Airlines 2019-06

2019 – 06

airlines.iata.org

AIRLINES.

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

P01 Cover_Airlines 2019-06_Airlines.indd 1

09/12/2019 11:42

IATA.DEC19.002-003.indd 2

05/12/2019 13:40

IATA.DEC19.002-003.indd 3

05/12/2019 13:40

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 – solutions have never been more clear.

enginewise.com

IATA.DEC19.004.indd 4

05/12/2019 13:46

Airlines.

Contents 2019 – 06

Comment

24 Airing opinions

7 Alexandre de Juniac, Director General

To conquer carbon, the focus must be on sustainable fuels and technology

27

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

Features

Asian growth robust enough to succeed

32 Shining a light on parts purchasing

Digest

5

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

CEO Interviews

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 jane.easterman@redactive.co.uk Publishing director Aaron Nicholls

airlines.iata.org

P05 Contents_Airlines 2019-06_Airlines.indd 5

Standing up to threats on the horizon

20

Advertising Business development manager Nigel Collard +44 (0)20 7324 2763 nigel.collard@redactive.co.uk

Follow IATA on Twitter @IATA and join our LinkedIn group

For Airlines. subscription requests, or change of address notifications, email Airlinesint@iata.org We welcome feedback and content ideas

34

From legal to retail, IATA has a tailored conference to meet your aviation needs

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.

To access Airlines. content online visit www.airlines.iata.org

Subscribe to the Airlines. fortnightly email - register your details at www.iata.org/optin Published by Redactive Media Group, Level 5, 78 Chamber Street, London, E1 8BL +44 (0)20 7880 6200 www.redactive.co.uk

Recycle your magazine’s plastic wrap – check your local LDPE facilities to find out how.

2019 – 06 Airlines

09/12/2019 11:43

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

I

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

airlines.iata.org

P07 DG Comment_Airlines 2019-06_Airlines.indd 7

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.

7

Alexandre de Juniac: Director General and CEO, IATA 2019 – 06 Airlines

09/12/2019 11:43

Airlines 2019 – 06

P08-09 Big Picture_Airlines 2019-06_Airlines.indd 8

09/12/2019 08:00

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

airlines.iata.org

P08-09 Big Picture_Airlines 2019-06_Airlines.indd 9

9

2019 – 06 Airlines

09/12/2019 11:43

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.”

IMAGES: GETTY/ISTOCK

10

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

P08-15 Digest_Airlines 2019-06_Airlines.indd 10

airlines.iata.org

09/12/2019 08:01

Digest

“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

airlines.iata.org

P08-15 Digest_Airlines 2019-06_Airlines.indd 11

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

Events 2020

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

11

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

09/12/2019 11:44

Digest

“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.

12

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

IMAGES: ALAMY/ISTOCK

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

P08-15 Digest_Airlines 2019-06_Airlines.indd 12

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

airlines.iata.org

09/12/2019 11:44

Digest

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

$129billion

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 .

airlines.iata.org

P08-15 Digest_Airlines 2019-06_Airlines.indd 13

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.”

13

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

09/12/2019 11:44

Airlines 2019 – 06

P08-15 Digest_Airlines 2019-06_Airlines.indd 14

Air transport supports 800,000 jobs in the United Arab Emirates

14

, 800 000

Digest

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.

FREIGHT DEMAND

FREIGHT CAPACITY

3.5% 2.1% decrease

Increase

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.

airlines.iata.org

09/12/2019 08:02

Digest

“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.

15

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

P08-15 Digest_Airlines 2019-06_Airlines.indd 15

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

09/12/2019 08:02

Data

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:

North America

Latin America

Europe

Africa

Middle East

Asia Pacific

North Asia

24%

8%

28%

3%

3%

21%

13%

16

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

P16-17 Data_Airlines 2019-06_Airlines.indd 16

“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

airlines.iata.org

09/12/2019 11:45

Data

In 2018, most flights were booked directly on airline websites.

53%

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

Booking method

39%

Company travel department

14%

Airline apps via mobile device

11%

Online travel agent website (Expedia, Makemytrip etc) 10%

prefer to manually enter card of respondents details into an Internet payment page

40%

%

Airline websites

Price comparison website (Skyscanner, Kayak etc)

9%

Calling a travel agent

7%

In person at a travel agency

6%

Airline ticket office

2%

Do not know

2%

Airline call center

1%

Social media

1%

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.

17

46%

53%

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.

Respondents

62%

Price of the ticket airlines.iata.org

P16-17 Data_Airlines 2019-06_Airlines.indd 17

Respondents

Respondents

43%

38%

Flight schedule

Airline reputation

Respondents

23% On-board comfort 2019 – 06 Airlines

09/12/2019 11:45

Opinion: Slots

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

18

A

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

P18 IATA Slots_Airlines 2019-06_Airlines.indd 18

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

airlines.iata.org

09/12/2019 11:45

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

T

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.

airlines.iata.org

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

P19 IATA Opinion-MTao_Airlines 2019-06_Airlines.indd 19

19

09/12/2019 08:03

CEO Interview

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.

20

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

P20-23 CEO-Astana_Airlines 2019-06_Airlines.indd 20

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

09/12/2019 08:04

CEO Interview

“Without the right development, air travel in Kazakhstan will not be able to deliver its many benefits” airlines.iata.org

P20-23 CEO-Astana_Airlines 2019-06_Airlines.indd 21

21

2019 – 06 Airlines

09/12/2019 08:04

CEO Interview

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

P20-23 CEO-Astana_Airlines 2019-06_Airlines.indd 22

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

09/12/2019 08:04

CEO Interview

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

P20-23 CEO-Astana_Airlines 2019-06_Airlines.indd 23

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.

23

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

09/12/2019 08:04

Quotations 2019

Topi Manner, CEO, Finnair Carsten Spohr, CEO and Chairman, Lufthansa, Chairman, IATA

24

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

P24-25 Quotations 2019_Airlines 2019-06_Airlines.indd 24

We have AI solutions in use in our flight operations to predict the impacts of weather in our operations.

Airing opinions

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.

airlines.iata.org

09/12/2019 08:05

Quotations 2019

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.

airlines.iata.org

P24-25 Quotations 2019_Airlines 2019-06_Airlines.indd 25

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

25

@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

09/12/2019 08:05

Regulation, Compliance and 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.

Flight Operations Inspector Theory 17 - 28 Feb 2020, London Gatwick Flight Simulation Training Device Qualification and Operation 24 - 26 Feb 2020, London Gatwick AOC Accountable Manager 11 Mar 2020, London Gatwick I 7 Apr 2020, London Gatwick Evidence-Based Training fo Flight Operations Inspectors 21 - 24 Apr 2020, London Gatwick To book now or for more information, please visit: www.caainternational.com/training or contact us: E: training@caainternational.com; T: +44 (0) 330 0224401 www.caainternational.com Part of the UK CAA International Group

Underutilised inventory?

Together for better aviation

Let us unlock your inventory value

ajw-group.com

IATA.DEC19.026.indd 26

05/12/2019 13:49

Dossier: Cabin waste

Dossier

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

P27-30 Dossier Cabin Waste_Airlines 2019-06_Airlines.indd 27

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

09/12/2019 08:06

Dossier: Cabin waste

80% The air transport industry spends about $700 million on cabin waste disposal every year.

28

$700m

Etihad has announced its intention to remove 80% of SUPs by the end of 2022

Airlines 2019 – 06

P27-30 Dossier Cabin Waste_Airlines 2019-06_Airlines.indd 28

Demonstrable benefit

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

136 tons

Delta will get rid of 136 tons of SUP onboard and in lounges by the end of 2019

100 million

By 2021 100 million SUP items will disappear from Qantas flights

airlines.iata.org

09/12/2019 08:06

IMAGES: ISTOCK/SHUTTERSTOCK/GETTY

Dossier

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

29

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

P27-30 Dossier Cabin Waste_Airlines 2019-06_Airlines.indd 29

2019 – 06 Airlines

09/12/2019 08:06

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

30

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

P27-30 Dossier Cabin Waste_Airlines 2019-06_Airlines.indd 30

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

09/12/2019 08:06

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.

collinsaerospace.com/more

AEROSPACE REDEFINED

©2019 Collins Aerospace, a United Technologies company. All rights reserved.

IATA.DEC19.031.indd 31

05/12/2019 13:50

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

32

A $5bn The spare parts market is worth $5 billion annually

Airlines 2019 – 06

P32-33 MRO_Airlines 2019-06_Airlines.indd 32

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

airlines.iata.org

09/12/2019 11:45

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.

IMAGES: ALAMY

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

airlines.iata.org

P32-33 MRO_Airlines 2019-06_Airlines.indd 33

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”

33

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

09/12/2019 08:07

Cyber security

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

D

34

According to the 2015 SANS Institute Study, an estimated 80% of cyber incidents originate in the supply chain

Airlines 2019 – 06

P34-35 Cybersecurity_Airlines 2019-06_Airlines.indd 34

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

airlines.iata.org

09/12/2019 08:07

Cyber security

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

airlines.iata.org

P34-35 Cybersecurity_Airlines 2019-06_Airlines.indd 35

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.

35

2019 – 06 Airlines

09/12/2019 08:07

Technology

The 100-day transformation Supporting airlines in their digital transformation is vital as the pace of industry change picks up speed WORDS: GRAHAM NEWTON

T

36

“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

P36-37 Accelerate_Airlines 2019-06_Airlines.indd 36

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.

airlines.iata.org

09/12/2019 08:08

Technology

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.

IMAGE: ALAMY

Innovation hub

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.

airlines.iata.org

P36-37 Accelerate_Airlines 2019-06_Airlines.indd 37

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.”

37

For more information on how to get involved, please contact accelerate@iata.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

09/12/2019 08:08

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

38

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

IMAGE: GETTY

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

P38 Meet Us 2020_Airlines 2019-06_Airlines.indd 38

airlines.iata.org

09/12/2019 11:46

IATA.DEC19.039.indd 39

05/12/2019 13:51

IATA.DEC19.040.indd 40

05/12/2019 13:52