2019 – 04
FUEL FOR THOUGHT OVERCOMING THE CHALLENGES OF JET FUEL USE WILL BE VITAL FOR AVIATION GROWTH
2019 – 04
CEO Interviews XiamenAir, Air Seychelles | Passengers with disabilities Providing a digniﬁed service | IATA Opinion Cutting emissions requires public trust | Boeing 737 Max Restoring conﬁdence
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Contents 2019 – 04
24 Standing on our own
5 Alexandre de Juniac, Director General
Air Seychelles CEO Remco Althuis says smaller carriers still have an important role in the modern airline industry
Aviation is actively ﬁghting climate change, but more people need to know 17 IATA Opinion: Michael Gill, Director, Aviation Environment
Flying isn’t the enemy, CO2 is
Dealing with the commercial and technical challenges posed by fueling is key to the growth of commercial aviation
31 Fuel for thought
Digest 8 IATA and industry update
Jobs in aviation “must be for everyone”, IATA hits out at NZ air taxes, European delays “unacceptable”, Spohr named Chairman, South African air growth
28 Restoring public conﬁdence
Jeﬀ Shane, General Counsel says solving the Boeing 737 Max controversy is key to preserving the sector’s good reputation
14 Data: In numbers
Economic performance of the industry
40 Peace of mind
Standardizing services for passengers with reduced mobility will oﬀer a more comfortable ﬂight experience
CEO Interviews 18 The highs and lows of an airline
Zhao Dong, XiamenAir Chairman on the airline’s plan to improve performance while minimizing the risk to the business
IATA Corporate Communications Vice President Anthony Concil Creative Direction Richard McCausland Assistant Director Chris Goater www.iata.org Editorial Editor Graham Newton Head of content production DeeDee Doke Assistant editor Patrick Appleton Senior designer Gary Hill Picture editor Claire Echavarry Production Production manager Jane Easterman +44 (0)20 7880 6248 firstname.lastname@example.org Publishing director Aaron Nicholls
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60 Seconds with... 42 Ed Bastian, CEO of Delta Air Lines
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2019 – 04 Airlines
Comment: Director General and CEO, IATA
Promoting our efforts The aviation industry understands the importance of environmental sustainability, now we must inform others that the sector is already doing noteworthy work
ILLUSTRATION: SAM KERR
he Northern Hemisphere’s busy summer holiday season is drawing to a close. Once again, the amazing connectivity of aviation enabled countless families to reunite or embark on hard earned holiday adventures. Unfortunately, many see growing connectivity as a threat that needs to be put in check with carbon taxes. Though a Dutch proposal for a pan-European tax on air travel was rejected at a June conference on carbon pricing, taxes on aviation are proliferating. Austria and Sweden already have taxes inspired by environmental concerns, Germany is proposing to increase its tax, and the Netherlands will introduce a “green tax” from 2021. A departure tax is due to start in France from 2020, the UK has a proposal for a mandatory carbon oﬀset option and Switzerland and Finland also have tax proposals on the table. Environmental taxes improve government ﬁnances but they rarely result in investments to improve the sustainability of air transport. That’s why IATA opposes such taxes. Instead, the industry is doing everything in its power to ensure sustainability through initiatives with real impact. At our AGM, it was accepted that environmental sustainability is the greatest challenge to our industry’s license to grow. We have redoubled our resolve to cap emissions from 2020 through the Carbon Oﬀsetting and Reduction Scheme for International Aviation (CORSIA) and to cut them to half 2005 levels by 2050. Now we need to deliver. CORSIA is on track help us achieve the ﬁrst goal. We are mapping the way to our 2050 ambition. Sustainable aviation fuels will certainly play a big role and improving air traﬃc management will also cut emissions signiﬁcantly. And it is in
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aviation’s DNA to continuously look for technological opportunities with the potential to accelerate progress. The past few months have made some things clear. First, environmental concerns eclipse the strong recognition of aviation’s economic and social beneﬁts. Second, governments and the public have limited understanding of what we have done, and what we will do to mitigate our climate change impact. Delivering on our commitments is not enough. We must engage in the debate on sustainability. This action must be: Global: The sentiment we see in Europe today will spread Pan-industry: We are engaging industry partners through the Air Transport Action Group Personal: Brands closest to the consumer will have the greatest impact Each one of us must tell our industry’s story about the actions that it is taking to mitigate climate change impact and its target of a sustainable future. In the second half of 2019, IATA has committed to working with airlines’ government aﬀairs, environment and communications teams to get you involved. Since 1990 the carbon footprint of every ﬂight has been halved. And we have ambitions to cut net emission to half 2005 levels by 2050. It’s a good story. We must not keep it a secret.
Alexandre de Juniac: Director General and CEO, IATA 2019 – 04 Airlines
Aviation is the business of freedom. Sri Lankaâ€™s decision to cut aviation taxes and charges, including fuel and ground handling fees, is a welcome move. Made in the wake of recent terror attacks, the move is aimed at encouraging tourists to continue to visit the Indian Ocean nation, which is famed for its rich natural landscape, beautiful wildlife and breathtaking beaches.
The Big Picture
Airlines 2019 â€“ 04
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Digest Jobs in aviation “should be achievable for all” Christine Ourmieres-Widener has said boys and girls should be encouraged to aspire to the same jobs from an early age. Winning the Inspirational Role Model accolade at the International Air Transport Association’s (IATA) Diversity & Inclusion Awards, the former Flybe CEO said the industry must steer away from outdated views regarding job roles in aviation. “Young girls need to be encouraged to have the same dreams and ambitions as young boys—two plus two equals four, whether you are a girl or a boy,” said Ourmieres-Widener. “And gaining an aeronautical degree or qualifying as a pilot should automatically be seen as achievable by all, regardless of gender.” Ourmieres-Widener was recognized for inspiring young people and young women to join the aviation industry, having worked as an engineer on Concorde before eventually rising to Flybe CEO.
In helping to tackle this, OurmieresWidener said she will use her $25,000 winning prize to fund an Msc diploma in air transport at Cranﬁeld University in the US and oﬀer her own personal mentorship to the successful candidate. “Wherever you go, whoever you speak to, tell the youths that an engineer is a woman, a pilot is a woman, a CEO is a woman,” she said. “Together, we can lead our industry into a fully diverse and inclusive future for the success of all.”
The airline boss also introduced the FlyShe initiative, designed to change aspirations and create opportunities for women while also addressing the future skills shortage in aviation. “To encourage and inspire young girls to consider aviation as a viable option there needs to be more emphasis on steering towards science, engineering, technology and mathematics,” said Ourmieres-Widener. “You are never too early to motivate ambition and we need to change the perception of our industry as a diverse, exciting, modern and fun place to be.” She added that girls “cannot be what they cannot see” and called for more inspirational role models, which would encourage a large underrepresented part of the population to pursue a career in aviation and address future skills shortages.
Airlines 2019 – 04
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“Wherever you go, whoever you speak to, tell the youths that an engineer is a woman, a pilot is a woman, a CEO is a woman” Christine Ourmieres-Widener, former Flybe CEO
De Juniac: Retreat of globalization affects airlines IATA has called for “a more inclusive globalization” following its announcement of a downgrading of the 2019 forecast for the air transport sector. At its 75th AGM in Seoul the organization announced a revised ﬁgure of $28 billion proﬁt for 2019, down from the $35.5 billion forecast in December 2018. Addressing some of the most signiﬁcant risks to the growth of aviation, IATA’s Director General and CEO Alexandre de Juniac said protectionist measures across the globe were hurting the industry and called for a cessation of current hostilities. The year so far has seen the operating environment for airlines deteriorate as fuel prices rise and world trade continues to weaken.
Decline: Air freight has fallen for the past eight months
Overall costs look set to outstrip rising revenues, by 7.4% to 6.5%, which will see net margins fall to 3.2% (from 3.7% in 2018) and proﬁt per passenger decline also, down to $6.12 (from $6.85 in 2018). It’s not all doom and gloom, with 2019 the 10th consecutive year in the black for the airline industry, but de Juniac said that a squeeze on margins as a result of rising labor, fuel and infrastructure costs means “there is no easy money” to be made. “Under current circumstances, the great achievement of the industry—creating value for investors with normal levels of proﬁtability, is at risk. Airlines will still create value for investors in 2019 with above cost-of-capital returns, but only just,” said de Juniac.
CARGO FALLS AGAIN AS TRADE TENSIONS GROW FURTHER Global air cargo demand fell 4.8% in June, according to the latest IATA ﬁgures. Demand—measured in freight tonne kilometers— suﬀered the eighth consecutive month of year-on-year decline in cargo ﬁgures. Trade tensions, most notably between the US and China, continue to have a signiﬁcant detrimental eﬀect on air freight. IATA said that “signs of a modest recovery in recent months appear to have been premature” as all regions
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except Africa saw a decrease in trade by air. Capacity— measured in available freight tonne kilometers—grew 2.6% in June compared to 2018, but IATA said it remains “subdued” as load factor also fell. “Global trade continues to suﬀer as trade tensions deepen,” said IATA Director General and CEO Alexandre de Juniac. Asia-Paciﬁc and the Middle East were hit hardest by the decline in year-onyear growth of total air cargo volumes.
Events September to October 2019
Global Fraud Prevention 23-24 September Miami, USA World Financial Symposium 23-26 September Miami, USA Digital Cargo Conference 24-25 September Geneva, Switzerland
Turbulence Aware Forum 24-26 September Chicago, USA Airs@t Forum 1-2 October Montreal, Canada Technical Forum 1-2 October Kuwait City, Kuwait Global Airport & Passenger Symposium 15-17 October Warsaw, Poland Airline Industry Retailing Symposium 29-31 October Bangkok, Thailand AirPharma Conference 29-31 October Amsterdam, Netherlands
2019 – 04 Airlines
“Airways New Zealand needs to exercise cost management discipline and conduct a forensic analysis of their cost building blocks” Conrad Cliﬀord, IATA Regional Vice President, Asia-Paciﬁc
Environmental taxes not the answer, says IATA
Research commissioned by IATA suggests “environmental taxes” would prove highly unpopular across Europe. Instead, IATA said governments considering proposals for an EU-wide tax on air tickets should “listen to their citizens” and tackle the issue of sustainable aviation by other means. An IATA survey found that the most preferred government actions among respondents were supporting the development of sustainable aviation fuels (SAFs) and new technology. Environmental taxes were one of the least popular options, with just 22% of those surveyed in support of the move.
Handled with care: RFID aids the baggage process and helps to avoid potential mishandlings
“The way forward for aviation and the environment is sustainable aviation fuels,” said Alexandre de Juniac, IATA Director General and CEO. “Promoting their commercialization will do more than any other tax. The research shows the public’s feeling are very clear, people value the freedom to ﬂy.” Commercial aviation is responsible for around 2% of global carbon emissions each year. De Juniac said the industry takes climate change “very seriously” and said the research showed the public want governments to work with the industry in the areas of clean fuels and hybrid or electric technology.
Making progress: Sustainable Aviation Fuels are key to the industry’s future growth
AGM passes five resolutions to improve air transport Issues focused on the environment, baggage tracking, One ID, slot allocation and passengers with disabilities. A resolution on the environment was “overwhelmingly passed” and called on governments to implement the Carbon Oﬀsetting and Reduction Scheme for International Aviation (CORSIA) as agreed through ICAO. Regarding slots, IATA said the AGM “reaﬃrmed the importance” of a harmonized global system and said governments must urgently address capacity shortages. For RFID, the resolution commits airlines to transition to bar-coded baggage tags with RFID inlays, allowing RFID data alerts to aid the baggage process and avoid potential mishandlings. IATA’s One ID initiative—which uses a single biometric identiﬁer to move passengers through an airport—has been supported by a resolution calling for stakeholders such as airlines and government authorities to work together in promotion and implementation of the process. The ﬁfth AGM resolution on disabled passengers “aims to improve the air travel experience for people living with disabilities worldwide”, and sees airlines commit to ensuring that passengers with disabilities have access to safe, reliable and digniﬁed travel.
Airlines 2019 – 04
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IATA APPOINTS SPOHR AS CHAIRMAN
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According to Eurocontrol, in June more than 210,000 ﬂights, 20% of the total, were delayed. The average delay was 17 minutes.
, 210 000
Carsten Spohr has been appointed as the 78th Chairman of the IATA Board of Governors (BoG). The Lufthansa Group CEO succeeds Qatar Airways Group CEO His Excellency
SCHVARTZMAN: EUROPEAN DELAYS ARE UNACCEPTABLE Deﬁciencies in European air traﬃc management (ATM) causing delays are unacceptable, IATA has said. According to Eurocontrol, in June more than 210,000 ﬂights, 20% of the total, were delayed. The average delay time was 17 minutes. In a statement, IATA called on European Governments and air navigation service providers (ANSPs) to reform outdated work practices and deploy staﬀ where required, as well as recruit additional staﬀ to ﬁll any gaps. “Travelers should be able to get to their destinations on time,” said Rafael Schvartzman, IATA’s Regional Vice President for Europe. “The situation is simply unacceptable. Fortunately, solutions exist. With the correct investment, and a change in mindset by both governments and ANSPs, another summer of wasted emissions and delays can be avoided.”
Akbar Al-Baker following the conclusion of IATA’s 75th AGM in Seoul, South Korea. Spohr, who will serve a one-year term, has been Lufthansa Group CEO and Chairman since May 2014.
PASSENGER GROWTH ON THE RISE IN JUNE, BUT TRAFFIC STILL AFFECTED BY PROTECTIONISM Passenger growth is markets, traﬃc ﬁgures beginning to increase climbed 4.4% in June again but trade tensions year-on-year while capacity continue to aﬀect airlines’ rose 3.1% and load factor performance. increased to 85.5%. Demand—measured in International passenger revenue passenger demand increased by 5.4% kilometers—increased by 5% compared to June 2018, with in June, compared to 2018. all regions recording growth. The ﬁgure is a slight increase The leading region was Africa, from 4.7% year-on-year as overall capacity rose 3.4% growth recorded in May. and load factor grew to 83.8%. Despite the improved ﬁgures, IATA International Domestic warned protectionism is inhibiting the industry’s potential. “June continued the trend of solid passenger demand growth while the record load factor shows that airlines are maximizing eﬃciency,” said Alexandre de Juniac, IATA’s Director General and CEO. “Amid trade tensions between the US and China, growth was not as strong as a year ago, however.” Passenger load factor In the domestic
RISE IN NEW ZEALAND AVIATION CHARGES CRITICISED New Zealand’s decision to increase air navigation charges (ANS) has been met with disappointment by IATA. ANS provider Airways New Zealand raised charges by 12.7% at the start of July, with Airlines facing a cumulative 21.4% increase over the next three years.
“Airways New Zealand needs to exercise cost management discipline and conduct a forensic analysis of their cost building blocks,” said Conrad Cliﬀord, IATA’s Regional Vice President, Asia-Paciﬁc. “And with input from stakeholders, including airlines, identify what is critically required,
and what can be removed or deferred into future periods.” Meanwhile, Cliﬀord praised eﬀorts to reduce operating costs in Australia after it was announced that the state’s ANS provider has reduced charges by 2%. The move will save the industry AU$20 (US$14) million annually.
2019 – 04 Airlines
In 2017, 20.9 million passenger journeys were made to, from and within South Africa
“Policy reforms are essential to make the most of air transport to the beneﬁt of the South African people and economy” Alexandre de Juniac, IATA Director General and CEO
Change needed to ensure South African growth $ Reforms to immigration policies, a reduction in charges aﬀecting business, and making air transport central to economic planning can help aviation in South Africa thrive over the next 20 years. That’s according to the latest study on the economic value of air transport and aviation in the country, published recently by IATA. In 2017, 20.9 million passenger journeys were made to, from and within South Africa, with aviation and tourism representing $9.4 billion in gross value added. It accounts for 3.2% of South Africa’s GDP and supports 472,000 jobs. IATA says that over the next 20 years the South African market could more than double in size, resulting in 23.8 million additional passenger journeys, over
372,000 more jobs, and a total of $20.2 billion in GDP by 2037. “The results of the study are a reminder that robust air connectivity unlocks signiﬁcant economic and social beneﬁts,” said IATA Director General and CEO Alexandre de Juniac. However, improvements on immigration policies, business taxes and charges, and economic planning are key to any possible future growth. “We are concerned by the Q1 2019 4.4% and 3.6% contractions in the transport and tourism sectors, which reﬂect uncertainties and diminished conﬁdence,” added de Juniac. “Government policy reforms are essential to make the most of air transport to the beneﬁt of the South African people and economy.”
HARARE TRIP PROVES “FRUITFUL” IN PURSUIT OF REPATRIATION FUNDS IATA is hopeful a resolution on blocked airline funds in Zimbabwe will be found soon following a meeting with President Emmerson Mnangagwa recently. IATA CEO and Director General Alexandre de Juniac was joined by Regional Vice President for Africa and the Middle East Muhammad Ali Albakri for the visit to Harare to discuss ways of improving
Airlines 2019 – 04
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Zimbabwe’s air transport sector to boost the country’s economy. Zimbabwe has $196 million awaiting repatriation to airlines, but de Juniac is conﬁdent a solution will be found following a “fruitful” meeting with President Mnangagwa. More joint meetings between IATA and Zimbabwe’s government have been scheduled to ﬁnalise the
deﬁnition of a framework for the return of airlines’ revenues and to implement it while also preventing the accumulation of further debt.
IATA.SEPT19.013.indd 13 Skypro FP.indd 1
08/08/2019 01/08/2019 16:09 11:33
2019 AIRLINE INDUSTRY ECONOMIC PERFORMANCE
Forecast net post-tax proﬁt by country (% revenue) The strongest ﬁnancial performance is being delivered by airlines in North America. The Middle East is the weakest. Total airline proﬁt will be $28 billion.
IATA expects 1% of world GDP to be spent on air transport in 2019, totaling $899 billion. All ﬁgures taken from ‘IATA Economic Performance of the Airline Industry 2019 mid-year report’.
45% Airlines 2019 – 04
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Airlines and their customers are forecast to generate $129 billion in tax revenues this year. That’s the equivalent of 45% of the industry’s GVA (Gross Value Added, which is the ﬁrm-level equivalent to GDP). airlines.iata.org
Fuel prices rising: This year the airlines fuel bill will rise to $206 billion, 25% of average operating costs. The forecast is based on an average jet fuel price of $87.5/barrel next year, and $70/barrel for Brent crude oil. US$ per barrel 140
Litres fuel used per 100 RTK 55
120 50 100 45 80
60 40 40 35
Jet fuel price Fuel use/100 RTK
TONNES CO2 SAVED
CO2 Without the expected fuel eﬃciency gain this year, CO2 emissions would be 1.7% higher in 2019. That represents a saving of over 16 million tonnes of CO2.
The number of scheduled aircraft departures is forecast to reach 39.4 million next year. That’s an average of 75 aircraft departing each minute of 2019. 15
The value of international trade shipped by air next year will be $6.7 trillion. Tourists traveling by air in 2019 are forecast to spend $909 billion. Good for the economy:
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The average return fare (before surcharges and tax) of $317 in 2019 is forecast to be 61% lower than in 1998, after adjusting for inﬂation.
Economic development worldwide is boosted by air transport. Increasing connections between cities enables the ﬂow of goods, people, capital, technology and ideas. 2018 Unique city pairs Value of trade carried Value of tourism spend
Supply chain jobs
Supply chain GVA
2019 – 04 Airlines
Aerodrome, Airspace and Compliance Monitoring courses by the UK CAA A comprehensive portfolio of public access courses designed and delivered by the UK CAA practising regulators. Based on the EASA and ICAO Standards and Recommended Practices. Airports Aerodrome Operations I 30 Sep - 3 Oct 2019, London Gatwick Aerodrome Accountable Manager I 28 Nov 2019, London Gatwick Regulation, Compliance and Monitoring FSTD Qualification and Operation I 14 - 16 Oct 2019, London Gatwick AOC Accountable Manager I 30 Oct 2019, London Gatwick An Introduction into Compliance Monitoring I 18 - 20 Nov, London Gatwick To book now or for more information, please visit: www.caainternational.com/training or contact us: E: firstname.lastname@example.org; T: +44 (0) 330 0224401 www.caainternational.com
Together for better aviation
Part of the UK CAA International Group
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Together for better aviation
IATA Opinion: Michael Gill
Flying isn’t the enemy, CO2 is In the battle against climate change, trust and co-operation between aviation and its detractors will be important says Michael Gill, Director, Aviation Environment
he aviation and climate debate has hit fever-pitch in the media in recent months. In Europe in particular, the coverage of the “ﬂight-shame” movement has been out of proportion to the actual support it has received. IATA’s research into the attitudes of passengers has shown that there are a large number of concerned travelers who want to ﬂy, but are worried about climate change and want to be reassured that the industry is doing all it can to be sustainable. Those are legitimate concerns. As far as aviation is concerned, we remain focused on our long-term goal to reduce CO2 to half of 2005 levels by 2050. This would keep us in line with the Paris Agreement target of holding global temperature rise to less than 2 degrees. A lot of work is ongoing to put in place interim milestones which will give us a better idea of cumulative emissions growth and reduction during this period. We are not aware of any other global business sector that has set itself such a tough goal.
ILLUSTRATION: SAM KERR
Pushing the limit
And unlike other industries (automotive, for example) which can move to electric and pass responsibility for emissions to the power sector, aviation has no immediate option to dispense with liquid fuels. This is why the deployment of sustainable aviation fuels (SAF), which could ultimately reduce emissions by up to 80%, is so important. SAF, along with continued improvements to eﬃciency of engines and airframes and the hoped-for improvements to ineﬃcient air traﬃc control routes, will help us achieve our goals. We accept that, for a number of people, our targets do not go airlines.iata.org
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far enough, fast enough. That’s why we are continually pushing the industry and our partners to do more. For example, all the available SAF is already being used. If governments were serious about their climate rhetoric, they would be putting in place a framework to encourage production. Calling for stronger government action on practical measures (rather than ineﬀective taxes) is an area where perhaps the industry and environmental NGOs could ﬁnd some common ground. We understand that some people are suspicious of SAFs, but airlines have committed not to use any fuel source for SAF that would degrade biodiversity. And we are working on strict ecological standards for SAF, through ICAO and in partnership with NGOs. The emergence of the “no-ﬂy” movement is focusing on trying to persuade people it is better to travel by other means or maybe not to travel abroad at all, or only rarely. To hold such beliefs is the privilege of those in free and prosperous societies. But a world with such restricted travel opportunities would be poorer and less tolerant, while the impact of not ﬂying on climate change would be negligible. The majority of future ﬂyers are not coming from the West, where journey numbers per person is close to peaking, but from developing economies in Asia, Africa and Latin America. Why should these people be denied the opportunity to enjoy the beneﬁts of air travel? Our enemy is not travel – it is CO2. So our challenge is to ﬁnd the fastest, most practical way to reduce our CO2 impact so that we can to enable these people to ﬂy sustainably. It is a challenge that aviation embraces. And it is one that together, we must and will solve.
2019 – 04 Airlines
The highs and lows of running an airline Zhao Dong, Chairman of XiamenAir, explains how the carrier will improve yields and eﬃciency while minimizing costs and risk. Interview by Graham Newton WORDS: GRAHAM NEWTON
irspace restrictions, high-speed rail, and a shortage of airline captains threaten to dampen Chinese air traﬃc growth. But XiamenAir will use the platform of the Chinese Government’s Belt and Road Initiative to support international expansion. Proﬁtable for 32 consecutive years and counting, the country’s ﬁrst private airline has its sights set on answering increasing demand while improving its environmental mitigation.
How is the airline performing in 2019 and what are your targets for the next six months?
In the ﬁrst ﬁve months of 2019, XiamenAir has carried more than 14 million passengers and achieved an operating revenue of RMB13 billion. The big project for the remainder of the year is the opening of Beijing Daxing International Airport. On 13 May, XiamenAir participated in test ﬂights for the airport together with Air China, China Southern, and China Eastern. Our subsidiary, Hebei Airlines will be one of the ﬁrst airlines to start operating at Daxing in September. And XiamenAir will transfer all its operations to Daxing in March 2020. At that point, the XiamenAir Group will have more than 100 daily ﬂights from Daxing. Also in 2019, we will work to reach our annual Airlines 2019 – 04
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“China has long been known for its etiquette. Giving the best to our guests is always the way to show our hospitality” airlines.iata.org
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2019 – 04 Airlines
What is the strategy for the airline over the next few years to ensure it continues its run of proﬁtability?
XiamenAir will make every eﬀort to maintain its competitiveness and promote brand awareness in the global aviation industry. We will work hard on domestic operations, but we will also seize the opportunities arising from the Chinese Government’s Belt and Road Initiative – its global development strategy – in the international market. This will enhance our hub network from Xiamen, improve the seamless transfer experience for passengers, and so attract more transfer passengers. As the third biggest airline at the new Daxing Airport, we will fully leverage our advantages to better optimize the network and develop Beijing as a new driver. Alongside this, the plan is to utilize state-ofthe-art technology and integrate hotels and tourism resources to provide passengers with one-stop traveling solutions. In essence, through a variety of initiatives, we’d like to achieve high yields and high eﬃciency but low costs and low risk. How are you positioning the brand for the overseas market, particularly as you expand your network?
China has long been known for its etiquette. Giving the best to our guests is always the way to show our hospitality. Ever since it was established, XiamenAir has had a “sincerity-oriented and customer ﬁrst” service ethos. The airline has also formed its unique service brand of “Fine Management, Respectful Attitude, Elaborate Process, and Inner Beauty.” According to China’s Civil Aviation Passenger Service Evaluation (CAPSE), XiamenAir has been voted by passengers as the best airline for service for 27 quarters. While expanding abroad, we keep strengthening the idea of “Chinese Tradition, Global Vision.” We Airlines 2019 – 04
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targets of 40 million passengers and RMB36 billion operating revenue, which will help to make us proﬁtable for the 33rd consecutive year.
In the first five months of 2019, XiamenAir has carried more than 14 million passengers
have combined, for example, Chinese tea, opera, and ﬂower culture with on-board products, and there are certiﬁed sommeliers and baristas to better meet the demands of foreign passengers. We use cutlery designed by an award winner from Greece and hand-made white porcelain from an artist in Fujian province to present the beauty of western and eastern culture. Is SkyTeam important to your strategy and is the alliance still relevant given the diﬀerent forms of cooperation in the market today?
Since joining SkyTeam in 2012, XiamenAir has experienced great development. Together with partner airlines, we can connect our customers with 240 destinations in more than 40 countries. Recently, SkyTeam proposed a new strategy to create a more seamless travel experience through the implementation of technology. This strategy ties in with the vision of XiamenAir to focus more on customer service. According to the latest Customer Experience Questionnaires Report, the net promoter score of XiamenAir is 74%, which is 19% higher than the average level of SkyTeam and is the top position for the ﬁfth consecutive time. Of course, joint ventures and equity cooperation has become important in the aviation industry but these are a supplement to alliances not a replacement. XiamenAir has a joint venture with KLM on our Amsterdam route that has achieved great success. But, constrained by diﬀerent countries’ regulations, JVs and equity cooperation cannot be implemented in every market. In this regard, alliances still serve as a platform for a wider scope of partnerships and enables airlines to work together for the good of the customer in multiple ﬁelds including operations, network connectivity, frequent ﬂyer programs, lounges, and so forth. What challenges do you see to the growth of Chinese air travel?
The biggest challenge is the constraint of airspace. In the past 10 years, Chinese air traﬃc has maintained double-digit growth year on year, airlines.iata.org
yet the annual growth rate of total stage length in our airspace is only 3.6%. Market demand has clearly outstripped the airspace available to be used, and this has aﬀected overall on-time performance. Further reform in China’s airspace management will provide better support for the rapid development of civil aviation. The second challenge is the shortage of aircraft captains due to the booming civil aviation business. It takes about 5–7 years to get a captain through training. The huge demand for captains has driven Chinese carriers to introduce more foreign pilots. At present, XiamenAir employs about 100 captains from various countries. But they complement our team and enhance our international operational ability. Another challenge that must be mentioned is the development of China’s high-speed railway (HSR). By 2018, China’s HSR track totaled 29,000 kilometers, accounting for more than two-thirds of the world’s total HSR track. HSR has a punctuality and price advantage that will deﬁnitely attract what were previously airline passengers. However, I also see this as an opportunity. Civil aviation has an irreplaceable advantage in speed and reach. “Long haul by air, short haul by rail” will be the trend. A HSR station embedded in the airport will extend the catchment area. Intermodal connectivity will not only bring greater convenience to passengers but also be a new driver of growth. Finally, there is China-US trade tension. This may have a serious impact on the global economy and increasing tariﬀs between the two countries does no good to the development of the global aviation industry. We need to keep an eye on the situation. Is there anything more to be done to improve infrastructure in China?
The Chinese government attaches great importance to the development of civil aviation. By the end of 2020, the total number of airports for scheduled, commercial air traﬃc in China airlines.iata.org
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Airport Key International Domestic
In the past five years, China has built 33 new airports, and another 50 airports will be completed within the next five years. RMB 100 billion has been invested in Beijing Daxing International Airport. The pace of construction and level of investment is stunning will reach around 260. In the past ﬁve years, China has built 33 new airports, and another 50 airports will be completed within the next ﬁve years. RMB 100 billion has been invested in Beijing Daxing International Airport. The pace of construction and level of investment is stunning. What’s more, aviation infrastructure development in China will be accelerated in the future. New airports under construction include Chengdu, Xiamen, and Qingdao. Heavily congested airports like Hangzhou and Shenzhen have plans to be expanded and the Civil Aviation Administration of China (CAAC) has clearly stated that it will focus on improving the competitiveness of the international hubs in Beijing, Shanghai, and Guangzhou. Moreover, world-class airport clusters will be essential to address the development in major Chinese economic zones, namely Beijing2019 – 04 Airlines
Tianjin-Hebei, the Yangtze River Delta, the Pearl River Delta, and the Guangdong-Hong Kong-Macao Greater Bay Area.
30 related routes to eight countries, with overall capacity increasing by 416% compared with 2013. We believe that the Belt and Road Initiative will be a strong driver in collaboration and the growth of the global aviation industry.
Are there any regulatory changes needed to support the industry’s growth?
Firstly, safety is the foundation for the sustainable development of the aviation industry. I think governments and civil aviation authorities still have room to enhance the airworthiness certiﬁcation procedure of new aircraft. Secondly, IATA predicts that global air transport demand will double by 2037. China, India, and Indonesia will be the important driving forces of the growth. The growth of these markets requires governments to look at the development of the aviation industry with a more open mind. For the good of economic growth, employment, and trade development, enhanced liberalization initiatives, such as visa policies, are essential. Governments also need to review rising taxation on the aviation industry. The global economy is under pressure. As a high-risk, low-proﬁt industry, the regulators need to consider easing the tax burden of the aviation industry. That will help airlines to deliver economic beneﬁts worldwide. And that, ultimately, will beneﬁt governments a lot more. Regionally, is there enough cooperation between countries to support the increased demand for air travel?
Globalization has united aviation into one market, leading to the need of cooperation and collaboration. The Belt and Road Initiative proposed by China aim at linking regional markets and bringing great opportunities to the industry. CAAC has signed bilateral aviation service agreements with 62 countries as part of the Belt and Road Initiative, driving an annual growth increase of more than 20% from 2013 to 2018. Fujian province is the core region of the Belt and Road Initiative. XiamenAir, headquartered in this province, has launched Airlines 2019 – 04
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Is the environment an issue for Chinese airlines or do you see this as mostly a European and US issue?
14.8% Including 2018, our fuel consumption has declined for ﬁve consecutive years, an accumulative reduction of 14.8%
The environment is an issue for the future of all humanity. The Chinese Government made a commitment at the  Climate Conference in Paris and further announced a three-year plan in 2018. As we move toward a more open world, XiamenAir embraces its environmental responsibilities. In February 2017, we signed an agreement with the United Nations in New York and became the ﬁrst airline in the world to cooperate with the UN on the Sustainable Development Goals. Including 2018, our fuel consumption has declined for ﬁve consecutive years, an accumulative reduction of 14.8%. We have lived up to our promise of [dealing with] emissions every year. If you could change one thing about aviation in general, what would it be and why?
I will continue with the environmental theme. All airlines can do more. As a partner with the UN to implement Sustainable Development Goals (SDG), XiamenAir has adopted a series of initiatives including new technologies, new materials, and new energy sources to promote environmental protection. We use lighter catering trolleys, for example, and control our airborne water amount. We have also replaced petrol vehicles with electric vehicles, use paper made from bamboo instead of trees, and classify our garbage to improve recycling. We plan to gradually eliminate all plastic items for food and beverages, and provide low-oil, low-salt, and low-sugar choices, highlighting both the environment and the health of passengers. airlines.iata.org
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Standing on our own Remco Althuis, CEO Air Seychelles, tells Graham Newton that niche carriers still have a role to play in the modern industry WORDS: GRAHAM NEWTON
What diﬀerence will the A320neo make to the airline?
It will make a huge diﬀerence. Our ﬂeet was quite old so this is the start of a modern ﬂeet that will give us big eﬃciency gains on the regional network. The ﬁrst aircraft will primarily operate to Johannesburg and Mumbai. At 168 seats, it will give us 32 extra seats and more importantly will allow us to ﬂy back from those destinations with a full payload. Because Seychelles is so isolated our nearest alternate airport is 1.5 hours away. So, the extra fuel we had to take on meant older engines didn’t allow us a full payload. Now we have an aircraft with lower operating cost, producing less emissions that provides a better customer experience.
Tell us about the overall strategy for the airline over the next few years?
perating as a smaller airline can be diﬃcult, having to comply with the same regulations as the industry heavyweights. Air Seychelles CEO Remco Altuis says that although tourism is vital for the archipelago and its ﬂag carrier, size doesn’t matter when it comes to promoting the best of aviation and encouraging change on issues aﬀecting the industry. Airlines 2019 – 04
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There is a ﬁve-year transformation plan to make the airline sustainable. The focus is on growing the domestic and regional network, which is why the A320neo is so important. We’re improving our inter-island ﬂights and scenic charter ﬂights. At the same time, as part of the plan we have stopped international long-haul ﬂights and we have given the A330 aircraft back. We’ve also reviewed the onboard product and with the arrival of the new aircraft we will oﬀer a streaming service so that customers can watch content on their own devices. Not only are we tapping into a new technological trend but also a couple of hundred kilos of weight will be taken oﬀ the aircraft. We don’t need screens and heavy servers anymore. That means fuel savings airlines.iata.org
“Retail has set the bar high and customers now expect instant gratification. Airlines have to do something similar” airlines.iata.org
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2019 – 04 Airlines
and fewer emissions. The business will also be diversiﬁed. Our ground handling sector is making good revenue, so we’ll ensure that remains the case and we’ll put more eﬀort into cargo. Overall, we are restructuring our cost base but keeping with the creole spirit of the airline.
Visitor numbers to the Seychelles are expected to grow up to 8% per annum
What are the major challenges you face in successfully implementing your strategy?
The fuel price is always a challenge as is the geopolitical climate. There has also been an inﬂux of capacity from the Middle East and Europe and that was a major reason behind our decision to stop international long-haul. The airline was just not in a position to compete. We’re keeping a close eye on cargo because that is struggling, and passenger demand usually follows. But actually, visitor numbers to the Seychelles are expected to grow 5%-8% per annum. We’re conﬁdent that the Seychelles will continue to attract tourists. Is aviation doing enough to promote diversity?
You can always do more. Seychelles is a diversiﬁed nation and is a matriarchal society, so we have a head start. There has always been a good mix of people working at the airline. In our management team, there are slightly more women than men. Our Head of Ground Services is female as is our Head of Flight Operations, and our Head of Legal. It is important to constantly engage with schools so the airline can reach the young talent pool and stay ahead of the diversiﬁcation and recruitment curves. Proper succession planning is a part of this too, as is making sure all staﬀ get the right amount of support.
It is important to constantly engage with schools so the airline can reach the young talent pool and stay ahead of the diversiﬁcation and recruitment curves.
taking environmental responsibility seriously front and center. For example, our ﬁrst A320neo is named after an endangered local bird, the Seychelles Paradise Flycatcher. We have decided to raise awareness about the environment of the Seychelles on our aircraft to sensitize our travelers about the importance of protecting the environment. You will also see information about the environment on our new streaming service that reduces weight and ultimately reduces emissions too. We no longer have straws onboard and we are working on a programme to stop single-use plastic. Soon, Seychelles is banning the import of plastic cups, so we have to work out how to deal with that as well. It’s good because it will force us to be creative and creativity is what we need. That’s how we will work more eﬃciently as an industry. The challenge for aviation is clear. It must answer the demand for its services with the minimum impact on the environment.
And how about the environment? Is the industry message getting through to the public?
Do governments understand the value of aviation?
You have to constantly make people aware of the message. At Air Seychelles, we are doing a number of things to help the environment and the messaging. Though they may be small, they add up to the global message that the industry is
Generally speaking, I think they do now understand the value of the industry. But what they don’t understand is the complexity of the industry. And that is often combined with a strong national pride in having an airline. For
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the Seychelles, an isolated country, aviation is obviously vital. No one doubts that. But explaining the network rationale, pricing, distribution and revenue optimization is a much more diﬃcult conversation. Airline margins and the overall impact on the economy have to be balanced if air travel is to be made sustainable. The point is that connectivity comes at a price. To sustain an airline business, it must be run on economic metrics. But the industry is not always explained to the right people. There needs to be a more holistic approach from governments and the industry. It is not just about talking to a transport minister or technical experts. Is technology the only way forward in improving the travel experience for the modern airline customer?
The human element will always be the most important. Flying is still a big deal for many people, especially emotionally. And it is humans that provide emotional support. It’s also worth noting that the accessibility of air travel means all ages and all types of people ﬂy. It’s hard to answer that with technology alone. Of course, technology empowers staﬀ as well as customers and that is vital. And the transactional side of the business has beneﬁtted enormously from technology. It is easy, simple, and gives control to the customer. It also helps to improve predictability for the airline and the consistency of service. Technology or humans, the focus has to be on the customer. How important is Etihad to your airline and do they contribute beyond the equity stake and network cooperation?
Etihad has a 40% stake in the airline. Previously, there was a very close relationship. They had a lot of key staﬀ here and we relied on them quite heavily. Of course, we still collaborate in areas such as general staﬀ training, and they support in maintaining our aircraft. Being able to take advantage of their network is crucial for us. At airlines.iata.org
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the same time, we’ve taken back several functions, including speciﬁcally crew training, ﬂight planning and ﬂight dispatch. We felt these were critical elements that needed to be controlled by Air Seychelles. To be sustainable, we have to stand on our own two feet. Where outsourcing makes sense, Etihad will be one of the options considered. Can smaller airlines survive in an increasingly competitive industry?
It can be tough if you’re a full-service carrier because there are no economies of scale and yet the airline needs to be compliant with the same regulations as everybody else and still ﬁnd the investment to compete. Fortunately for us, Seychelles is a beautiful country that will always have visitors and that gives us a demand to tap into. Stopping international long-haul reduces our exposure to global risks dramatically. There is no doubt that industry consolidation will continue but niche carriers can survive on their own if they execute their business strategy well at a detailed level. Your house must be in order and your costs must be competitive. Every aspect must be aligned with your business model and strategy. If you could change one thing about the industry, what would it be and why?
The cost and complexity of distribution. New Distribution Capability is deﬁnitely helping but it is the entire legacy side of the business that has to change. Airlines have to be quicker to market, they have to lower costs, and they have to oﬀer a more personalized proposition. That is at the core of the business. But many airlines have a legacy mainframe and corresponding mindset that has been around for decades. Retail has set the bar high and customers now expect instant gratiﬁcation. Airlines have to do something similar. They have to meet customer expectations and to do that, distribution must be radically overhauled.
1977 Air Seychelles was founded following a merger of Air Mahe and Inter-Island Airways
aircraft make up the Air Seychelles ﬂeet
destinations served by Air Seychelles across three continents
5 Air Seychelles is one of the ﬁve founding members of the Vanilla Alliance
2019 – 04 Airlines
Jeﬀrey N. Shane, IATA’s General Counsel, argues that the 737 Max controversy must not be allowed to destroy conﬁdence in the global regulatory system WORDS: JEFFREY N. SHANE
his year marks the 75th anniversary of the signing of the Chicago Convention—the global treaty that established the governing legal framework for international aviation. The signing took place on 7 December 1944, at the Stevens Hotel—today’s Chicago Hilton—after more than a month of negotiations. It is impossible to overstate the magnitude of what was achieved in Chicago on that day, particularly given what was happening elsewhere at the time. The D-Day invasion had taken place less than six months before, intense ﬁghting continued around the world, and the end of the conﬂict was still nine months away. The Chicago Convention is civil aviation’s charter; it is our constitution. At the ceremony, the American president of the conference, Adolf A. Berle, said it was the “foundation for freedom under law in air transport.” That it has enabled the astonishing growth of the industry globally while taking its safety record to unimagined levels is a tribute to the remarkable prescience and wisdom of the treaty’s authors. They somehow were able to see beyond the terrible fog of war and understand the contribution that civil aviation would make to peace and prosperity in the years ahead. It should remind us all that we have a vital interest
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It is clear that those who grounded the 737 Max ﬁrst were operating without real data to support the decision, but simply decided to pursue the most conservative approach
Restoring public confidence
in ensuring that its principles endure. That’s why there is reason to be troubled by the potential implications of the Boeing 737 Max controversy.
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It has become clear that well-meaning and highly competent regulators, doing what they do best, and doing it for the right reasons, can unwittingly destroy the public’s conﬁdence not just in a particular aircraft model, but more importantly in the global regulatory framework itself. We must do all we can to avoid that result. We grieve for all those who died in the two accidents—346 souls—and for their families and loved ones. Accidents of this kind are increasingly rare, and when they happen, they aﬀect all of us very deeply. These things are not supposed to happen. And they certainly aren’t supposed to happen twice in ﬁve months. So, perhaps it is understandable that diﬀerent civil aviation administrations (CAAs) responded diﬀerently. Everyone was in a state of shock. It’s clear that those who grounded the aircraft ﬁrst were operating without real data to support the decision but simply decided to pursue the most conservative approach. For safety regulators, it was not an irrational decision. The problem is that other civil aviation authorities—more determined to ensure that any 2019 – 04 Airlines
regulatory decision was wholly supported by actual data—did not ground the aircraft immediately. The US Federal Aviation Administration (FAA) was in this latter category, explaining that it is, and always has been, a data-driven agency. Given that the 737 Max had ﬂown something like 57,000 ﬂights in US airspace without an incident and that the actual cause of the two accidents was still unknown, the FAA felt it had no legitimate basis for grounding the aircraft. Eventually that data was obtained both from the second accident site and through satellite surveillance, following which both Canada and the US grounded the plane. Consistency
Every agency carried out its responsibilities in keeping with its best judgment, but the ﬂying public was left uncertain and confused. The intention of the drafters of the Chicago Convention was that international aviation would be governed by global harmonization, standardization, and consistency in the content and quality of regulatory oversight. That’s not what the public saw after the second Max accident. Instead, the public saw what appeared to be a strange competition among aviation regulatory agencies. Stories in the press merely reinforced the impression that the old order had given way to a new disorder—with CAAs everywhere forming their own views unconstrained by any need for a global consensus. Frankly, it was not a pretty picture. We are now approaching the end of the story. Regulators everywhere are considering whether, when, and how to safely restore the aircraft to service. Every government not only has the right but also the obligation to certify the airworthiness of aircraft operated by carriers registered in their territory. Nobody questions that. But the expectation within the Chicago Convention system is that the state of manufacture of the aircraft will have the primary responsibility for establishing the airworthiness of a new aircraft type, and other Airlines 2019 – 04
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If one or more CAAs declare the 737 Max airworthy and restore it to service while others remain unpersuaded, the viability of the global regulatory framework will be placed at grave risk.
states will merely validate that certiﬁcation—a less arduous undertaking. It is meant to be a coordinated and collaborative process. Moreover, Article 33 of the Convention requires that contracting states recognize as valid the airworthiness certiﬁcates of other contracting states, as long as the certiﬁcation process in question complies with ICAO standards. If one or more CAAs declare the 737 Max airworthy and restore it to service while others remain unpersuaded, the viability of the global regulatory framework will be placed at grave risk. Such disagreements would compromise further the public’s conﬁdence in the continued integrity of a system that has served the world extremely well for the past 75 years. We don’t have to guess what the consequences would be: if the public lacks conﬁdence in the integrity of the system, they are unlikely to have much conﬁdence in an aircraft recertiﬁed by the system. Credit
As the 737 Max is restored to service, it is essential that air travelers are assured that there are no lingering disagreements among CAAs regarding the criteria to be applied or whether the requirements have been met. If there are genuine professional diﬀerences among regulators—it certainly wouldn’t be the ﬁrst time—they should be resolved quickly. It is not the 1950s. Thanks to the spread of liberalization more people are ﬂying internationally than ever before. Demand for air travel is expected to double over the next two decades. Today’s air passengers do not want to hear that one CAA or another is the gold standard, thereby implying that others are something less. They want every CAA to follow and represent the gold standard. ICAO, the FAA, the European Aviation Safety Agency, and other CAAs deserve great credit for all they have done over the past few decades to raise the quality of aviation safety regulation everywhere. These eﬀorts have worked. It’s time to acknowledge that success, to celebrate it, but most importantly, to demonstrate conﬁdence in it. airlines.iata.org
Fuel for thought
Jet fuel will continue to power the industry for the foreseeable future. Overcoming its challenges will be vital to aviation growth WORDS: GRAHAM NEWTON
Jet fuel remains an important commercial and technical consideration in airlines’ strategy. One of the big commercial questions, for example, is how to improve sustainable aviation fuel (SAF) uptake. Though the Carbon Oﬀsetting and Reduction Scheme for International Aviation (CORSIA) has been adopted to compensate for aviation’s CO2 emissions, SAF will be important in helping airlines to reduce their carbon airlines.iata.org
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footprint and to reach the industry goal of carbon neutral growth. Technically, SAF are tried and tested. The ﬁrst ﬂight using a SAF blend was in 2008 and the ﬁrst plant producing SAF opened in 2016. “We have come a long way in a short period of time,” says Hemant Mistry, IATA’s Director for Global Airport Infrastructure and Fuel. Still, SAF represent just 0.01% of total fuel uptake. The challenge is to get this
ﬁgure up to about 2% by the middle of the next decade, an ambition that will require signiﬁcant government support through the introduction of policies to stimulate research and investment in SAF production. Six SAF plants are coming online in the next few years—either being built or having the ﬁnance to be built. Looking out to 2025, publicly announced projects alone should push SAF uptake in aviation to 3.5 billion liters annually, equating to 2019 – 04 Airlines
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More than 175,000 scheduled flights have used sustainable aviation fuels, equating to about 10 million liters
, 175 000
35% Jet fuel prices in Africa, for example, are around 35% higher than the global average approximately 1% of jet fuel uptake. Among the many recent commercial announcements is Neste’s decision to expand its renewable product capacity in Singapore by up to 1.3 million tons by 2022. Moreover, there will be a sixth SAF certiﬁcation pathway later this year or in 2020 that could be game-changer as it involves bio-diesel—which is already produced in large quantities. “That will show that the conﬁdence in SAF is there and that opportunities exist,” insists Robert Boyd, IATA’s Senior Manager, Aviation Environment. “But, of course, it needs the right government policies to make SAF prices competitive.” Digital connection
In the technical arena, digitization of the fuel management process is a major issue
that is already bringing enormous eﬃciencies to the fueling sector from tender/bid to invoicing. In the case of aircraft fueling operations, voice and paper have dominated communications between the cockpit and an into-plane service provider (ITP). Airlines have started to electronically interface with ITPs but only at stations where the number of fuel uplifts justify the cost involved. To help drive connection costs down and move everybody forward, IATA is developing an industry Fuel Operational Message hub that allows communications between ITPs and the cockpit using a single connection. IATA’s solution means airlines and ITPs will need to deploy a connection only once, and then just switch channels to communicate with any partner around the world using IATA’s XML fuel operational messages standard. “This will save airlines and ITPs time and money,” says Daniel Chereau, IATA’s Assistant Director, Commercial Fuel. “It will also help mitigate cybersecurity concerns as it greatly simpliﬁes the
Spotlight on… Training portal Fueling training is based on aircraft manufacturers’ Aircraft Maintenance Manuals (AMM) but, over time, each airline has applied its own approach to training design and delivery. This has resulted in into-plane service providers (ITP) having to deal with a variety of fueling procedures and training materials for the same aircraft type, which can quickly grow into a safety risk. IATA’s Fueling Training Portal will streamline training activity. Based on IATA guidance material, it will allow airlines to monitor the training status of ITP personnel trained through the e-learning platform. ITPs will also be able
to validate that personnel have undergone training necessary for practical proﬁciency. “The system will be initially developed in English but will be expanded to additional languages as demand dictates,” says Michael Moosberger, IATA Project Manager. “And aircraft types ﬂying the majority of global operations will have training modules in the system. “The full launch is scheduled for mid-2020 following a pilot in North America and Europe. This solution will deliver increasingly greater eﬃciency and industry beneﬁt as more ITPs and airlines use this standardized solution.”
multitude of digital connections existing in this area today.” There are some regulatory hurdles to overcome—such as some countries requiring paper proof that the fuel was “exported”—but the opportunity for greater eﬃciency is sure to drive the hub’s development forward. Proof of concept has been achieved and the emphasis is now on the roll out.
Both commercial and technical challenges will feed into what remains the primary jet fuel concern for many airline CEOs; its price. As it stands, oil looks set to average about $70 for 2019. While OPEC+ nations have agreed to reduce production, US tight oil producers continue to increase their output. In large part, the current state of global oil supply reﬂects the interaction between these two competing forces. There are, however, many other elements to consider, including the level of investment in reﬁning capacity and regional disparities. Jet fuel prices in Africa, for example, are around 35% higher than the global average due to government taxes and price-setting, cost-ineﬃcient infrastructure, and the
Discussion on… Harmonized fueling standards In the technical work stream, the harmonization of fuel handling standards is work in progress. The variances that have been noted by an in-depth industry group are numerous, though many are easily rectiﬁed. Each partner in the group is committed to make improvements and adapt requirements to the global standards. Filtration is a more complex undertaking. Water and dirt are routinely ﬁltered out during the fueling process with super absorbent polymers (SAP) particularly good at removing water. SAP particles, however, can escape the ﬁlter and potentially contaminate aircraft fuel. The task at hand, therefore, is to ﬁnd new ﬁlters that ensure the industry maintains its excellent safety and eﬃciency records in this ﬁeld. There is a self-imposed
deadline of 2020 to ﬁnd a drop-in alternative and work has already progressed to ﬁeld trials. These take place under a variety of conditions. The eﬀects of climate, fuel quality, fuel speciﬁcations, fuel volumes, ﬂow rates, and equipment are all tested. For example, some airports put a lot of fuel through a ﬁlter every day, while others might go days
without using a ﬁlter. Passing the rigor of the approval process will ultimately earn an inclusion in industry standards. “The technical challenges are considerable but so is the collaborative eﬀort of industry expertise to ﬁnd solutions,” concludes Hemant Mistry, IATA’s Director for Global Airport Infrastructure and Fuel. “I am sure we will solve these issues.”
On average, fuel accounts for around 25% of an airline’s operating costs
“The Central European Pipeline System (CEPS) used to distribute fuel throughout continental Europe is capacity-constrained” Hemant Mistry, IATA’s Director for Global Airport Infrastructure and Fuel
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2019 – 04 Airlines
The price of oil looks set to average about $70 for 2019
Daniel Chereau, IATA’s Assistant Director, Commercial Fuel
“IATA’s Fuel Operational Message hub will help mitigate cybersecurity concerns”
34 Katja Kleﬀmann, Lufthansa
“We have enough product. The problem is how to get it into our airports”
Patrick Callan, Chair, Commercial Fuel Working Group and Managing Director, Fuel Management, Delta Air Lines
“Uncertainty in the market leads to price volatility. Volatility leads to excited traders. And excited traders lead to airlines paying the wrong price for jet fuel” Airlines 2019 – 04
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lack of market competitiveness. Europe, meanwhile, is suﬀering signiﬁcant bottlenecks in jet fuel supply. Older reﬁneries in Europe are closing and production is shifting to mega-reﬁneries in the Middle East and Asia. Jet fuel is therefore being imported into such major ports as Rotterdam. “But the Central European Pipeline System (CEPS)—originally a military concept—which is used to distribute fuel throughout continental Europe is capacity-constrained,” explains Mistry. “It could mean fuel shortages at European airports, including the major hubs. All partners in the fuel supply chain will need to work toward a solution.” Lufthansa’s Katja Kleﬀmann agrees. She notes: “Missed investment in logistics is a big problem. We have enough product with new reﬁneries in the Middle East, China and elsewhere. The problem is how to get it into our airports.” The greater demand for low sulfur
0.01% SAFs represent just 0.01% of total fuel uptake currently
middle distillates from shipping due to a forthcoming mandate known as IMO2020 could also aﬀect the jet fuel market, although the extent of the impact is open to question. IMO2020
IMO2020 mandates a reduction of the sulfur levels in marine fuel from 3.5% to 0.5% from January 2020 and it is estimated that over half of the 87,000 active ships in the world are not yet compliant. One suggestion is that this will increase the crack spread, the diﬀerence in price between crude oil and the petroleum products the reﬁneries extract from the oil by “cracking” oil’s long hydrocarbons into shorter, more useful chains.And a one dollar per barrel increase in the crack spread pushes the industry’s annual fuel costs up $2.5 billion. In short, IMO2020 could hike up the cost of jet fuel for every airline. “I would sum it up this way,” says Patrick Callan, Chair, Commercial Fuel Working Group and Managing Director, Fuel Management, Delta Air Lines. “Uncertainty in the market leads to price volatility, which leads to excited traders. And excited traders lead to airlines paying the wrong price for jet fuel.” airlines.iata.org
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Advertising Feature: Heathrow Airport
Looking into the future A roundtable discussion organized by Heathrow Airport saw professionals from across the aviation supply chain and beyond discuss the future of ﬂight
IMAGES: SAM KESTEVEN
The air transport industry accounts for an estimated 2% of global greenhouse gas emissions and 12% of transportrelated CO2 emissions. Although that may seem small by comparison to road transport (74% of transport-related CO2 emissions), aviation must step up in the battle against climate change. At a recent roundtable discussion of aviation, business and environmental experts organized by London Heathrow to inform upcoming projects at its Centre of Excellence for Sustainability, the overriding view is that the air transport industry can do more to ensure a sustainable future for the sector. A report from the Intergovernmental Panel on Climate Change (IPCC) published in 2018 warned that the world only has until 2030 to avoid uncontrollable global warming. Raising concerns that the sector’s current eﬀorts are incompatible with the urgency of the climate change crisis, roundtable participants said the Carbon Oﬀsetting and Reduction Scheme for International Aviation (CORSIA) must realise its potential sooner rather than later. “You have got a voluntary scheme starting in 2021, and a mandatory one beginning in 2027, but then we have the IPCC saying we only have 11 years to bend the curve on emissions,” said IEMA (Institute of Environmental Management and Assessment) Policy and Engagement Lead
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Nick Blyth. “Policy has to do more to support innovation and be more biting.” “At least CORSIA gives us something to work with,” said James Cameron, a member of Heathrow’s 2.0 advisory group, adding that the industry needs to “start thinking harder” about where to channel revenue streams from oﬀsetting. Cameron highlighted the fact that some good ideas have come about when carbon has been given a value by governments or private contracts, and argued that there should be a deeper discussion around how resources derived from oﬀsetting are deployed. The participants said recent events in England such as the Extinction Rebellion protests “demonize” ﬂying. Richard Templer, Director of Innovation at Imperial College London’s Grantham Institute said that instead, “we need to take air transport emissions to zero while enabling the societal, economic and political beneﬁts that it has created.” A UN report released in 2016 revealed that, by 2050, the aviation sector could be consuming a quarter of the world’s carbon budget if it does not meet its emission targets. The industry is aiming to cap its emissions at 2020 levels, but air travel is expected to increase by around 5% per year up to 2034, and there were more than four billion passengers in 2017 alone. Templer added that airlines should present themselves as part of the solution and place
more emphasis on describing emissions as pollutants that require a “clean up”, with Cameron wondering if the industry “understands the appetite for these changes” among the general public. Both called for leadership from the air transport sector in increasing customer engagement too.
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A UN report released in 2016 revealed that, by 2050, the aviation sector could be consuming a quarter of the world’s carbon budget if it does not meet its emission targets airlines.iata.org
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“Because airlines have direct contact with customers, they have both the opportunity and responsibility to enter into a purposeful dialogue about how to decarbonize ﬂight,” explained Templer. “Leadership in such dialogue means that the questions that are solicited are pertinent, based in potential solutions and are never neutral about the climate change impact of ﬂying as it currently operates. You have to be saying ‘we know what we have to do, and this is what we want to do’.” The roundtable panel agreed that collaboration will be key in reinventing aviation – how and where we ﬂy, as well as speed, height and distance – and said that matching up with the relevant technologies can play a signiﬁcant role in helping to scale and develop environmentally-friendly initiatives. Aviation could also look at teaming up with other sectors ﬁghting a battle against carbon emissions, pooling their resources to create technologies of the future. “Airlines and airports should ally with the cement and steel industries to create technologies that remove carbon, so customers know that every time they ﬂy they are helping the environment,” said Templer. “That would be a transformative message.” Gary Cutts, Future Flight Challenge Director at Innovate UK said that there is an appetite for co-operation among stakeholders and although “aviation is quite compartmentalized, the people [in the industry] we have talked to have shown a great desire to work with new entrants” in ﬁnding solutions. One such solution is looking at how the future of ﬂight will develop in the years ahead, especially in relation to carbon-free
2019 – 04 Airlines
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ﬂying. Some on the panel questioned whether long-haul ﬂights will continue to exist in the next few decades, and suggested that more short distance ﬂights would open up the opportunity to use electric aircraft in the near future. Cutts explained how traveling shorter distances more often could transform the air transport sector, saying that he has researched capital utilization in the past and considered how aircraft might not be owned by airlines in future but instead travel from east to west in hops, with passengers opting in for certain parts of the trip. “The whole business model may change, driven by consumer’s demand for low-carbon travel,” he said. There was widespread agreement that the electriﬁcation of long-haul aircraft will be a particularly hard nut to crack. A report from consultancy ﬁrm Roland Berger highlighted that there are 169 projects for small electric aircraft under way. Two-to-four-seat electric planes that can travel 50 miles are already possible, while 400-mile ﬂights with 10 seats should be available within the next decade. “Anything under ﬁve seats in the current air transport system contributes just 1% of fuel burn; everything over that contributes 99%, so the real challenge is how we scale these technologies,” said Ron van Manen, Programme Manager at the EU’s Clean Sky 2 partnership. “If we can get that technology up to 50 or 100 seats and up to 600 miles or 1,000 miles, I think it gets interesting. But if the needle sticks at 500 nautical miles, it’s not going to have any impact.” Van Manen disagreed with Cutts on the ‘shorter, more often’ method of ﬂying, saying
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that passengers choose to ﬂy with the airline they like, not the most environmentally friendly. Although the panel oﬀered up the possibility of greener fuel types as a positive development, and discusses the possibility of electric aircraft, van Manen brought a dose of reality to how airlines view the issue. “The elephant in the room here is life-cycles,” he said. “Each ﬂeet replacement cycle is a $5tn investment. The 2020s will determine what is available in the 2030s, and what people are ﬂying in the 2030s will still be used in 2050. We can’t just go to airlines and say ‘you have to make another $5tn investment, straight after the last’.” His view led to a discussion around design change and what this will mean in practice
“The elephant in the room here is life-cycles. Each ﬂeet replacement cycle is a $5tn investment. We can’t just go to airlines and say ‘you have to make another $5tn investment, straight after the last’” Ron van Manen, Programme Manager at Clean Sky
– not just for aircraft, but also for airports and surrounding infrastructure. Cameron said it is “about connections in the physical space” and explained that electric aircraft may require vertical launches, huge wing spans and other considerations that make it a “challenging” process. Continued development of technological innovation is critical for a greener aviation industry, with Paul Robinson, Head of the Department of Aeronautics at Imperial College London saying that his team are looking at how to store electrical energy in ﬂight. The UK government has just closed a consultation into the future of aviation, and envisages that hybrid or all-electric aircraft will be in service by 2050. This follows the successful short-distance ﬂight of the E-Fan all-electric aircraft across the English Channel in 2015, while Airbus and Rolls Royce’s E-Fan X demonstrator is in the developmental stage. It is hoped that this will help establish certiﬁcation requirements and pave the way for electric air travel across Europe. “The pressure is on to move as rapidly as we can towards reduced or even zero-emission aviation, and there are now full development programmes moving forward hybrid and all-electric solutions,” said John Turton, Aerospace Committee Member at the Institution of Mechanical Engineers. “The 2050 timeframe certainly seems feasible to me, but it’s a process of taking one step at a time and we are only at the start of this process. It would seem that a long-haul electrical hybrid is still a long way oﬀ, though.” An industry-wide shift to electric aircraft has many implications, not least the issue of
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“We need to take air transport emissions to zero while enabling the societal, economic and political beneﬁts that it has created” Richard Templer, Director of Innovation at Imperial College London’s Grantham Institute
Rachel Everard, Rolls Royce Head of Sustainability makes her point
electric charging infrastructure. Whether airplanes would be charged on arrival or have their batteries replaced is an unknown, and feeds into a concern regarding turnaround times. In addition, the weight of batteries built into the plane may increase landing speeds which could have an eﬀect on runways and air traﬃc control. The panel also discussed the issue of pollution coming from road traﬃc used to get people to the airport and aircraft, again suggesting the idea of pods traveling to and from the airstrip. The use of blimps ﬁtted with GPS tracking to transport freight was another idea ﬂoated by the group, with UK Power Networks Services Director Ian Smyth
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saying that total change is inevitable for any such ideas to take shape. “We will need to think about the planes, how they sit on runways, and secondary and tertiary support,” said Smyth, who estimated that electrifying all long-haul aircraft in the UK will require around 5% of the country’s total electricity consumption. “This will need a whole-system approach, bringing together aeronautical and electrical engineers, along with environmental groups.” Smyth said that infrastructure projects need a collective approach from the beginning, instead of “bringing the bulldozers in” before the energy professionals have looked at the planning process. Again, Van
Manen oﬀered a realistic take of where the industry is at currently, explaining that there is “no infrastructure whatsoever” to produce the amount of electric charging that the air transport sector would require. “When you consider the challenge of electrifying around one billion cars on the road, aviation can probably learn some lessons in terms of thinking a little bit too optimistically,” he said. Everyone agreed that anticipating future trends in environmental issues is diﬃcult, with forecasts on electriﬁcation changing all the time, and the reliability of electricity as a power source for transport still not an exact science. Heathrow’s Strategy Director, Andrew MacMillan said planning long-term infrastructure is a problem “when you don’t know what will be available in the future.” Although many smaller businesses have grand designs for the future of aviation infrastructure through the convergence of renewable energy, storage and electric vehicles, some of the panel urged caution. Smyth said that when it comes to making a case for electriﬁcation at an airport, investors should learn lessons from projects like England’s high speed railway (HS2) which has undergone rigorous feasibility studies, consultations and planning investigations. He added that the crux of the case with airport electriﬁcation is that it must be “cheaper, better for customers, and better for the environment.”
For more information on London Heathrow’s Centre of Excellence for Sustainability, visit https://your. heathrow.com/centreofexcellence/
2019 – 04 Airlines
Passengers with Disabilities
Peace of mind Standardized services will help to reinforce the positive steps already taken by airlines to provide safe and reliable air travel to people with disabilities WORDS: GRAHAM NEWTON
early 70 years ago, IATA member airlines agreed Resolution 700. It made air transport the ﬁrst in the world to set standards on the acceptance and carriage of passengers requiring assistance. In the years since, however, national or regional regulations covering passengers with reduced mobility (PRM) and various forms of disabilities have proliferated. The situation has become complicated with carriers subject to diﬀerent rules depending on a ﬂight’s destination. As a case in point, the United Kingdom is considering a passenger charter, which, if adopted, could contravene international treaties. “We know that many passengers with disabilities rely absolutely on their mobility aids and we recognize that any damage to them can be a serious, even traumatic, issue,” says Alexandre de Juniac, IATA’s Director General and CEO. “Our aim is to ensure that passengers with disabilities can travel with peace of mind knowing that their mobility aids will arrive undamaged and ﬁt for use.”
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30% The total number of wheelchair requests in 2017 was approximately 15 million, representing a 30% increase on 2016
Airlines have committed to provide clear guidance to passengers with disabilities on their requirements for the carriage of mobility devices and medical equipment. Also ongoing is staﬀ training to ensure the proper knowledge, skills, and abilities are disseminated to provide passengers with disabilities a seamless and digniﬁed travel experience. To clarify the situation further, IATA has focused eﬀorts on a series of principles on passengers with disabilities and is urging governments to consider these in the development of national legislation and policies. These principles underpinned the unanimous approval of a resolution at the 75th IATA AGM in Seoul to improve the air travel experience for the estimated one billion people living with disabilities worldwide. The resolution further requests that ICAO applies IATA’s core principles as the basis for its multilateral initiatives on accessibility for passengers with disabilities. This would help to harmonize national legislation and regulations that might otherwise confuse passengers
Passengers with Disabilities
IATA survey There has been a notable increase in requests for wheelchair assistance being received by airlines. Between October and November 2018, IATA conducted a survey of airline members to better understand the scale of the increase in wheelchair requests and whether these are limited to speciﬁc routes/geographies. The results of the survey suggest that:
The increase in assistance requests is signiﬁcant. The total number of wheelchair requests in 2017 was approximately 15 million, a 30% increase on 2016 Many assistance requests come from passengers who need support at the airport but not necessarily
wheelchair assistance, such as elderly passengers who do not feel conﬁdent navigating their way through busy airports on their own To assess this issue and properly assist airlines and passengers, IATA is holding information exchange workshops in partnership with regulators, airports, ground-handlers,
manufacturers, and disability associations in Europe, India and the US. The ﬁrst workshop took place in the UK in May 2019 in tandem with the Heathrow Access Advisory Group Requests are more prevalent in certain geographies, particularly on ﬂights to and from India, the US, UAE and Europe
41 and airlines. Core areas and process issues such as harmonization are covered by the principles. For the consistent application of policies, it is fundamental that legislation at the national and regional level applies a common, inter-operable deﬁnition when referring to passengers with disabilities. In turn, this should facilitate greater regulatory harmonization on a global level. IATA is also calling for regulators to consult with the airline industry and other air transport sector stakeholders before legislation, policies, procedures or practices are adopted. This allows a proper impact assessment to be made so that the costs and beneﬁts of any proposed regulatory action are clearly deﬁned. “Airlines were ahead of their time when, 70 years ago, we set out standards to ensure passengers with disabilities had access to air travel,” says de Juniac. “But now we need to go further. We applaud the UN Convention on the Rights of People with Disabilities. The industry is committed to ensure passengers living with disabilities can travel safely and with dignity.” At IATA’s AGM, Eric Lipp, Executive Director,
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Open Doors Organization, said that regulatory inconsistency is one of the biggest issues in providing passengers with disabilities with a safe, reliable, and digniﬁed service. In the US, for example, there is regulatory ambiguity surrounding emotional support animals while, more generally, wheelchairs and scooters have to account for strict guidelines about lithium-ion carriage by air. Decisions about how passengers with disabilities travel in the future need to be made today. Lipp noted this isn’t just a social and human rights issue but a ﬁnancial one too. The group is already the largest minority and, as the world population ages, will only grow. Technology has a big role to play. In Japan, some providers are working on an automatic wheelchair that can be summoned by smartphone, scan its client’s boarding pass, and then take the client to the correct gate. “People want to be independent,” said Lipp, but noted that this independence will only be possible if the industry, governments and supporting organizations work together.
“Our aim is to ensure that passengers with disabilities can travel with peace of mind knowing that their mobility aids will arrive undamaged and ﬁt for use”
Alexandre de Juniac, IATA’s Director General and CEO
2019 – 04 Airlines
60 seconds with...
Ed Bastian CEO, Delta Air Lines
“Whatever the politics of the day it doesn’t change our long-term aspirations” Tell us about the airline’s performance.
We are having a good year. Top line revenues are up in excess of 8%. There is a strong demand for travel and Delta is well positioned to address that. But we must always watch the macro indicators, such as fuel prices and geopolitical tensions. You have to, especially as a large international carrier. Is the US-China trade war or tensions along the Mexican border aﬀecting business?
We are always concerned with anything that causes disruption to trade. But our US-China traﬃc is up 25%. They are two of the largest markets in the world and there is still strong traﬃc between the two countries. Cargo is the one part of our business that has been aﬀected by trade concerns. Cargo is not a signiﬁcant contributor to our bottom line though. It’s roughly $1 billion out of $50 billion in revenues. So, it’s not something that will change our strategy, but we hope the situation improves. Regarding Mexico, we have a great partner— Aeromexico. Mexico is a young market. There is a really bright future together with Aeromexico. Whatever the politics of the day it doesn’t change our long-term aspirations.
In brief… Delta
destinations across As one of the four legacy carriers in the US, the airline currently operates more than 5000 daily ﬂights across the world countries Headquartered at Atlanta, Delta Air Lines has a ﬂeet of 918 aircraft, comprising Airbus, Boeing and McDonnell Douglas aircraft Delta Air Lines was founded in 1924, with the ﬁrst ﬂight taking place in June 1929.
So, you are a believer in consolidation?
If you look at the US, consolidation was one of the forces that helped stabilize the industry. And competition is still ﬁerce— there are four major carriers about the same size. In Europe it has helped, as you can see by improving results. Consolidation allows airlines to bring scale to the market. This is a capitalintensive industry and so scale really helps. Most importantly, it beneﬁts the consumer. Consolidation means airlines can invest in the overall product, adding quality and value.
Are all your partnerships living up to your expectations?
What challenges do you see ahead for the industry?
Aside from the partnerships mentioned, we own 10% of Air France-KLM and there is a very strong relationship there. We hope Virgin Atlantic will join the joint venture (JV) once we get the relevant approval and we will acquire a 49% stake in Virgin Atlantic. It gives us the ability to connect over signiﬁcant hubs in Europe. So far, some $2 billion has been invested in stakes in our partners. But I don’t envision a future where Delta controls them. The investment was for strategic reasons, not ﬁnancial.
Safety is always something you keep working at. The aviation system is the safest form of transportation in the world and we want to keep it that way. I think too many people are looking for the end of economic growth and are being too cautious. That stops investment and you end up causing what you fear. At Delta, we are investing back into the business and it is helping our proﬁtability. Our environmental responsibility is also vital. It is in everybody’s interest to keep the planet healthy.
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WE’ RE CREATING A MORE CO NNECTED EVERYTHI NG Collins Aerospace has long been a leader in connected systems and services. Now, we’re creating an even more connected future. We’re linking key touchpoints and partners across the commercial aviation ecosystem – from passengers, airlines and airports to aircraft manufacturers, system suppliers and service providers. This connectivity is empowering the industry to unlock new insights that deliver improved efficiencies for operators and more seamless and rewarding travel experiences for passengers. It’s how we’re developing digital solutions to make big advances – and making connections that redeﬁne aerospace.
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