2019 – 06
REPACKAGING THE REGULATIONS Improving environmental measures to deal with cabin waste requires a risk-based, global regulatory approach
2019 – 06
CEO Interviews Air Astana, Year in Quotes 2019 | Slots WSG revamp IATA Opinion Asian potential in spotlight | Maintenance Repair Working in partnership | Cyber Beware the threat | Innovation Accelerate@IATA
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OUT OF SIGHT. INSIGHT. In the air and everywhere. Round-the-clock service representatives, a growing global network, full-flight data, and an app that tracks your orders â€“ solutions have never been more clear.
Contents 2019 – 06
24 Airing opinions
7 Alexandre de Juniac, Director General
To conquer carbon, the focus must be on sustainable fuels and technology
A collection of the best quotes from airline CEOs throughout 2019
Dossier 18 An alliance to beneﬁt global aviation
27 Repackaging the regulations
Improving worldwide airport slots
For carriers to achieve real change, rules on the issue of cabin waste recycling and disposal need to be redrawn together
19 IATA Opinion: Ma Tao, Senior Vice President, North Asia
Asian growth robust enough to succeed
32 Shining a light on parts purchasing
Simplifying the MRO market for all
10 IATA and industry update
NDC and aggregators, Freight growth slows, Airlines invest in sustainability
34 Airlines must address cyber risk
16 Data: In numbers
36 100-day transformation
Global Passenger Survey 2019
Giving start-ups a chance to impress
See you in 2020...
20 Tactical thinking
38 Setting the agenda
Air Astana President and CEO Peter Foster on the importance of ﬂexibility
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 email@example.com Publishing director Aaron Nicholls
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Standing up to threats on the horizon
Advertising Business development manager Nigel Collard +44 (0)20 7324 2763 firstname.lastname@example.org
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Printed by PCP Airlines. ISSN 1360-6387 The opinions expressed in this publication are those of the individual authors or advertisers and do not necessarily reﬂect those of Redactive, IATA or its members. The mention of speciﬁc companies or products in articles or advertisements contained herein does not imply that they are endorsed or recommended by IATA or Redactive. The paper in this magazine is elemental chlorine free (ECF), manufactured within ISO 4001 environmental management standards and is sourced from sustainable managed forests. All of this publication’s content is subject to copyright, design rights and trademarks of Airlines. and third parties.
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2019 – 06 Airlines
The Incredibl E195-E2. THE PERFECT COMBINATION OF GREATER EFFICIENCY AND INCREASED REVENUE. • Up to 146-seat conﬁguration, with no middle seat • 25.4% better fuel efﬁciency per seat* • Improved performance from hot and high and short ﬁeld airports
#E2 2Pro oﬁtHunt nteer nt #InccreediblE2 In ncrred diblE2.co om
*compared to ﬁrst-generation E195.
C41294.023_Embraer_TechLionRunway_AirlinesInt_Dec19_270x210_v1.indd 1 IATA.DEC19.006.indd 6
03/12/2019 05/12/2019 16:31 13:47
Director General and CEO, IATA: Comment
Carbon, not flying, is the enemy As we head into a new year, the air transport industry and its partners must all focus on technology and sustainable fuels to meet the climate challenge
ILLUSTRATION: SAM KERR
make no apologies for making sustainability once again the subject of my comments for Airlines.. As I write this, the world is gathering at COP25 in Madrid. The calls for action are growing stronger, with a new industry—fashion, meat farming, computing—in the ﬁring line every day. We know aviation is no exception to this scrutiny. Our industry accounts for 2% of global man-made carbon emissions. But the growth in passenger demand, particularly from developing markets, means passengers and policy makers need to be reassured of our commitment to sustainability. That is not in doubt, as the air transport industry has committed to: improve fuel eﬃciency by an average of 1.5% annually between 2009 and 2020. We are achieving 2.3%. carbon-neutral growth from 2020. And the ICAO Assembly conﬁrmed its resolve to make a success of CORSIA—the Carbon Reduction and Oﬀsetting Scheme for International Aviation. It will enable us to work towards capping the growth in CO2 from aviation and generate $40 billion in climate funds. cut our net emissions to half 2005 levels by 2050, in line with the Paris Agreement 2°C goal. Industry experts are collaborating to map out how we can realistically achieve this. To achieve our 2050 goal will involve a huge energy transition in aviation. For over a hundred years, we have had a fuel that has served aviation reliably and safely. But it is a fossil fuel and its time is coming to an end. Sustainable Aviation Fuels (SAF), which have only been in commercial development for a decade, are the answer. They can reduce lifecycle carbon emissions by up to 80%. To date, over 215,000 commercial ﬂights have been powered by SAFs. They
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are a reality. But they are in short supply—serving only 0.1% of aviation’s energy needs. The 14 production facilities under construction now will bring that close to 2% by 2025. It could be a tipping point in aviation’s energy transition, but we need help. Firstly, from governments. Government incentives should aim to bring down costs while scaling-up production to make sustainable aviation fuels commercially viable. We also need help from our traditional energy suppliers, as they have the expertise, distribution networks and ﬁnances to make a real diﬀerence. We are seeing some investments in SAF production, but so far these have been only small steps. This must change, and fast. These requirements will only gain momentum if passengers can see the value of what we are doing. Transparency on our past and present actions is essential so that people have the facts needed to make the right choices on mobility. I believe that aviation’s track record and targets should reassure our passengers that they can ﬂy proudly and sustainably. As we move into the New Year, let us remind ourselves that in the climate change battle, carbon is the enemy. And we will defeat it with SAF and other technologies so future generations will live in an even more connected world than we have today.
Alexandre de Juniac: Director General and CEO, IATA 2019 – 06 Airlines
Airlines 2019 â€“ 06
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The race that stops the nation. Founded in 1861, the Melbourne Cup sees international runners and riders contest the A$8 million ($5.4 million) prize. Animal welfare is a key priority for IATA, and the IATA CEIV Live Animals standard ensures that the stars of the show—the racehorses—are transported with the utmost care and attention as they bid to put their names in the history books.
The Big Picture
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2019 – 06 Airlines
Digest What’s next for aggregators and NDC? New Distribution Capability (NDC) oﬀers an opportunity for airlines, travel management companies (TMCs) and online travel agents (OTAs) to embrace technology, innovation and to unlearn the past. Making the most of this requires good faith and willingness to adapt. At the Airline Industry Retailing Symposium in Bangkok, the discussion focused on how the role of NDC shapes up in terms of aggregation, with panels featuring representatives from global distribution systems (GDS) and start-ups—all eager to reassure airlines that change is not to be feared, but rather to be looked upon with an open mind and desire for change. The GDS panel explained that the role of aggregation is to normalize a
Emma Wilson, Vice President Marketing, Sabre. Accepting the gauntlet laid down before them, the start-ups panel said they are entering the market to help airlines “simplify their oﬀering” and grow the business. Lucy Illidge, Commercial Strategist, Kyte said that start-ups are at the cutting edge of tech. The advantage is obvious, but airlines need to make decisions quicker, the panel agreed. Embrace the culture of change and new technologies, the start-ups urged as they called on airlines for help. “Start-ups are fast growing entities— it is usually a good bet to be open. Don’t look at the state we are in now,” said Steve Domin, CEO and Co-Founder, Duﬀel. “Try something new.”
range of content in the same place using diﬀerent sources, deconstructing and presenting to the buyer—corporate or otherwise—in an understandable way. They were unanimous in the view that the journey to NDC is a slow road, but Ian Heywood, Travelport’s Global Head of Product and Marketing said that with expertise and willingness, the global distribution systems can make a breakthrough in the next decade. Panelists also agreed that the path to NDC requires airlines to adapt, such as oﬀering more speciﬁc search requests, increased openness to new learnings and a desire to provide “better, faster, quicker responses” to the oﬀers they receive from GDS. “It’s about ﬁnding a balance between disruption and innovation,” added
Airlines 2019 – 06
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“Start-ups are fast growing entities—it is usually a good bet to be open. Don’t look at the state we are in now, try something new” Steve Domin, CEO and Co-Founder, Duﬀel
Mindset change required to maximize hydrant potential The safe and eﬃcient fueling of aircraft is at the heart of the aviation fuel sector. Hydrant systems do an excellent job the vast majority of the time, but they are complex and challenges persist. Much of hydrant work is on an existing system at an existing airport. It is therefore necessary to minimize the airport operational impact, such as the closure of a taxiway. At Geneva International Airport, for example, a mobile crane, directional drilling, and micro-tunneling all helped when it extended its fueling network. Constant safety assessments— such as jet blast—underpinned these eﬀorts. Rather than speciﬁcs, however, it is overall mindsets that needs to change, according to John Pitts of eJet International. Speaking at IATA’s Aviation Fuel Forum in New Orleans,
COMPETITIVE AVIATION SECTOR COULD ADD €20BN TO ITALY’S GDP The International Air Transport Association (IATA) has called on Italy to work together with aviation to deliver economic prosperity and a more sustainable air transport industry in the region. Aviation supports 714,000 jobs and contributes €46 billion ($50.9 billion) to the Italian economy, roughly 2.7% of Italy’s GDP. IATA has urged the government to pursue a collaborative and competitive air transport agenda, which it said could create 200,000
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more jobs and nearly €20 billion ($22.3 billion) in additional GDP by 2037. The more competitive its aviation sector, the greater the beneﬁts to Italy in terms of prosperity and employment “The strength of Italy’s manufacturing exports, its services, and its tourism industry relies on air transport,” said Rafael Schvartzman, IATA Regional Vice President for Europe. “The more competitive its aviation sector, the greater the beneﬁts for prosperity and employment in Italy.”
Pitt warned that installing or extending hydrant systems is “not for inexperienced parties.” Best practice for work on a hydrant system starts with planning early. All project delivery options come with pros and cons. Engineering, procurement, and construction (EPC) contracts are one possibility. These types of contract are divisible into various components and so can keep a client involved. Turnkey projects where the owner is eﬀectively just handed the keys once the project is complete, can be less successful. It is essential not to go with the lowest price option and competence must be evaluated carefully. Pitt added that having the right people on hand is vital too. “Always procure the best expertise,” he said.
Revenue generator: Aviation contributes €46bn to the Italian economy
Legal Symposium 19-21 February New York, US World Cargo Symposium 10-12 March Istanbul, Turkey Safety and Flight Ops Conference 31 March-2 April Baku, Azerbaijan
IGHC Conference 17-20 May Mexico City, Mexico Aviation Data Symposium 10-12 June San Francisco, US Cabin Safety Conference 16-18 June Macao World Financial Symposium 28 September -1 October Dubai, UAE Global Airport & Passenger Symposium 13-15 October Osaka, Japan Airline Industry Retailing Symposium 27-29 October Vancouver, Canada
2019 – 06 Airlines
“As demand more than doubles over the next two decades, the critical role that aviation plays in Africa’s economic and social development will grow in equal proportion” Alexandre de Juniac, IATA Director General and CEO
Capacity issues ‘need aligned approach’ Industry standards are the key to driving capacity in the future but full alignment is a huge challenge, agreed a group of panelists on a thought leadership roundtable on building capacity for the future. The diﬀerent requirements from airlines, airports, and governments that exist today hinder the industry’s ability to maximize the potential of the aviation system. At the Global Airport and Passenger Symposium in Warsaw, a panel agreed that there is a minimum baseline that should be achieved across the diﬀerent sub-sectors of the air transport industry.
Unsolved matters: Diﬀerent requirements from diﬀerent sub-sectors are exacerbating capacity problems worldwide
“We are the ones that should be shaping the industry,” said Simon Wilcox, Head of Transformation, Automation and Innovation, London Heathrow Airport. Data will be equally vital. At the moment, sharing it across the aviation value chain is still a problem for a variety of reasons and duplication is rife. A trusted framework for data exchange was therefore identiﬁed by the panel as essential to dealing with capacity issues. “Passengers have to know they can trust us,” said Leen van Duijn, Vice President of Security Service, KLM.
IATA urges Africa to embrace air transport
African aviation can drive economic and social development with the help of governments and industry, IATA has said.
Changing the game: Implementing the Single African Air Transport Market (SAATM) would increase connectivity throughout Africa
Airlines 2019 – 06
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Priorities for improving aviation and delivering economic beneﬁts across the region include safety developments, ensuring cost-competitiveness, opening the continent to travel and trade, and addressing gender diversity. In addition, schemes within the continent which can help improve aviation’s capability to drive change in Africa include: The African Continental Free Trade Area (AfCFTA)—to boost intra-Africa trade through the elimination of import duties and non-tariﬀ barriers The African Union (AU) Free Movement Protocol—to ease the severe visa restrictions that African countries impose on African visitors Single African Air Transport Market (SAATM)—to open up intra-Africa air connectivity
INDIGO JOINS IATA
Governments “picking the wrong fight” over taxes Tax revenues from airlines and passengers in 2019. Equivalent to 45% of the air transport industry’s gross value added
Indian low-cost carrier IndiGo has joined IATA. Indigo becomes the fourth Indian airline to join the trade association of the world’s airlines, following in the footsteps of Air India, Spice Jet and Vistara. The airline said the move will help increase its global reach .
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Alexandre de Juniac has said European governments are “picking the wrong ﬁght” in taxing airlines over environmental concerns. Speaking at Wings of Change Europe in Berlin, the IATA Director General and CEO said governments should work together with aviation to help create a sustainable industry. Many European countries impose environmental taxes on passengers, but IATA says such methods do little to reduce emissions.
The air transport industry continues to invest heavily in aircraft eﬃciency, has committed to reduce total emissions to half 2005 levels by 2050, and is oﬀsetting emissions from 2020 through the Carbon Oﬀsetting and Reduction Scheme for
International Aviation (CORSIA) scheme. Commenting on proposals in Germany that would double the taxation on passengers, de Juniac said “the goal must not be to make ﬂying unaﬀordable” but rather to help people ﬂy in a way that aligns with climate fears. “Neither should [the goal] be to cripple industry and tourism which creates jobs and drives development,” said de Juniac. “Flying is not the enemy—it is carbon.”
LEADING AIRLINES ANNOUNCE SIGNIFICANT INVESTMENTS IN SUSTAINABILITY IATA has welcomed news of investment in sustainability by two of the world’s leading airline groups. Qantas Group has announced a commitment to making air transport more sustainable through a policy of oﬀsetting aimed at reducing its net emissions up to zero by 2050. An investment of A$50 million ($34.1 million) has been set aside to help the group and its carriers—Qantas, Jetstar Australia and New Zealand, QantasLink and Qantas Freight— achieve its goal. The news follows
IAG’s pledge to spend $400 million in sustainable aviation fuel over the next 20 years, including plans to build a plant that will convert household waste to jet fuel. IAG—which owns British Airways, Iberia and Aer Lingus— also announced that it will oﬀset carbon emissions for all UK domestic ﬂights from 2020, and is investing $27 billion in replacing its aircraft with more eﬃcient models. Speaking to Airlines. about the initiatives, IATA’s Director, Aviation Environment Michael Gill
said he hoped that other carriers will take inspiration from the work of both airline groups. “We applaud all airlines that can go beyond the collective industry goals,” said Gill. “The announcements show leadership in climate action alongside other leading airlines making signiﬁcant contributions to commercialising sustainable aviation fuel.”
2019 – 06 Airlines
Airlines 2019 – 06
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Air transport supports 800,000 jobs in the United Arab Emirates
, 800 000
AIR CARGO EXPERIENCING “VERY TOUGH” YEAR
ALBAKRI: IMPROVEMENTS IN AIRSPACE CAPACITY “ESSENTIAL” TO UAE GROWTH IATA has reaﬃrmed the importance of increasing airspace capacity in the United Arab Emirates (UAE). Muhammad Ali Albakri, IATA Regional Vice President for the Middle East, said that continuous improvements are required if the UAE is to remain a leading global aviation hub. “To maintain the country’s competitiveness as a leading global hub, suﬃcient airspace capacity to meet demand, infrastructure investments and rapid implementation of new technology are essential,” said Albakri. Air transport supports 800,000 jobs and contributes $47.4 billion to the local economy, some 13.3% of the nation’s GDP. According to the latest IATA study, pursuing a positive agenda for aviation could see that rise to an additional 620,000 jobs and $80 million in GDP by 2037.
Air freight demand has made a slow start to the peak season, according to the latest analysis from IATA. Freight demand— measured in available freight tonne kilometers (FTKs)—fell 3.5% in October, compared to a year ago. It is the 12th consecutive month of year-on-year decline. Meanwhile, capacity— measured in available freight tonne kilometers (AFTKs)— outstripped demand for the 18th month in a row as it rose by 2.2% in October, compared to the same period in 2018. IATA said that it had been “a very tough year” for those in the air freight industry. Air cargo continues to suﬀer from a number of diﬀerent negative factors, including the US-China trade war, an overall deterioration
in global trade, and slowing economic growth across the board. “Air cargo’s peak season is oﬀ to a disappointing start,” said Alexandre de Juniac, IATA's Director General and CEO. “Demand is set to decline in 2019 overall— the weakest annual outcome since the global ﬁnancial crisis. It has been a very tough year for the air cargo industry.” In the regional markets, only Africa recorded growth in air freight demand. Airlines in Asia-Paciﬁc and the Middle East suﬀered a sharp deterioration in year-on-year growth, while Latin American and European carriers felt a more moderate decline. African carriers enjoyed an increase in demand of 12.6% compared to October 2018.
3.5% 2.1% decrease
PASSENGER FIGURES CONTINUE MODERATE UPTURN The latest IATA ﬁgures show that demand—measured in total revenue passenger kilometers (RPKs)—rose 3.4% year-on-year in October. This was a modest slowdown
from 3.9% growth recorded in September. Capacity—measured in available seat kilometers (ASKs)—increased 2.2% , while load factor edged up 0.9% to
82.0%, a monthly record. “The industry continues to do an excellent job of maximizing asset eﬃciency,” said Alexandre de Juniac, IATA Director General and CEO.
“We are thinking about aviation in a holistic way—Solidarity Transport Hub will be the mega-hub Europe that really needs” Rafal Milczarski, LOT Polish Airlines CEO
Ambitious: Milczarski has overseen LOT Polish growth in recent times
Warsaw terminal can be “mega-hub for Europe” Rafal Milczarski, CEO LOT Polish Airlines, has highlighted the extraordinary growth in Polish air travel demand, a demonstration, he said, “of the vitality of the market.” In a keynote speech at the IATA Global Airport and Passenger Symposium in Warsaw, Milczarski said the future growth of Polish aviation can be achieved in a sustainable way with the right investments and decisions. In fact, Polish air travel has been posting signiﬁcant increases for the past ﬁve years. And in 2019, LOT is predicting an 11% rise in passenger
numbers despite the challenges in European aviation in general. As part of its vision to be the airline of choice for Central and Eastern Europe, LOT is building a second hub at Budapest. But it is the new Solidarity Transport Hub in Warsaw, 37km away from the city, that really highlights the carrier’s— and the country’s—ambition. With government support, the facility will very much be a transport hub of the future, also featuring Poland’s new central railway station. “It will be the mega-hub that Europe really needs,” said Milczarski.
Airlines give backing to ONE Order at AIRS A group of aviation professionals have urged the industry to recognize the potential of ONE Order in revolutionizing aviation business. “How we sell our product is mindlessly complicated,” said United Airlines Managing Director Customer Platforms Soumit Nandi at IATA’s Airline Industry Retailing Symposium (AIRS). Addressing delegates in Bangkok, both Nandi and Lufthansa’s Head of Distribution and Revenue Christian Popp made their enthusiasm clear. Popp said Lufthansa has identiﬁed airlines.iata.org
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three key beneﬁt drivers: From the passenger viewpoint, ONE Order will simplify the customer journey and make it seamless, with ampliﬁed choice of products and services. Both Lufthansa and United have conducted successful ONE Order pilots, with Lufthansa transporting 200 passengers on ONE Order records according to Popp. Stephane Lecourtois, Amadeus’ Director, Airlines Solutions, NDC & Order Management said airlines need to create “transition”, not a “big bang.”
Order management: ONE Order simpliﬁes the customer journey
2019 – 06 Airlines
In numbers I ATA G L O B A L P A S S E N G E R S U R V E Y 2 0 1 9
Breakdown of respondents by region:
99.98% RFID has a 99.98% read-rate accuracy Improving baggage information reliability is important to the industry, and the use of Radio Frequency Identification for baggage tracking was resolved unanimously at IATA’s 75th AGM in 2019.
10,877 Statistics breakdown: IATA GPS
IATA’s Global Passenger Survey included 10,877 respondents aged between 18 and 65-plus from 166 countries, with 60% male, 38% female and 2% undisclosed Airlines 2019 – 06
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“Passengers are looking to technology to improve their travel experience. The NEXTT initiative aims to deliver a seamless experience for passengers” Nick Careen, IATA Senior Vice President, Airport Passenger Cargo & Security
In 2018, most ﬂights were booked directly on airline websites.
Moreover, company travel departments, airline apps on mobile phones or tablets, online travel agent websites and price comparison websites are used for booking ﬂights by 44% of passengers. The use of physical travel agents continues to dwindle
of travelers finding wi-fi important
The relevance of wi-fi on board is quite high with more than half of travelers finding it important to them
Company travel department
Airline apps via mobile device
Online travel agent website (Expedia, Makemytrip etc) 10%
prefer to manually enter card of respondents details into an Internet payment page
Price comparison website (Skyscanner, Kayak etc)
Calling a travel agent
In person at a travel agency
Airline ticket oﬃce
Do not know
Airline call center
It increases with the number of ﬂights taken in the past 12 months for both leisure and business purpose ﬂights—the more passengers ﬂy, the more they are willing to share their information.
Over half of passengers (53%) would check in their bag if tracking was available throughout the journey, while 46% would like baggage directly delivered to an oﬀ-airport location
Willingness to share additional personal details remained at a similar level to last year with around two-thirds (70%)of travelers willing to share personal information to speed up the airport process.
Ticket price, ﬂight schedule and airline reputation are the three most important factors of airline choice. On-board comfort is also a signiﬁcant factor for around a quarter of travelers.
Price of the ticket airlines.iata.org
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23% On-board comfort 2019 – 06 Airlines
A partnership to benefit global aviation By Angela Gittens, Director General, ACI Alexandre de Juniac, Director General and CEO, IATA, and Eric Herbane, Chairman of the WWACG
ir connectivity is a fundamental driving force of the modern global economy, and the freedom to ﬂy empowers millions of people in their daily lives. Total unique city pair connections exceeded 21,000 in 2018, and continue to grow as more cities join the global air transport network. The beneﬁts this brings in terms of employment and economic activity are undeniable: some 65 million jobs and $2.7 trillion in GDP. And air transport directly contributes to 15 of the 17 United Nations sustainable development goals. This growth in demand, however, has created a tremendous challenge in terms of infrastructure. The obvious answer is to expand capacity where possible. But obtaining political approval and local consent for airport expansion is a challenging and lengthy process. Put simply, more than 200 airports worldwide have insuﬃcient capacity to meet the demand for ﬂights, especially at peak times. Forty years ago, recognizing the imminent challenge of restrictions to airport slots capacity, the Worldwide Slots Guidelines (WSG) were Airlines 2019 – 06
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created. The guidelines have been published and administered by the International Air Transport Association (IATA) and largely implemented by slot coordinators at local level. They are the bedrock of the aviation scheduling system. The system, however, is not perfect. And Airports Council International (ACI), IATA and WorldWide Airport Coordinators Group (WWACG) are fully committed to continuously improving the global slot process to ensure it responds to increasing traﬃc demand. This year has seen the agreement of one of the most signiﬁcant changes yet. It has been decided to rename the WSG as the WASG – the Worldwide Airport Slot Guidelines. This brings an overdue recognition that the providers of the airport capacity, the airport operators, did not previously have suﬃcient input into the guidelines. New governance arrangements have rectiﬁed this, ensuring ACI, IATA and WWACG are joint industry partners in delivering modern and eﬃcient slot policy and process. The outcomes of the Strategic Review of the slot guidelines by ACI, IATA and WWACG delivered signiﬁcant changes and enhancements to the slot process. These changes are primarily focused on: easing the access to congested airports by introducing changes to the criteria to allocate slots, aimed at ensuring a fair balance
between new entrants and non-new entrants enhancing the standards for monitoring the actual utilization by airlines of allocated slots, which will reinforce this process as an essential element of airport slot coordination, and set clear roles and responsibilities of airport operators, airlines and slot coordinators to optimize performance improving the airport capacity declaration process with additional clarity of the roles of airport operators and slot coordinators, the need to review coordination parameters twice a year If the beneﬁts of aviation connectivity are to be sustained, then we must have a set of eﬃcient, global guidelines that are applied without fear or favor everywhere in the world, whilst recognizing national or regional legislations. The new governance for the WASG opens a new era of collaboration between the airlines, airport operators and slot coordinators in setting and maintaining a harmonized slot allocation process. In addition, it ensures the WASG will continue to evolve to meet the everchanging demands of the aviation industry, to the beneﬁt of passengers the world over. In September 2019, ACI World, IATA and WWACG submitted a joint paper to the 40th ICAO Assembly asking them to note the progress in the strategic review, the new WASG governance structure, and the industry’s commitment to engage with States to ensure the global slot guidelines meet the needs of citizens, airlines and airports in terms of ensuring connectivity and choice of air services
Ma Tao: IATA Opinion
Young and strong
ILLUSTRATION: SAM KERR
Ma Tao, Regional Vice President, North Asia, believes that air travel in the region will continue to grow and maximize its potential despite temporary challenges
Administrative Region (SAR), Mongolia, and recently Hong Kong SAR. Growth also needs to be sustainable. Aviation plays a key role in connecting people and businesses throughout the world. Unlike more mature aviation markets, however, North Asia’s public perception of ﬂying is still positive. We must not take that for granted. The entire value chain has a responsibility to ensure the public is aware of the facts about our sustainability eﬀorts. Government support is equally vital, especially to make sustainable aviation fuels commercially viable. Innovative use of technology is another strength of the region. Emerging technologies, new business models, and reshaped processes are all being tested here and can inform best practice worldwide. Take, for example, the electronic boarding pass project in China for domestic travel. The project involving 13 airlines at 37 airports saw a 52% penetration rate in September 2019, leading to higher rates of oﬀ-site check-in. Such initiatives take a skilled workforce. IATA training centers in Beijing, Hong Kong, Shanghai and Taipei are essential to supporting the industry’s growth. There is also real opportunity in the region for training to be expanded, both numerically and technically. This is a young region demographically and a growing region for air travel. It means the industry needs to attract young talent and train them in ways they understand. For the younger generations, this involves online learning, virtual reality, and gamiﬁcation. Meeting these challenges head-on will help fulﬁl North Asia’s enormous potential. IATA’s 40 member airlines in the region are determined to make aviation the business of freedom.
2019 – 06 Airlines
he future of the North Asia region is bright. Forecasts suggest that its main component, China, will replace the United States as the world’s largest aviation market at some point in the mid-2020s. By 2037, China alone will have 1 billion new passengers for a total of 1.6 billion. The completion of Beijing’s Daxing International Airport and plans for a three-runway system in Hong Kong highlight the forward-looking steps being taken to ensure capacity is available to support the anticipated growth in demand in the region. Nonetheless there are challenges. The China-United States trade dispute continues to be felt by aviation globally, including in North Asia. Air cargo volumes in the past 12 months have seen year-on-year declines. And the temporary shutdown of Hong Kong International Airport —a major regional cargo hub—a few months ago and the continuing tensions there exacerbate the pressure. But these issues are expected to be temporary blips in the increasing popularity of air transport for both passengers and cargo in the region. There is a need therefore to continue preparing for future opportunities as aviation’s center of gravity shifts east. Safety is a top priority. 2018 was another year of zero jet or turboprop hull losses in North Asia. That achievement is the result of the hard work and collaboration of all partners in the aviation value chain. We are also strengthening our cooperation with the regulators in the region through memorandums of understanding (MoUs) on safety with China, Macau Special
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Tactical thinking Peter Foster, President and CEO of Air Astana says ﬁrm principles mixed with ﬂexibility is the secret to success WORDS: GRAHAM NEWTON
elements contributed to this. Fuel prices were certainly a big help. The average price was approximately 15% lower in 2019 than in 2018. But we also restructured to bring non-fuel costs down. Our network and connectivity were realigned. In the summer season, we cut back our scheduled services and ran more charter ﬂights to holiday destinations, such as Sharm El Sheikh in Egypt. That was very successful. Also, once the Pakistan-India airspace issues were resolved, India has been an excellent market for us. Air Astana is also renewing its ﬂeet and we have a number of new fuel-eﬃcient aircraft that have contributed to our results. On top of all this, our new low-cost carrier (LCC), FlyArystan, has exceeded expectations.
N IMAGES: ALAMY/ISTOCK
estled between Europe, Asia and the Middle East, Kazakhstan holds many interesting opportunities for airlines, none more so than its ﬂag carrier Air Astana. As CEO Peter Foster explains, the airline is in rude health and has bold plans for the future, including branching out into low-cost carrier operations, reinforcing the business strategy, and standing up in the battle against climate change. Is cost discipline the main reason for a strong performance in 2019?
Air Astana had a much better year in 2019, especially from June onwards, and many Airlines 2019 – 06
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What was the rationale behind FlyArystan and what diﬀerence will it make to Air Astana’s strategy going forward?
Our rationale was originally defensive. Air Astana began operations in 2003 and until 2010 we had a monopoly on domestic routes. The market was deregulated in 2011 and, of course, that led to plenty of competition. By 2018, our share of the domestic market had halved. It was also becoming obvious from examples across the world that the full-service model wasn’t right for short-haul routes anymore. We studied the market extensively and concluded that an LCC would have a positive eﬀect on the market. We began services on 1 May 2019 with two Airbus A320s and two more were added by December. The response from airlines.iata.org
“Without the right development, air travel in Kazakhstan will not be able to deliver its many benefits” airlines.iata.org
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2019 – 06 Airlines
the market has been far above expectations and load factors are averaging 94%. How it will work with Air Astana has been the subject of some discussions because we were fully aware that a hybrid model or having the LCC managed by the parent airline has generally proved unsuccessful. It was decided that the LCC had to operate independently, but despite that the parent airline retains ultimate control. Most decisions, such as what routes to ﬂy, will be made by the LCC alone, which has its own management team. Of course, Air Astana owns the LCC and it’s absurd to think we would not maximize synergies. We have to make sure that it is the Air Astana Group that beneﬁts overall. But it will be a very light touch.
22 Are the airframe manufacturers meeting
There will be a point where a signiﬁcant ﬂeet expansion is needed for FlyArystan—which ﬂies A320ceos—but we have not made any decisions on that yet. We’ll decide in 2020. The new Embraers are entering the Air Astana ﬂeet on schedule. But the neo program is signiﬁcantly delayed. There are production issues with Pratt & Whitney engines and with the Airbus neo production line, especially in Hamburg where the A321 is assembled. It means that we have had to delay route expansion plans and we are extending the life of our Boeing 757s far beyond their planned retirement dates. It was expected that the 757s would all be retired by now but it’s likely that a small number will still be operating through 2020. It’s expensive to maintain the 757 engines, and we haven’t been able to retrain our crews as anticipated.
your needs with their oﬀerings and production schedules?
Is the local infrastructure meeting your needs?
We’re moving to a primarily Airbus neo ﬂeet. A320 and A321 neos will be the bedrock of the Air Astana ﬂeet.
94% We began services on 1 May 2019 with two Airbus A320s and two more were added by December. The response from the market has been far above expectations and load factors are averaging 94% Airlines 2019 – 06
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As might be expected, infrastructure is a mixed bag. Astana is ﬁne and has been developed but there hasn’t been any terminal expansion at Almaty in the 14 years that I have been in charge of Air Astana. It is a problem that will only become more intense as FlyArystan expands. There are some discussions about the ownership of the airport but whomever owns it must commit to expanding it. Without the right development, air travel in Kazakhstan will not meet demand and the industry will not be able to deliver its many social and economic beneﬁts. FlyArystan is based at Almaty at the moment but in 2020 it will have two new bases in Karaganda and Aktobe. There has been investment in these airports, and they may become the LCC’s main hubs. Looking at your region as a whole, what challenges and opportunities lie ahead?
The region is inﬂuenced by the Russian Federation’s economic performance. Their economy has undergone signiﬁcant restructuring in recent years and that has resulted in a weakness in the ruble, which airlines.iata.org
means currency weakness in the region. In turn, that aﬀects purchasing power and so outbound traﬃc has suﬀered. But the visa situation is improving not only in Kazakhstan but in Uzbekistan too. That has helped inbound traﬃc.
15% Fuel prices were lower in 2019 than 2018—Air Astana was one of many airlines to beneﬁt from the 15% drop
What is the secret to your longevity as the Air Astana CEO and has your thinking on aviation changed over the years?
The principle has always been to run a safe, cost-eﬃcient, proﬁtable airline and that has not changed. Although Air Astana is 51% state-owned, we have always been run purely along commercial lines and there is complete management independence. Behind every decision there is an emphasis on safety, keeping costs low, and ensuring we have a proﬁtable route network. We do not and never have received subsidies of any kind. But you also need ﬂexibility in your tactical thinking. You must focus on the challenges as they arise. During my 14 years as CEO, those challenges have changed. What motivates me and the team is understanding new issues and overcoming them. Just a few years back, for example, I would never have imagined we would launch an LCC and yet here we are. Firm principles and ﬂexible tactics would best summarize how we manage the airline. Is consolidation the only way forward for the industry or can a carrier such as Air Astana still go it alone?
Although we’re not a member of one of the big three alliances, if you look at our global network it is clear that our international destinations are predicated on partnerships. We have a codeshare with Cathay Paciﬁc on our Hong Kong route, with Turkish Airlines on the Istanbul routes, and with Lufthansa on the Frankfurt routes—to name just a few. The agreement we have just signed with Russian airline, S7, might be one of the most airlines.iata.org
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The principle has always been to run a safe, cost-eﬃcient, proﬁtable airline signiﬁcant for Air Astana. As a result, we have shifted our Moscow operations from Sheremetyevo to Domodedovo. This is an important strategic partnership in our largest foreign market.
Can the industry win over governments and the public in the environmental debate?
Flightshaming has not yet come to this region, but when it happens it will happen very quickly. Though the industry is doing all it can, it has to do better in getting the story out.
Aviation is a high-proﬁle industry but that is not always a good thing. Other industries can be less proactive than we are and go unnoticed. And many governments just view airlines as a revenue source. The taxes they impose often reach punitive levels. But the industry does have a responsibility and it needs a coherent approach to ensure that we can achieve our goals. Lowering carbon emissions is the main aim and there is a lot of hard work going on. Airframe and engine manufacturers are doing all they can. And many airlines—Air Astana being just one—have been doing their best to renew the ﬂeet and incorporate new, fuel-eﬃcient aircraft. But though the industry is doing all it can, it has to do better in getting the story out. Flight-shaming has not yet come to this region, but I am sure it will and when it happens, it will happen very quickly. All airlines need to be ready with answers and to be part of the story. 2019 – 06 Airlines
Topi Manner, CEO, Finnair Carsten Spohr, CEO and Chairman, Lufthansa, Chairman, IATA
Working for an airline is attractive to all sorts of people, including millennials. They want to know the purpose of the industry. And aviation has a great answer. It makes the world a smaller place and brings social and economic beneﬁts. I would like to see industry partners bring back the spirit of aviation. This is a unique industry that does a lot of good and we should all have more pride in what we do. Rather than let politicians talk about limiting the industry we should be talking about aviation’s limitless potential to have an impact on the world.
Airlines 2019 – 06
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We have AI solutions in use in our ﬂight operations to predict the impacts of weather in our operations.
Christine Ourmieres-Widener, ex-CEO, Flybe
Females will not apply if they don’t see someone who is an inspiration—young girls cannot be what they cannot see.
Alexandre de Juniac, Director General and CEO, IATA
We must ﬁnd ways to get States to share our ambition and prioritize the commercialization of sustainable aviation fuels and the delivery of modernized air traﬃc management.
Zhao Dong, Chairman, XiamenAir
Safety is the foundation for aviation’s sustainable development. Authorities still have room to enhance the certiﬁcation process.
Remco Althuis, CEO, Air Seychelles
Tony Douglas, CEO, Etihad Group
Airlines evolve to meet the challenges of an industry and world in a state of constant ﬂux, and this means having to be agile.
Vipula Gunatilleka, CEO, Sri Lankan Airlines
It is always a good idea to have a plan B. And if you have good cash ﬂow, you always have options.
Christina Foerster, CEO, Brussels Airlines
The challenge is clear. Aviation must answer demand with minimum impact on the environment.
Pieter Elbers, CEO, KLM
From an airline perspective, it is absurd that we have had a single European currency for many years, but we can’t organize a Single European Sky (SES).
As a woman in a senior position, you always feel like everybody is watching you, and any mistake you make will be magniﬁed. It takes courage to go for it. Enrique Beltranena, CEO, Volaris
I push very hard for the environment, but I don’t think anyone in the industry can say we are where we want to be.
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To the point @IATA Mar 21 Our ﬁrst ever world air transport statistics came out in 1957. Today WATS is one of our most important publications! #ThrowbackThursday #tbt @IATA Jun 3 #Airport capacity is the single limiting factor to further aviation growth. New more eﬃcient ground processes are essential - Paul Griﬃths CEO @DXB #IATAAGM #NEXTT
@IATA Oct 30 #DYK Project Lemonade, part of the new AIR Think Tank White Paper, proposes seamless rebooking for disrupted passengers taking advantage of #AirlineNDC & ONE Order capabilities. #IATAAIRS @IATA Nov 19 As the #fallofthewall is celebrated, an extraordinary stat from IATA DG Alexandre de Juniac: “Carbon emissions per passenger #ﬂight are half what they were in the year the Berlin Wall fell.” Sustainability is the key focus of #WOCE19.
2019 – 06 Airlines
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Dossier: Cabin waste
Repackaging the regulations 27
Improved environmental measures to deal with cabin waste are only possible if regulations are risk-based and globally consistent WORDS: GRAHAM NEWTON
Plastic-free ﬂights have grabbed the headlines in recent months. Etihad, for example, ﬂew from its Abu Dhabi HQ to Brisbane without any plastics onboard, using such alternatives as edible coﬀee cups. It intends to remove 80% of single-use plastics (SUPs) by the end of 2022. Tony Douglas, Etihad Group CEO, notes: “We discovered we could remove airlines.iata.org
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27 million SUP lids from our inﬂight service a year and… it’s our responsibility to act on this, to challenge industry standards and work with suppliers to provide lower-impact alternatives.” Air France has, meanwhile, committed to the elimination of 210 million SUP items by the end of 2019, Delta will get rid of 136 tonnes of SUP onboard and in lounges in the same time period, and by
2021 100 million SUP items will disappear from Qantas ﬂights. Many other airlines have started similar initiatives as they seek alternative, sustainable options. According to estimates by IATA, airlines generated around 6.1m tonnes (6.7m US tons) of cabin waste in 2018, of which at least 20% was food and drink that had gone unused. 2019 – 06 Airlines
Dossier: Cabin waste
80% The air transport industry spends about $700 million on cabin waste disposal every year.
Etihad has announced its intention to remove 80% of SUPs by the end of 2022
Airlines 2019 – 06
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Although airlines are committed to reducing SUP, the issue is not as clear cut as might ﬁrst appear. Getting rid of SUPs must show a demonstrable environmental beneﬁt with alternatives also meeting safety and hygiene standards. Wooden stirrers instead of plastic ones is an easy win. But such instances are rare. Most of the numerous inﬂight products that use plastic present a real dilemma. Paper cups, for example, have an internal plastic coating to stop the liquid leaking from the cup. This makes recycling and composting challenging, if not impossible, in most regions. An obvious alternative is glass. But glass weighs a lot more than plastic or
paper and the heavier the aircraft, the greater the fuel burn, and the higher the emissions. This dynamic can be seen in cargo too, where tarpaulin—the alternative to a plastic shrinkwrapped pallet—is far heavier. In other words, some SUPs can be easily replaced but others are far more challenging. SUP bags are used to collect washroom, galley and cleaning waste, for example, and alternatives need to be robust and waterproof to ensure there are no leaks onto the cabin ﬂoor. And should there be viable alternatives, international waste regulations often insist that cabin wastes need to be landﬁlled or incinerated anyway, negating any positive environmental eﬀect. Meanwhile, ICAO’s guidance on Security Tamper Evident Bags (STEB) for duty free purchases states that the bags should be made from transparent low-density polyethylene (LDPE) or equivalent, but it’s not clear if there are any equivalents currently available. Layered regulations
Simplifying and coordinating regulations will be essential if airlines’ ability to
Delta will get rid of 136 tons of SUP onboard and in lounges by the end of 2019
By 2021 100 million SUP items will disappear from Qantas ﬂights
respond to these challenges is to improve. There has been a surge in SUP legislation with 127 countries imposing restrictions on non-biodegradable SUPs—such as the thickness of the plastic—but few are aligned in any way. So, plastics that are permittable on the outbound ﬂight may not necessarily be allowed on an inbound segment or vice versa. Moreover, 27 countries have banned SUP products, including plates, cups, straws, and such materials as polystyrene. The expectation is that the number of countries imposing bans will double in a short space of time. Airports and civil aviation authorities are adding to the confusion by applying their own SUP constraints. In some instances, it is hard to know whether the SUP ban includes international or domestic ﬂights and arriving as well as departing ﬂights. It is also unclear if STEBs are aﬀected and even plastics carried by passengers or packed in their baggage. And even if airlines can ﬁnd paper or biodegradable solutions, there must be appropriate facilities to recycle paper and support composting at airports. “It is vital that governments consult with the sector to ensure that their regulatory proposals promote alternatives to SUP that are sustainable,
Discussion on… Meeting the SUP challenge
In May 2019, over 150 participants attended the Sustainable Cabin Forum 2019 organised by Hi Fly and the Mirpuri Foundation, in partnership with IATA. Following the success of their plastic-free ﬂight trials in December 2018, Hi Fly President, Paulo Mirpuri, stated the Forum had been conceived: “to share knowledge and best practices across airlines, airports, catering
companies, manufacturers and industry regulators in a bid to discuss single-use plastic and catering waste resulting from the worldwide air-carriage of passengers”. IATA Director General and CEO, Alexandre de Juniac, commented that: “This is an important ﬁrst step in bringing together industry leaders and regulators: While we all recognize that cabin waste and
single-use plastics have become a big issue for us, replacing these items is not always as easy as it might appear, and we should be aware that there is always the possibility of causing unintended environmental damage. However, eﬀorts to go green can also be hindered by regulation, and we must ensure we seek a smart regulatory approach to sustainability.”
Air France has, meanwhile, committed to the elimination of 210 million single-use plastics items by the end of 2019 airlines.iata.org
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2019 – 06 Airlines
Dossier: Cabin waste
Tony Douglas, Etihad Group, CEO
“It’s our responsibility to challenge industry standards and work to provide alternatives” The Sustainable Cabin Forum 2019— organized by Hi Fly and the Mirpuri Foundation in partnership with IATA—followed successful plastic-free flight trials by Hi Fly in 2018
Jon Godson, IATA, Assistant Director, Aviation Environment
“It is vital that States consult with the sector to ensure that their regulatory proposals promote safe, sustainable alternatives to SUP”
Alexandre de Juniac, IATA, Director General and CEO
“We recognize that SUPs have become a big issue, but replacing these items is not always as easy as it might appear” Airlines 2019 – 06
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safe, and hygienic and are harmonized across international aviation,” says Jon Godson, IATA’s Assistant Director, Aviation Environment. Innovative solutions
Airlines are meanwhile exploring a number of innovative solutions of their own to reduce cabin waste. A forthcoming Cabin Waste handbook from IATA actually lists 27 separate initiatives. Suppliers are also being pressurized to ﬁnd new processes and products that will reduce the industry’s
20% of inﬂight food and drink that is untouched and ends up being landﬁlled or incinerated
overall environmental footprint. To help airlines solve the dilemma of SUPs, IATA is studying the possibility of a sectoral approach to the lifecycle assessment of inﬂight products so airlines can base their service oﬀerings on the overall environmental beneﬁt. IATA will also provide guidance on the application of harmonized smarter single-use plastic legislation for discussion with regulators. Ultimately, “though seeking sustainable alternatives to SUP, the industry should prioritize eﬀorts to reduce cabin waste in the ﬁrst place, starting with the 20% of inﬂight food and drink that is untouched and ends up being landﬁlled or incinerated,” Godson says. This could have a knock-on eﬀect on eﬀorts to raise awareness of the responsible approach to aviation’s environmental impact. “A visible lack of cabin waste reuse could impact passengers’ conﬁdence in our ability to reduce our invisible emissions,” concludes Godson. airlines.iata.org
WE’RE CREATING A MO R E CONNECTED EVE RYTHI 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.
©2019 Collins Aerospace, a United Technologies company. All rights reserved.
Maintenance, Repair, and Overhaul
Shining a light into parts purchasing How IATA is helping to create greater transparency in the maintenance, repair, and overhaul market WORDS: GRAHAM NEWTON
A $5bn The spare parts market is worth $5 billion annually
Airlines 2019 – 06
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irlines and maintenance, repair, and overhaul (MRO) companies can pay too much for aircraft parts. With millions of unique part numbers and a multitude of brokers and original equipment manufacturers involved, it is a dense market that lacks transparency. And that means prices can be artiﬁcially high, creating additional cost within the aviation supply chain. The surplus spares market overall is worth $5 billion annually but a signiﬁcant portion of that is “unearned” proﬁts, generated by trading parts amid this complexity. Simplifying the process has been diﬃcult because parts purchasing is a predominantly manual process. Suppliers are contacted individually to ascertain the availability and price of a part. Scanning the market for the best deal is time-consuming and makes little ﬁnancial sense. The cost of checking suppliers on an individual basis is greater than a slightly cheaper price. The result is airlines often accept the ﬁrst, potentially expensive, oﬀer.
“Airlines have been held hostage by an opaque market and it is important to unravel this diﬃcult area,” says Chris Markou, IATA’s Head, Operational Cost Management. Getting smart
Christopher Whiteside, President and CEO of the AJW Group, which oﬀers services across the MRO spectrum, believes partnership is the best way forward. “Building partnerships forms highly eﬀective agreements, which deliver the desired solutions that the airlines want and need,” he says. AJW acts an integrator to ease a client’s maintenance requirements and, says Whiteside, beneﬁts from the technical, reliability and Service Bulletin/Airworthiness Directive support that a component original equipment manufacturer (OEM) can provide. The challenge is to spread this partnership approach across the industry. To help shine a light into the darkened recesses of parts purchasing, IATA has introduced the MRO SmartHub. The platform will save airlines an
Maintenance, Repair, and Overhaul
and criteria to assess the fair market value (FMV) of a part. Though the FMV represents real monetary value for a part, it is not presented as a buy or sell option. In fact, for data security compliance, all information is de-identiﬁed before it is displayed. As such, the Evaluator becomes an impartial but reliable advisor and decision support tool. Importantly, the FMV is not just based on an average of the historical price. Users, for example, can get a recommendation whether it is better to buy a new part or repair the old one. The Evaluator will even estimate the time for a repair based on supplier information and also the cost of the repair. This can then be weighed up against the cost and time involved in buying and receiving a new part.
Progress through the levels
estimated 10%-15% in the cost of parts and create new supply chain eﬃciencies for all stakeholders by bringing greater knowledge and transparency to the parts market. Developed in conjunction with Opremic Solutions, there are two functions to the MRO SmartHub; the Connector and the Evaluator. The Connector describes itself, linking an airline to the market quicker and with no more time-consuming communication and integrated/automated negotiations via the platform. The functionality also allows trading between preferred approved partners within a closed group. In eﬀect, the Connector brings all supplier information together in one place. Suppliers must provide ﬁrm information on prices, availability, and the lead time. Otherwise stock cannot be uploaded to the platform. Because the information is transparent and displayed in real-time, airlines save a lot of time and money. But it is the Evaluator that is the key to the success of the solution. Behind the Evaluator lies an algorithm that uses multiple data inputs
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Christopher Whiteside, President and CEO of the AJW Group
“Building partnerships forms highly eﬀective agreements, which deliver the desired solutions that the airlines want and need”
All airlines stand to beneﬁt. Lufthansa, for example, was looking to solve the problem of parts purchasing in-house, through its subsidiary, Lufthansa Technik. But it has now found a ready-made solution in MRO SmartHub. “The MRO SmartHub is a global platform that is applicable to all,” says Fabricio La-Banca, Lufthansa Technik AG. “The market really needs this. By creating greater transparency, the MRO SmartHub will generate real “fair market values”. It will rebalance the aviation value chain and help airlines save money.” Optimizing purchase decisions depends on relevant information and incisive decision support for management and material teams. To that end, IATA will continue to bring in more airlines to the MRO SmartHub. Ultimately, the aim is for the platform to become the industry standard in evaluating and trading parts, a solution that beneﬁts all by rebalancing the aviation value chain. For more information, visit www.iata.org/ services/safety-ﬂight-operations/Pages/ mro-smarthub.aspx
2019 – 06 Airlines
Airlines must address cyber risk Jamie Monck-Mason, Executive Director, Cyber and Technology, Media and Telecoms, Willis Towers Watson, says airlines dedicate insuﬃcient resources to the threat of cyberattacks WORDS: JAMIE MONCK-MASON
According to the 2015 SANS Institute Study, an estimated 80% of cyber incidents originate in the supply chain
Airlines 2019 – 06
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espite high proﬁle cyber incidents in recent years, many airlines continue to hide their heads in the sand. Understandably, risk and insurance budgets prioritize safety. Nevertheless, cyber risks pose a huge threat to bottom lines. Airlines continue to invest heavily in technology, but the attendant risks are rarely addressed adequately. SITA’s 2018 Air Transport IT Insights survey noted that 71% of airlines planned major investment in biometric technology to automate passenger ID management. Though passengers will reap the beneﬁts through streamlined check-in and boarding, those beneﬁts bring cyber exposures. Personal data may be the “new oil,” but it may also be “the new asbestos.” The 2018 Cathay Paciﬁc and British Airways data breaches highlighted the share price impact and regulatory exposures accompanying such incidents. Airlines aren’t alone in collecting and leveraging large amounts of personal data, but the international nature of their customer-base and the extraterritorial reach of data protection legislation such as the European Union’s General Data Protection
Regulation (GDPR), mean that, no matter where it is based, an airline is exposed to the regulatory regimes of numerous countries worldwide. In Cathay’s case, it was 27 regulators in 15 jurisdictions. Thought needs to be given not only to headline-grabbing ﬁnes and class action privacy claims (even in the absence of ﬁnancial loss or, in some cases, distress) but also to the need for eﬀective incident response mitigating reputational and ﬁnancial damage. Fresh legislation
IT outages are of equal concern, as we saw with the Southwest, Delta, and British Airways system failures of 2016–17 that resulted in thousands of ﬂight cancellations. Quite apart from tens of millions of dollars’ lost income and passenger compensation claims, such outages now bring another threat: cyber security legislation exposure. Europe’s Directive on the Security of Network and Information Systems (NIS Directive) can lead to GDPR-like ﬁnes for failing to prevent disruption to ﬂights through maintaining adequate cyber security. Though not extraterritorial in scope, countries such as
The nature of any airline’s customer-base means that, no matter where it is based, an airline is exposed to regulatory regimes of numerous countries worldwide
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Singapore are following Europe’s lead. And whereas compliance with data protection legislation is relatively measurable, airlines are still ﬁnding their way in navigating the new breed of cyber security legislation. Increasingly, individual board members are feeling the heat. Cathay Paciﬁc’s chairman conceded that their breach was “the most serious [crisis] the airline has faced,” as shares slid to a nine-year low. Shareholders hold boards accountable for failing to protect against cyber incidents, and global regulation increasingly targets individual decision makers. Neglecting to take data protection responsibilities seriously in the United Kingdom can lead to the prosecution of individual directors. In Singapore, managers who fail to audit compliance with the Cybersecurity Act can face a ﬁne or imprisonment. This might be less concerning if airlines weren’t so interconnected with other organizations in the aviation value chain. According to the 2015 SANS Institute Study, an estimated 80% of cyber incidents originate in the supply chain, whether it is GDS providers, ground handlers or IT contractors. Increased investment in cyber security and training—66% of cyber incidents are caused or contributed to by employee acts or omissions— can improve an airline’s own cyber resilience. Risk transfer is arguably the only eﬀective means of protecting against third-party vulnerabilities, however, especially in safety and time-critical systems.
2019 – 06 Airlines
The 100-day transformation Supporting airlines in their digital transformation is vital as the pace of industry change picks up speed WORDS: GRAHAM NEWTON
“The program will establish best practice but is not looking to impose anything” Stephan Copart, IATA’s Head, Projects and Innovation, Financial and Distribution Services
Airlines 2019 – 06
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he industry “has never lacked ideas, but it has lacked speed in implementing those ideas,” believes Stephan Copart, IATA’s Head, Projects and Innovation, Financial and Distribution Services. IATA initiatives—from e-ticketing through Simplifying the Business to New Distribution Capability—have taken seven years on average, from problem identiﬁcation to early adoption. All these programs have achieved their goals and helped to transform the industry. But shrinking the timeline has become imperative as new, disruptive ideas and technologies appear on the scene on an almost daily basis. The Electronic Miscellaneous Document (EMD) project, for example, was fully implemented by the end of 2012, as stipulated by the project vision from the outset. Before that was achieved, however, ideas for ONE Order were circulating—an initiative that eﬀectively renders the EMD obsolete. In addition, aviation is facing increasing pressure from external forces, especially in areas such as retail, where greater agility is required to combat these competitive threats. “Aviation is a complex industry and time will always be needed for any transition,” admits Copart. “Nevertheless, there is a real need to be
quicker. Airlines must realize the beneﬁts of new technologies as quickly as possible.” Foot on the gas
Accelerate@IATA is an innovation platform designed to support faster technology implementation at airlines. It brings together airlines, value chain partners, and startups to identify problems, ﬁnd solutions, and bring them to a pilot phase within 100 days. An Innovation Day was held in July 2019 where seven startups were invited to discuss the opportunity further with IATA and have now been through the ﬁrst phase of the acceleration process. Further talks with IATA educated them on the airline retail landscape and ecosystem. As part of the second phase, the same seven startups joined the wider community at the October 2019 AIR Symposium in Bangkok where they presented their solutions. In general, four phases are envisaged for the program: Phase 1: Start-up sourcing phase, closing with Selection Day Phase 2: Acceleration process Phase 3: Closing event to present solutions, Demo Day Phase 4: Pilot phase with airline partners.
Accelerate@IATA comprises anchor partners and ecosystem partners. Anchor partners help IATA to deﬁne the problems and are active decision makers during the entire program through the startups’ selection process, acceleration involvement, outcome, and pilots. There is a maximum of 20 anchor partners, 15 of which must be airlines. Ecosystem partners get to collaborate with the selected startups and will also be involved once the pilot phase is reached.
Of course, many airlines, such as Lufthansa and JetBlue, have their own innovation hubs or have invested in similar platforms. But Accelerate@ IATA tackles non-competitive issues and leverages collaboration. This results in industry solutions that will beneﬁt from the network multiplier eﬀect and assist smaller airlines by exposing them to innovation that is validated by industry. “The program will establish best practice but is not looking to impose anything,” says Copart.
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The benefits of Accelerate @IATA For airlines: Access to global, stage-agnostic start-ups, and technology providers The opportunity to be at the forefront of new technologies The ability to play a leading role in shaping the industry’s future innovation programs A transformation fast track, accelerating implementations, and reducing transition costs Savings on innovation costs compared to internal development
For start-ups: Access to IATA’s global network of airlines and value chain partners for pilot and implementation opportunities Access to expertise and market knowledge Industry mentorship Potential funding via the partners
“We will be able to educate startups about industry needs in a far more eﬃcient manner and provide them with resources, such as space at IATA’s Geneva oﬃce, so they have constant access to subject matter experts. And for members, Accelerate@IATA is a tool to use as they see ﬁt.” Jonathan Newman, Chief Commercial Oﬃcer at Caravelo, one of the startups, underlines the point. “The Accelerate@IATA program has provided Caravelo with an immediately positive induction to the heart of the industry,” he says. “Through the introductions and valuable insights we've been able to make better headway, far quicker than we would have done without." Managing the scale of the project could be a challenge in future. Anchor partners are necessarily limited for practical reasons despite the huge interest, for example. And there is already traction in other industry areas, including airport processes, ﬂight operations, and cargo. Scaling up Accelerate@IATA is therefore already under consideration. “Not every airline has the same needs or the same challenges at the same time,” Copart concludes. “but if we can rapidly move from real solutions to real problems into a pilot phase then all airlines can beneﬁt. Accelerate@IATA will deliver sustainable solutions based on IATA standards to all airlines.”
For more information on how to get involved, please contact firstname.lastname@example.org
Accelerate at AIR A Startup Sphere commanded the exhibition space at the AIR Symposium in Bangkok. Airlines showcased solutions and industry initiatives were discussed as part of Accelerate@IATA banner. This area also included hackathon winners and allowed startups to present ideas
2019 – 06 Airlines
Meet us in 2020
For more information
See you in 2020 IATA hosts many cutting edge events around the world which provide awareness and analysis of key issues facing the air transport industry. Here are just some of the global conferences to put in your diary for 2020. Legal Symposium What is it? Oﬀering insight, relevance and value, the Legal Symposium tackles an engaging subject matter for aviation professionals with precise detail and analysis, in addition to excellent networking opportunities
Who’s it for? Airline legal counsel, airport legal counsel, legal practitioners, regulators, policymakers, and media
Symposium (WCS) brings together key stakeholders across the air freight sector, including more than 1,000 cargo leaders and over 40 exhibitors Who’s it for? Freight forwarders, solution providers, airports, ground handlers, regulators, and media When is it? 10-12 March in Istanbul
IGHC Conference When is it? 19-21 February in New York
World Cargo Symposium
Who’s it for? Airports, ground handlers, airlines, manufacturers, solution providers, and media When is it? 17-20 May in Mexico City
Global Airport & Passenger Symposium What is it? The Global Airport & Passenger Symposium (GAPS) shows how airlines, airports and governments around the world can make the air transport industry a sector of the future
Airline Industry Retailing Symposium What is it? Gathering together subject matter experts and visionaries across the air transport value chain, the Airline Industry Retailing Symposium (AIRS) analyzes where the sector is today and oﬀers modern solutions on what the industry can achieve through collaboration and invention among key stakeholders
Who’s it for? Government, security, airlines, airports, engineers, and architects, and media
Who’s it for? Airlines, distributors, e-commerce, retailers, senior management executives, technology, IT and digital transformation professionals, and media
When is it? 13-15 October in Osaka
When is it? 27-29 October in Vancouver
What is it? The largest and most prestigious annual event of its kind, the World Cargo
What is it? As the premier annual event of its kind, the IATA Ground Handling Conference (IGHC) oﬀers exclusive access to industry intelligence and to hear the latest developments alongside key decision makers in the air transport industry
on IATA’s full list of conferences and to learn how you can be a part of it, whether that’s as a delegate, sponsor, or exhibitor, visit: https:// www.iata.org/events/ pages/index.aspx
Airlines 2019 – 06
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