extensive and active man- agement to maximize efficien- To improve further the automa- cies and minimize risk. The IATA tion, standardization, control, Currency Clearance Service security, and simplicity in re- (ICCS) provides a centralized mittance and settlement (R&S) approach to airline global cash operations, IATA has adopted management activity while of- a new tool: the IATA R&S fering highly competitive market Integrated Solution (IRIS). IRIS exchange rates to help airlines was released in 2012 and is efficiently manage the repatria- aimed at minimizing errors and tion of their worldwide sales. In the risk of fraud while increas- 2012, the ICCS assisted over ing efficiency and operational 300 member airlines repatriate effectiveness. By the end of in excess of $36 billion of their its implementation, scheduled sales proceeds from more than for December 2013, IRIS is 125 countries. targeted for use for 96% of the industry’s worldwide annual net cash sales settlements.

48 $371.5 billion 99.976% Total funds BSP collection processed success $638 billion Total industry revenues 60,471 Total number of BSP agents

177 Figures quoted are 2012 data. Total countries and territories in the BSP 16,605 Total number of CASS agents incl. CNSC† 99.989% CASS collection success

$251.8 billion Processed by the BSP

$31.7 Cargo Network Services Corporation billion † Processed $51.9 by CASS $36.1 billion Settled by billion the ICH Processed by the ICCS

49 Airline infrastructure charges Simplified Interline Funds delayed or blocked by are reduced through the IATA Settlement removes paper governments increased in Enhancement and Financing from the billing process. 2012. Service.

The Simplified Interline Settle- IATA helps airlines to access The IATA Enhancement and Most of the invoices produced ment (SIS) platform, introduced funds from restrictively regu- Financing (E&F) Service offers by E&F can be submitted in 2011, is an electronic lated markets and countries. air navigation service providers electronically to the airlines invoicing system that optimizes According to the 2012 Re- (ANSPs) and airport authorities and settled through the ISS. interline billing and settlement mittance of Foreign Balances the opportunity to improve the E&F invoices are automatical- processes. In SIS, electronic (RFB) survey results, $1.05 efficiency and quality of their ly transmitted to airlines that billing files are automatically billion of members’ funds re- invoicing and collection pro- are members of SIS using settled by the ICH. On 8 May mains delayed or blocked in 13 cess. The service helps users the industry IS-XML standard, 2012, the second stage of SIS countries. This is an increase to strengthen their cash flow allowing for increased automa- was implemented, extending of $471.6 million (81%) over and improve their collection tion on the airline side. Airlines, SIS to cover cargo and the the 2011 year-end figure of ratio. For airlines, E&F ensures airports, and ANSPs can thus Universal Air Travel Program, $582 million. The increase is charges are collected on a benefit from a standard format thus completing the delivery of largely due to the repatriation transparent and equal basis. electronic invoice, a standard the SIS platform. difficulties faced by the airlines E&F can also help airports and and simplified dispute process, in Venezuela, Iran, and Algeria. ANSPs to secure cost-effective and a more efficient billing and In its first full year of operations, Venezuela is still the most chal- financing for investments in civil collection service. In 2012, SIS signed up 411 members lenging country—representing aviation infrastructure because IATA’s E&F Service processed in 158 different countries 60% of total blocked funds. the E&F Service is able to more than $3.2 billion in 50 and processed over 870,000 transfer collected amounts countries. invoices with a settlement value The top five priority markets directly to the party financing of $32 billion. May 2013 marks identified in the 2012 RFB are the investment. another important milestone. Venezuela, Iran, Algeria, Sudan, The legacy ICH web applica- and Eritrea. tion will be shut down, and SIS will be the only invoice submis- sion method for all settlements by the ICH. All billings will therefore be processed in a paperless manner.

ts 60% of to sen ta re l b p lo e c r k la e e d

u f z u e n n d

e s V $1.05 billion Total member funds delayed or blocked in 13 countries

50 “I’m an event manager for blue-chip Asian companies. Our clients like holding events in luxury destinations or in their emerging markets. Often we’re drawn to the Middle East because of its excellent facilities and global connectivity.”

The UAE reported 2.55 million business arrivals in 2012, rising to 2.76 million in 2013 and 3.55 million in 2014. By 2016, total spending on business travel globally will hit $1.4 trillion a year, representing compound annual growth of 7.7% since 2012.

Sources: Gulf Incentive Business Travel and Meetings; Global Business Travel Association projection. AVIATION SOLUTIONS Designing products for a sustainably profitable industry.

Passenger solutions

Aviation is a tough busi- Business intelligence helps IATA’s Airs@t product identifies The Consulting group contin- ness, and the challenges to airlines to optimize their net- what customers value most. ues to assist airlines across all manage costs and improve works, develop new routes and facets of the aviation business. efficiency are continuous. products, plan their fleets, and Market analysis can provide IATA products take advan- manage inventories. vital explanations for the emer- The Airline Consulting group tage of global expertise and gence of route trends. Airs@t took on a number of specialized deep industry knowledge to IATA’s PaxIS and Direct is a survey scoring carriers on assignments that focused on support the success of play- Data Service (DDS) prod- the basis of over 70 customer revenue management, business ers across the value chain. ucts ensure that airlines get touch points, from reservation planning, network and fleet route-specific and point-of-sale to baggage claim. In 2012, optimization, maintenance and information that, in turn, enables over 50,000 passengers were engineering, and fuel conser- them to benchmark their per- surveyed for routes from North vation. As an example, in 2012 formances against the market America, Europe, the Middle an Airline Consulting team was standards. East, and Asia. Airs@t delivers engaged in a business plan a solid representation of air review project with a major PaxIS is still an important passengers’ preferences—the African carrier. It was deeply product, but it is being super- carriers surveyed have a com- involved in implementing the seded by DDS (see article on bined market share of nearly plan, which touched many com- page 55). DDS was launched 75%. In 2013, Airs@t will be mercial aspects of the airline, in mid-2012 and is a more expanded to include attributes including network design, fleet comprehensive approach to surrounding frequent flier planning, revenue management, deriving business intelligence programs. supplier relationships, and fuel from ticketed passenger data. It management. The consulting combines the available agency The Weblink service facilitates team’s work helped to stabilize sales that PaxIS offers with the the deployment of the agency this evolving carrier against a direct sales data from partic- direct sales channel to reduce backdrop of political change. ipating carriers. Twenty-four airlines’ distribution costs. airlines are full participants in Timatic is the industry stan- DDS. Combined with PaxIS Weblink allows financial trans- dard used by airlines and data derived from Billing and actions to be completed using travel agents for compliance Settlement Plan (BSP) oper- IATA’s BSP. And in 2012, it saw with border control rules and ations, DDS represents 86% a 200% increase in usage as regulations. Extract from Airs@t data coverage of worldwide travel nearly $4 billion went through Period: Jan. 2012 to Dec. 2012 agency data. the system. The increase came Timatic Autocheck, a product Routes: EU-NAM, EU-AMEA-Asia, primarily in two of the fastest- that automates the document NAM-Asia growing aviation markets, Asia- compliance process, contin- Passenger sample: 44,600 Pacific and Latin America. The ued to gain traction in 2012, Travel cabins: Economy+Business service is expecting to achieve taking on such clients as a even greater penetration in major US carrier and a global 2013. travel management company. Timatic Autocheck is integrated into booking and departure M. control modules to increase L. K. A. customer service and to reduce fines by automatically checking J. every international passenger I. for proper documents and What are the top certificates prior to boarding. H. three aspects of a A web version of the program, B. G. flight that most need TimaticWeb2, was launched in improvement? 2012. F.

E. C. D. A. Sleeping comfort; B. Amount of legroom; C. Seat comfort; D. Meal(s) and/or snack(s) quality; E. Selection of movies; F. Cabin temperature; G. Picture quality; H. Punctuality of departure; I. Cleanliness of toilets; J. Selection of newspapers/magazines; K. Sound quality; L. Reliability of entertainment system; M. Speed of luggage delivery 52 Airports and civil aviation Cargo solutions solutions

CargoIS is the only business The Air Cargo Tariff (TACT) Based on IATA’s BSP data, The Airport Handling Manual intelligence tool for the air was updated in 2012 in sup- AirportIS provides airports and (AHM) is regarded as the defin- cargo market that reflects real port of the IATA objective of consulting firms worldwide with itive source of industry- transactional data. increasing efficiency by promot- comprehensive traffic data in approved standards. ing electronic data exchange support of marketing and air Its data comes from IATA’s and taking paper out of the air service development. These standards help simplify Cargo Accounts Settlement cargo chain. processes and interactions System (CASS), which settled AirportIS saw an influx of new between airlines, airports, and over 75% of the world’s air TACT coverage was expand- clients in 2012 in the Asia-Pa- ground handlers. The 33rd cargo volumes in 2012. New ed in 2012 to include new cific and Latin America regions, edition, published in 2012, CargoIS customers for 2012 sections on e-freight and including airports in Bogota, contains an updated version of include Aeroflot and advanced electronic information Cairns, Osaka, Melbourne, the Standard Ground Handling Airport. Beginning in mid-2013, (AEI) requirements by country. Tokyo (Narita), Perth, and São Agreement and was purchased CargoIS will move to a new Also in support of increased Paulo. by member and nonmember SAP platform that will greatly efficiency and paperless trading airlines, airports, and ground boost the power of its visual in air cargo, a major licensing The Airport and Civil Aviation handlers. and analytical tool set. CargoIS deal was signed with SAP for Consulting group had a robust will benchmark client data in all the integration of TACT into its year. The group undertook key markets. Air Cargo Module Transport major projects in Africa, the Management Solution (TMS). Americas, and Asia-Pacific: The Dangerous Goods Regu- Two large supply chain players lations (DGR) continues to be based in Europe have already • A major Asian airport the industry standard reference signed on for the product. commissioned IATA to manual for the carriage of dan- deliver comprehensive gerous goods. traffic forecasts for the period 2013–2055 to help In recent years, a number of it determine the basis for safety-related issues have its long-term infrastructure occurred because the DGR development plan has not been followed correct- • An African airspace ly (see page 39 for details). management organization These incidents demonstrate commissioned IATA to that the DGR remains more rel- develop Area Navigation evant and important than ever. (Global Navigation Satellite System) procedures at 24 of its aerodromes to enhance safety and to help achieve air traffic control and approach efficiencies • An airport authority in the Caribbean mandated IATA to carry out an infrastruc- ture review to ensure one of its airport’s compliance with international safety and security standards

53 Industry-related solutions

The wider aviation industry has IATA events are renowned partners during the year. The The International Airline opportunities to influence or for their ability to create value ITDI also works with top-class Training Fund (IATF) is a benefit from IATA products and by bringing decision makers academic institutions—Harvard nonprofit foundation that services. together. University, the University of provides training support to Geneva, Nanyang Technolog- airlines in developing nations to The Strategic Partnerships The unique collaborative nature ical University, and Stanford increase their competitiveness Program (SPP) brings together of the aviation business across University—to help advance and to help them meet industry some 350 industry-related sup- an extended value chain means aviation industry leadership. challenges. In 2012, the IATF pliers with IATA member airline that demand for opportunities sponsored a wide range of executives to discuss areas as to meet to shape the industry’s ITDI-related developments in training opportunities for 2,079 diverse as passenger service agenda is strong. IATA hosts 2012 included the implementa- aviation industry professionals and engineering and main- major commercial conferences tion of a learning management from developing nations. tenance. Since 1990, these focusing on airline schedules, system for a seamless custom- partners have worked with air cargo, aviation law, commer- er experience, mobile learning Aviation safety enhancement member airlines to help shape cial strategy, ground handling, for travel and tourism training, remained the IATF’s number some of the most important de- revenue accounting, passenger and a partnership agreement one priority through the delivery velopments in aviation history, travel, operations, fuel, and with Rosetta Stone for lan- in 2012 of the SMS Imple- such as e-ticketing. Reflecting human resources. IATA events guage solutions. Also notable mentation Training Program partner feedback, in 2012 are often timed to coincide with was the 23% growth in the (SMSITP) to 13 airlines from distribution and cargo XML was key events in IATA’s governance cargo portfolio, making it the Africa, the Middle East, Russia, added to the SPP. processes. For example, IATA’s second most popular subject, and Latin America. This is in New Distribution Capability behind tourism. In total, 52 air addition to the 28 airlines that An offshoot of IATA’s success- (NDC) was highlighted at the cargo related courses and 8 air benefited from the program in ful PaxIS product, MarketIS World Passenger Symposium cargo related diplomas, in En- 2011. Also in 2012, the IATF was launched in 2012 to in October. glish, Mandarin, and Spanish, offered its innovative People serve non-aviation clients. A are offered. Management and Develop- number of companies became IATA’s training activities helped ment for Airlines (PMDA) subscribers during the year, more aviation professionals For 2013, the ITDI aims to in- program to 20 airlines from including consulting firms, tour- develop their skills than ever troduce more blended learning Africa, the Middle East, Asia, ism authorities, and academic before. solutions that mix classroom and the South Pacific. The institutions. with distance learning and more PMDA teaches best practices The IATA Training and Devel- action-based learning—an in manpower management and IATA has BSP coverage in 177 opment Institute (ITDI) was educational process whereby development. countries that features over 40 established to develop the skills people work and learn together years of expertise in financial of aviation professionals world- through practice rather than settlement and collection for wide. The list of ITDI-accredited through traditional instruction. the airline industry. With the training organizations expanded introduction of the Travel In- 30%, to some 440 institutions, dustry Exchange Settlement in 2012. Over 90,000 students Solution (TIESS) in 2011, IATA trained with the ITDI and its offers this expertise to organiza- tions outside aviation. In 2012, 11 companies, including rail operators, cruise companies, tour operators, and travel insur- ance companies, joined TIESS when it was introduced in the Americas and Europe. In 2013, TIESS coverage will expand to countries in the Middle East, 65,000 Africa, and Asia-Pacific. students trained worldwide in 2011 92,000 students trained worldwide in 2012

54 FEATURE: ENHANCED BUSINESS INTELLIGENCE THROUGH DDS Knowledge is power.

Business intelligence gives air- PaxIS relies on some of the air- DDS, which was established As of 1 May 2013, coverage of lines the ability not only to meet line ticket sales in IATA’s BSPs. by IATA in conjunction with more than 86% of the market customer expectations but also DDS incorporates this, as well Airline Reporting Corporation, means DDS is already estab- to anticipate them. as some additional indirect has been set up with a unique lished as a comprehensive sales data not included in the sales positioning as a commu- source of business intelligence The latest IATA business intel- PaxIS product. The DDS da- nity subscription product. So, for the airline community. ligence product, Direct Data tabase also contains a unique to access the DDS database Service (DDS), promises to be and growing amount of direct airlines have both to subscribe a game changer. It is an evo- sales data that is not provided to the service and contribute lution of the successful PaxIS by the GDSs in their bookings their data to it. product. And while PaxIS has a products. strong reputation in the market DDS provides a powerful for its broad and global set of This richness will empower competitive alternative to the data, DDS will be even more airlines to make better-informed indirect sales bookings busi- powerful. decisions on how to develop ness intelligence products of their businesses to serve their the GDS’s. Not only is the DDS customers. Knowing how the priced on a very competitive market is trending plays into so basis but it also comes with an many business decisions that innovative web access tool that ultimately focus on providing makes it easy for airline plan- airline passengers with the ners to extract the right data destinations, and frequencies, they need to make informed they need. business decisions.

DDS is allowing airlines to be more effective competitors by making better market-based decisions and bringing needed competition into the market place for these essential busi- ness intelligence tools.

“DDS has become the biggest travel database in the world. Use it to make the very best travel service decisions.” Bryan Wilson, Director, Airline Distribution Optimization, IATA

55 IATA Offices

Main offices Regional offices

Montreal - Head Office Africa Europe North America 800 Place Victoria Sandown Mews East Block Torre Europa 1201 F Street N.W. P.O. Box 113 88 Stella Street 95 Paseo de Castellana Suite 650 Montréal, Québec H4Z 1M1 Sandton Madrid 28046 Washington, DC 20005 Canada 2146 Spain United States of America Tel.: +1 514 874 0202 Fax: +1 514 874 9632 350 Avenue Louise Russia and CIS Asia-Pacific Louizalaan Block 1 Geneva - Executive Offices TrpleOne Somerset Brussels 1050 Paveletskaya Square 33, Route de l’Aéroport 111 Somerset Road Moscow 115054 P.O. Box 416 #14-05 Somerset Wing Russian Federation CH - 1215 Geneva 15 Airport Singapore 238164 Middle East & North Africa Switzerland Business Park Tel.: +41 22 770 2525 China & North Asia Building No. 8 Fax: +41 22 798 3553 3F East Tower King Abdullah Street World Financial Center Al Shaab Roundabout No.1, Dongsanhuang Zhong Amman 1194 Road Jordan Chaoyang District Beijing 100020 The Americas People’s Republic of China 703 Waterford Way Suite 600 Miami, Florida 33126 United States of America

Disclaimer: Please note, the photographs used in this publication are for illustrative purposes only. The models depicted in these photographs are intended to illustrate the idea of real, everyday people from different cultures and regions. The authors do not intend that any of the views in this publication, or associated to the photographs, are to be held as the views of the models themselves. “Since graduating, I’ve been working on nextgen software for aircraft navigation. It’s pretty amazing how intelligent we can make planes now. We’ve got customers all over the world.”

Fully 80% of Poland’s growing aerospace manufacturing sector is established in “Aviation Valley” near Rzesznow. Globally, aviation generates an economic impact of $2.2 trillion annually.

Source: ATAG, Aviation Benefits Beyond Borders. www.iata.org

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