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78th AGM and World Air Transport Summit Doha, Qatar, June 19–21, 2022
THE AGM ISSUE
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CEO Interviews ANA, Delta, Qatar, Virgin Australia, Vistara | SAF Jet fuel moves on | Fit for 55 EU sustainability proposals | Safety Industry record Digital ID Distribution chain redeﬁned | Airports Keeping costs down
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Contents 2022 – 02
74 With challenges come opportunities
5 Willie Walsh, Director General
Freedom for people to connect
Vinod Kannan, CEO Vistara
26 Sustainable aviation fuels
10 IATA and industry update
Investment in SAF is essential if the industry is to reach its emissions targets and avoid the long haul to replace jet fuel
Europe’s step towards normality, New catering agreement, Diversity critical in Americas, Passenger recovery in 2024
40 Airline retailing
Sustainable aviation fuels
NDC is the ﬁrst step on the journey towards customer-centricity
53 Climate change
18 Not out of the woods just yet
Making Fit for 55 ﬁt for purpose
Qatar Airways Group CEO, His Excellency Akbar Al Baker
64 Aviation safety
34 Proﬁtable and sustainable business
Revamped safety strategy emphasizes leadership to make aviation even safer
14 Data: In numbers
Jayne Hrdlicka, CEO of Virgin Australia 80 Digital ID
Decentralized digital identity drives today’s travel experience
58 Diverse talent creates success
Shinichi Inoue, President and CEO, All Nippon Airways
Keeping airport costs down in a post-pandemic world
68 Safeguarding the future
Delta Air Lines CEO, Ed Bastian
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 Production editor Vanessa Townsend 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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2022 – 02 Airlines
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Willie Walsh: DG Insight
Freedom for people to connect The world is moving again! We are not at pre-crisis levels of traﬃc just yet, but the recovery of air transport is well underway. In fact, in many parts of the world, the peak northern summer travel demand could look very much like 2019. And the biggest challenge for air cargo still is ﬁnding the capacity to meet demand. This is good news for airlines. This progress towards normality will be celebrated when the industry gathers for the 78th IATA AGM and World Air Transport Summit (Doha, June 19-21). The AGM will also address challenges. Where COVID-19 restrictions have been lifted, the challenges are in operations. Supply chain disruptions and the shortage of skilled labor need to be carefully managed as demand ramps up. Where COVID-19 restrictions remain, most notably China, alternatives to the zero-COVID policy are urgently needed. And in all parts of the world there is work to do with governments so that new variants or future pandemics do not elicit the same response of closing borders. airlines.iata.org
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Airline ﬁnances now face challenges with high oil prices, economic uncertainty, and inﬂated debt levels. Controlling costs has never been more important. Longer term, airlines are determined to achieve net-zero emissions by 2050. Governments will be able to set a similar ambition at the ICAO Assembly later this year. That will create a critical framework for policies to better support a ramp-up of sustainable aviation fuel production, deliver the Single European Sky, and promote carbon-reducing technologies. Lastly, the globalized world, built in part by aviation, is under tremendous stress. As an industry that brings the freedom for people to connect, above all else this will be a reminder of our common hope for peace. There will be much to discuss in Doha.
“The IATA Passenger CO2 Calculation Methodology is ready for airlines, travel agents, and passengers to adopt. By creating an accepted industry standard for calculating aviation’s carbon emissions, we are putting in place essential support to achieve net zero by 2050.”
On changes in mask guidance in Europe “Mask requirements on board aircraft should end when masks are no longer mandated in other parts of daily life, for example, theatres, oﬃces, or on public transport. We welcome EASA’s recommendation to relax the mask mandate. It’s an important step on the road back to normality.”
On travel restrictions “We need a data driven approach and a cost/beneﬁt mentality. A recent report by OXERA and Edge Health, looking at the spread of the Omicron variant in Europe, concluded that travel restrictions may only delay the peak of a wave by a few days.”
On the conﬂict in Ukraine
Willie Walsh IATA Director General
“I am appalled by the unlawful invasion of Ukraine by Russia and stand in solidarity with the Ukrainian people under siege. Aviation promotes peace and freedom by bringing people together.”
2022 – 02 Airlines
Qatar has a busy year ahead. In November, teams and supporters from 32 countries will gather for the month-long soccer FIFA World Cup—an event that could not exist without aviation. Connecting the world will also be highlighted by the IATA AGM in June. Airline leaders will discuss sustainability, diversity, and other crucial issues to pave the way for a net-zero carbon emissions future.
The Big Picture
Airlines 2022 – 02
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Digest Europe’s step toward normality IATA welcomed new guidance from the European Aviation Safety Agency (EASA) removing its recommendation that masks should be required in-ﬂight. EASA’s updated Aviation Health Safety Protocol calls for the mandatory mask rule to be relaxed where rules have been relaxed for other transport modes. This important shift reﬂects the high levels of vaccination, natural immunity levels, and the removal of domestic restrictions in many European nations. The updated guidance also acknowledges the need to move from an emergency situation to a more sustainable mode of managing COVID-19. “We welcome EASA’s recommendation to relax the mask mandate, which is another important step along the road back to normality for air passengers. Travelers can look forward to freedom of choice on whether to wear a mask. And they can travel with conﬁdence knowing that many features of the aircraft cabin, such as high frequency air exchange and high eﬃciency ﬁlters, make it one of the safest indoor environments,” said Willie Walsh, IATA’s Director General. Several jurisdictions still maintain mask requirements. That is a challenge for airlines and passengers ﬂying between destinations with diﬀerent requirements. “We believe that
Removing masks: The recommendation to relax the mask mandate is another step on the road back to normality
11 mask requirements on board aircraft should end when masks are no longer mandated in other parts of daily life, for example, theatres, oﬃces or on public transport,” continued Walsh. “Although the European protocol comes into eﬀect next week, there is no globally consistent approach to mask-wearing on board aircraft. Airlines must comply with the regulations applicable to the routes they are operating. The aircraft crew will know what rules apply and it is critical that passengers follow their instructions. And we ask that all travelers be respectful of other people’s decision to voluntarily wear masks even if it not a requirement.”
UPDATED CATERING AGREEMENT IMPROVES EFFICIENCY IATA and the Airline Catering Association (ACA) have released an updated Standard Inﬂight Catering Agreement (SICA). The use of the standardized SICA template helps improve the eﬃciency of inﬂight catering procurement across the world. The release of the updated template is the result of an agreement to deepen the collaboration between IATA and ACA. The two organizations will also jointly promote the use of SICA among their members. “The updated SICA is a signiﬁcant achievement. Catering requirements are complex and a unique
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part of an airline’s service standard. SICA helps both airlines and caterers manage that complexity eﬃciently to achieve the results that travelers expect. And the collaboration between IATA and ACA has improved SICA by bringing together the expertise of both ACA and IATA. This was a successful ﬁrst-time collaboration that we intend to continue and expand,” said Nick Careen, IATA Senior Vice President for Operations, Safety, and Security. IATA and ACA will be presenting the new template at a joint session at the 34th IATA Ground Handling Conference (IGHC), which will take place in Paris, France from May 31 to June 2, 2022.
Inﬂight food: An updated catering agreement will improve catering procurement eﬃciency
2022 – 02 Airlines
“The progressive removal of restrictions is giving a much-needed boost to the prospects for travel.”
Willie Walsh, Director General, IATA
2021 safety performance shows strong improvements All accident rate (accidents per 1 million flights): In 2021, 1.01 (1 accident every 0.99 million flights), compared to 1.58 (1 accident every 0.63 million flights) in 2020 Airlines 2022 – 02
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Piloting change: Airlines are committed to increase the number of women in senior positions
Diversity critical to airlines in the Americas IATA welcomed the continued focus on diversity and inclusion of airlines based in the Americas region, illustrated by their renewed commitment to the industry-wide 25by2025 initiative, in which participating companies commit to increase the number of women in senior positions and in underrepresented jobs and report annually on key diversity metrics. IATA’s Wings of Change Conference Americas, held in Santiago, Chile, featured a panel discussion on gender diversity under the banner of “Breaking the Airline Industry’s Glass Ceiling.” This included a signing ceremony of the 25by2025 commitment at which Azul and
GOL joined airlines based in the Americas region that have already pledged their support. Moreover, Airports Council International Latin America and the Caribbean will be the ﬁrst non-airline entity in the region to join the initiative. “The growing number of airlines signing up to 25by2025 illustrates a strong momentum to make aviation stronger with a more diverse workforce. That is a very solid base to attract even more airlines to make the commitment and, more importantly, to report improving gender balance, particularly in senior roles,” said Jane Hoskisson, IATA’s Director, Talent, Learning, Engagement and Diversity.
PASSENGER NUMBERS SET FOR RECOVERY BY 2024 IATA expects overall traveler numbers to reach 4 billion in 2024, exceeding preCOVID-19 levels. “The trajectory for the recovery in passenger numbers from COVID-19 was not changed by the Omicron variant. People want to travel. There is still a long way to go to reach a normal state of aﬀairs, but the forecast for the evolution in passenger numbers gives good reason to be optimistic,” said Willie Walsh, IATA’s DG.
In 2021, overall traveler numbers were 47% of 2019 levels. This is expected to improve to 83% in 2022, 94% in 2023, 103% in 2024 and 111% in 2025. In 2021, international traveler numbers were 27% of 2019 levels. This is expected to improve to 69% in 2022, 82% in 2023, 92% in 2024 and 101% in 2025. In 2021, domestic traveler numbers were 61% of 2019 levels. This is expected to improve to 93% in 2022, 103% in 2023, 111% in 2024 and 118% in 2025.
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mid-2030s we are planning to introduce the sustainable Energia family of aircraft, powered by revolutionary propulsion architectures. 2045 will likely see the flight of our first hydrogen-powered turboprop and finally, in 2050, a hydrogen-powered E2 or similar sized aircraft will take to the skies. Undoubtedly these are bold and ambitious steps, but with over 50 years of market knowledge and expertise behind us, we are confident that we will deliver what we set out to do, transforming the way we all fly.
17/05/2022 06/05/2022 14:56 09:57
In numbers S U S TA I N A B L E A V I AT I O N F U E L
SAF, a term that generally refers to non-fossil derived aviation fuel, will play a key role in aviation’s ability to meet the 2050 net-zero CO2 goal
$17bn of forward purchase agreements for SAF and some 14bn litres of SAF are in forward purchase agreements
Indicative job creation potentials for SAF production worldwide
Airlines 2022 – 02
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Latin America & caribbean
SAF can reduce emissions by up to 80% during its full lifecycle
Sustainable aviation fuel not only brings environmental beneﬁts for aviation, but it can also foster the development of a new industry
Pushing technology and operations
Aggresive SAF deployment
Aspiratonal and aggressive technology perspectives
Data (Source: Waypoint 2050, ATAG report)
Sustainable aviation fuel ramp-up long-term Ramp-up required for several scenarios and expected volumes of SAF required in 2050 (assuming a 100% emissions reduction factor in 2050).
Source: Waypoint 2050, ATAG report
Quantity of SAF (in Mt) 450
F1 – current trends, baseline F2 – pushing technology and SAF F3 – aggressive SAF F4 – aspirational technology-driven
Countries have a formal SAF policy, and the hope is that a global agreement will be in place by 2025
300 250 200
high+ 150 100 50 F1
The Air Transport Action Group (ATAG) estimates that aviation will need between 330-445 million tonnes of SAF per annum by 2050.
330-445mt SAF costs will come down (carbon cost included)
Costs will be able to reduce, mainly driven by economies of scale and some feedstock input reductions Production cost (USD per tonne of SAF)
$4,500 Fossil jet fuel price spread, 2000-2019 (highest and lowest points)
$4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0
Waste & Residue Lipids + HEFA
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Oil crops & trees + HEFA
Cellulosic crops + AtJ
Agricultural Residues + AtJ
Woody biomass + FT
Municipal Solid waste + FT
Industrial waste gases + AtJ
Green Hydrogen + FT (PtL)
By 2025, there will be 11 technical pathways to SAF certiﬁcation 2022 – 02 Airlines
Sponsored Feature: FLYR Labs
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New routes, new products, and new competitors, airlines are actively searching for innovative ways to provide a personalized—and proﬁtable—passenger experience that outpaces other market participants. To rise above the rest, airlines need access to better revenue and demand forecasts, superior and reactive pricing power, and a comprehensive view of their revenue potential from the base fare to ancillaries and from fare brands to cargo performance. Following a diﬃcult reconning with its
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is able to learn how the human brain works and gains knowledge. The technology develops a neural network that accurately maps pathways between what it understands are correlated pieces of data across an airline’s network. Especially when provided with a massively large dataset, deep learning provides unmatched forecasting accuracy that can be used to inform broader commercial decisions across functions like scheduling & planning, marketing, leadership ﬁnancial reporting, and cargo. For ancillaries and fare families it is important to dynamically set the price to match travelers’ preferences and increase conversion rates. Through deep learning, the understanding of how fare, fare families, and ancillary transactions contextually relate to each other enables airlines to grow their ancillary contribution as a component of total revenue performance. Recognizing how an increase or decrease of fares, for each individual itinerary, impacts ancillary attach values and revenues in either direction is critical to total revenue optimization. A partnership approach to adopting artiﬁcial intelligence Adopting new technologies can be scary to any complex organization, let alone one the size of an airline. This is why researchers and vendors must create engagement models that help win the hearts and minds of organizations.
Airlines 2022 – 02
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FLYR Labs: Sponsored Feature
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FLYR’s cloud-native solution typically shows incremental revenue lift of 5-7% for its airline partners
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2022 – 02 Airlines
We are not out of the woods yet Qatar Airways Group CEO, His Excellency Akbar Al Baker, says the future is still uncertain, and resilience and agility are vital. INTERVIEW BY: GRAHAM NEWTON
he global pandemic hit Qatar Airways just like every other airline. Its CEO, His Excellency Akbar Al Baker, says the aviation industry needs to be aware of future similar challenges, working with airlines to help to mitigate the stress of possible pandemics in coming years.
What lessons have airlines learned from the pandemic?
60% Traﬃc is only at about 60% of 2019 levels. And the truth is we don’t know what will happen in the future.
Airlines 2022 – 02
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There is no doubt that the pandemic is the biggest challenge in our lifetime. It shut down the entire industry and brought the world to a grinding halt. Our industry is fragile. We learned that, at short notice, so many things can happen that directly aﬀect aviation. We have seen this before—with MERS, SARS, bird ﬂu, and political upheavals. Aviation must be even more resilient and agile in the face of such calamities. And leaders in the industry must adapt to unrolling circumstances to survive. Do you expect business-as-usual next year or has the industry fundamentally changed?
Traﬃc is only at about 60% of 2019 levels. And
the truth is we don’t know what will happen in the future. There could be another variant or a country with extremely high infection rates that will shut it down, as we have seen in China. Until people have conﬁdence that the virus will not have the impact it did two years ago, the industry will not fully rebound. We are not out of the woods. That means keeping a close watch on the virus and monitoring changing protocols. In Qatar, we managed the pandemic in an organized way, which means we have one of the lowest infection rates. People are returning to their normal lives. That needs to happen across the world. In terms of the type of travel, discretionary leisure travel has already begun. I think business travel will return too; business people are itching to sit together and have face-to-face meetings. They aren’t comfortable doing deals in virtual meetings. Can industry partners do more to support the recovery?
We also operate the airport at Doha. During the pandemic, there were discounts in handling, catering, and charges. Concessions at the airport were exempted from rent for a period.
“Until people have conﬁdence that the virus will not have the impact it did two years ago, the industry will not fully rebound.”
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2022 – 02 Airlines
Unfortunately, this is not always the case. On the contrary, we see many airports and air navigation service providers trying to cover their losses by increasing charges. Airlines need help to mitigate the stress of the pandemic. It is important to support the partner that is driving business for the entire aviation value chain.
10% I would have no problem with paying 10% more for SAF but I can’t pay two, three or even four times the price of normal jet fuel
Air cargo has been essential to sustaining trade around the globe. Shipping is under stress. Remember, ports were under lockdown too and shipping lines had similar problems to aviation. Even now, if you look at a shipping app, you can see vessels waiting outside ports in China. Plus, there is a shortage of shipping containers because of problems in their networks. It all brings us back to air cargo. It has been vital for the industry, for global trade, and for emergency requirements. One challenge we have is a shortage of capacity. But the bigger problem is shippers not declaring their consignments correctly. Speciﬁcally, we must address the lithium battery threat. I am afraid that the industry will only wake up to this if there is a disaster. The last incident at Qatar Airways was just a short time ago. Fortunately, our pilot took decisive action and made an emergency landing. We unloaded a container that had two bags burning. Qatar Airways is constantly ﬂagging up this problem and we are the launch customer for new ﬁre-retardant containers. Over the next two years, we will replace all our containers with the ﬁre-retardant variety. They can contain a ﬁre for up to four hours.
That will bring in a lot of people, create a lot of stress on the transport system but also be hugely exciting. Fans from around the world will be coming to Qatar. Airlines 2022 – 02
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How important has cargo been and what can the industry do to improve cargo processes?
But not every airline can aﬀord to do this. We must work harder to have robust regulations in place as soon as possible. We cannot allow a few agents that simply don’t care to put dangerous goods on an aircraft without declaring them. What is your strategy for the FIFA World Cup later this year?
We are not a super-sized airline, so we won’t be able to cater for the huge inﬂux of people alone. We have agreements with partners for shuttle ﬂights and other airlines in which we have a stake will operate charter ﬂights. These are all point to point and will ﬂy to the old Doha Airport, which has been completely refurbished. All the navigational aids have been upgraded to cope with the extra runway, which will complement the two we use at Hamad International Airport. In fact, all the infrastructure for the World Cup is ready ahead of time, including our new metro system. I am sure we will successfully mitigate the stress on our interconnected transport system and provide an excellent experience. airlines.iata.org
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Why is diversity important?
We are a big supporter of IATA’s 25by2025 initiative to get more diversity in the industry and we are proud to sponsor the IATA Diversity & Inclusion Awards. At Qatar Airways, more than 45% of employees are female, including senior managers and engineers. In fact, in every sector of operations I am proud to say we have a high number of females. Three years before the deadline, we are already well ahead of target. Can we achieve net-zero emissions by 2050 and what do governments need to do to support the industry’s eﬀorts?
At Qatar Airways, we are fully committed to achieving the 2050 target. But airlines can’t do it alone. And I don’t see the wider eﬀort yet. For example, oil companies are not producing enough sustainable aviation fuels (SAF). This is because they are still making huge investments in hydrocarbons and developing oil ﬁelds. There should be similar investment in SAF but that is not happening. The result is that SAF are expensive. We need volume for SAF to be available at a reasonable price. I would have no problem with paying 10% more for SAF but I can’t pay two, three or even four times the price of normal jet fuel. Unless we get it right, air travel will become exorbitantly expensive because the high cost of SAF will have to be passed on to travelers. I also think the industry hasn’t been sending out the correct message. Aviation is just over 2% of global emissions yet is the largest target for Airlines 2022 – 02
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environmentalists. Other industries are responsible for far more emissions—shipping, for example. The oceans are full of vessels and diesel is still used extensively. We need to point this out. Will new technologies help sustainability eﬀorts?
But remember, this will be a diﬀerent World Cup. It is the ﬁrst time in the history of FIFA that a country hosting the World Cup has all eight stadiums within 100km2. Spectators will be able to watch more than one match in a day, which has never happened before. That will bring in a lot of people, create a lot of stress on the transport system but also be hugely exciting. Fans from around the world will be coming to Qatar to enjoy the tournament.
We are a big supporter of IATA’s 25by2025 initiative to get more diversity in the industry and we are proud to sponsor the IATA Diversity & Inclusion Awards. At Qatar Airways, more than 45% of employees are female, including senior managers and engineers.
Electric and hydrogen propulsion systems are still some way away. With all the pressures in the industry right now, I don’t think there are enough ﬁnancial resources. It would take massive grants from governments for rapid research. Hydrogen has a number of challenges, including volume, volatility, and leakages. Electric aircraft look positive and will certainly be suitable for small air taxis. Maybe we will see electric aircraft taking 20 or 30 passengers for an hour or so. But there won’t be electric commercial aircraft with hundreds of passengers ﬂying for a few hours—at least not in the foreseeable future. What other new technologies could transform the industry?
Artiﬁcial intelligence will do a lot to deliver seamless, personalized travel. But the biggest issue we have with new technologies is data storage. We are getting more and more data that must be kept private and secure. But the more data we handle, the more chance there is of it being hacked or sold. We need to know a lot more about data security. Is there anything about aviation that keeps you awake at night?
I am used to challenges after 25 years as the CEO at Qatar Airways. I have developed a thick skin and sleep very well. People worry about the environmental challenge, but we have a plan. It will take a joint eﬀort from the industry and other partners, including fuel suppliers, engine manufacturers and airframe manufacturers. Once you have a plan, it is about action and not worrying. And the industry has a plan for all its challenges. airlines.iata.org
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Sponsored Feature: Osprey Flight Solutions
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Osprey’s web-based platform solves the challenges in systemic risk management for the aviation industry
In a politically turbulent world, airlines need real-time, relevant information to manage the risks in their network. Are the countries they overﬂy safe? Is there potential civil unrest at one of their destinations? Traditionally, this information has been provided by governments and authorities through advisories and NOTAMs. Governments have unique intelligencegathering abilities and so it is no surprise that the industry constantly calls on them to disseminate as much of their data as possible. The reality of data sharing “But we have to accept the reality,” says Andrew Nicholson, CEO, Osprey Flight Solutions. “And that is that the risk management of commercial aviation is usually, at best, tangential to government priorities. Providing objective, broad-based data as part of a comprehensive, probabilistic risk management process is not how they function. We have to stop this endless mantra of ‘governments must do more’.” It is also true that not all government intelligence gathering is created equal. Airlines with governments that have a
developed capability in this area might be able to garner a base level of information on speciﬁc threats. But how does an airline based elsewhere manage risks? They usually have to rely on data from other governments and hope that it is not too diluted due to political sensitivity issues. And which government do they choose? Consistency between the leading authorities is certainly not universal. “There is the concerning trend for mechanisms that exist to ensure ﬂight safety being used for political ends,” warns Nicholson. “Flight prohibitions are an obvious example. Take the international response to the Ryanair ﬂight diverted to Minsk in May 2021. Prohibiting overﬂight of Belarus sends a message, but the risk to safety of ﬂight was non-existent, especially if the aircraft didn’t have a political dissident on board.” The vast majority of airlines do not overﬂy North Korea based on government advisories, even though the risk to civilian aircraft ﬂying through this airspace is manageable. And in Afghanistan, just one air corridor is available because of ongoing political tensions and some safety concerns. Yet there is a negligible
“World-leading human analysis is an essential component of the system. It is not all about technology.” Andrew Nicholson Airlines 2022 – 02
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threat to aircraft at cruising altitude, particularly now that NATO has withdrawn, removing a large component of the conﬂict and therefore almost completely eliminating the risk of misidentiﬁcation. The residual safety issues over Afghan airspace can be managed in a similar fashion to how ﬂights are conducted over large swaths of the African subcontinent. In fact, the decision pushes routes over Saudi Arabia, Iran, Iraq, and the India-Pakistan border, arguably far more dangerous. In early 2020, Ukraine International Airlines ﬂight PS752 was shot down by a surface to air missile just after take-oﬀ from Imam Khomeini International Airport, Tehran. The power of commercialization Osprey Flight Solutions’ web-based platform solves the challenges in systemic risk management. It generates over
Osprey Flight Solutions: Sponsored Feature
12,000 data points a month, from over 200,000 publicly available sources, in 65 diﬀerent languages, from social media and traditional news media to insights from organizations working in particular sectors, such as human traﬃcking. That makes it the largest database of security and safety risk data in the industry by a signiﬁcant margin. “The information is completely apolitical and allows airlines to properly identify risks and compile a systemic risk proﬁle. It is the most powerful resource for risk analysis available.” says Nicholson. “Once we have fully ingested their requirements, customers just need to log in to get customized, objective data for every ﬂight in their network. It shows the power of commercialization. Just think of how commercial satellite imagery has furthered the real-time knowledge of risk.” Behind the slick interface, artiﬁcial intelligence (AI) is churning through the data to clean it up, structure it, and present it in a
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recognisable format. This then feeds the analytics and other outputs. Importantly, quality control is provided by human analysts. This ensures fake news and duplications are avoided. “World-leading human analysis is an essential component of the system,” says Nicholson. “It is not all about technology.” Changing the conversation Providing such broad spectrum, objective data and actionable intelligence is a gamechanger in risk management. The European Aviation Safety Agency (EASA) conﬂict zone platform—also provided by Osprey— provides a glimpse of the potential to bring the industry together with a consistent view of risk that such capabilities present. The platform shares information on conﬂict zones and there is even a chat
function to share best practice and the latest developments. The information is delivered to every European Union state and aircraft operator. “It shows the progress we are making in network risk management,” says Nicholson. “In future, we will see a signiﬁcant increase in the speed of capture and delivery of information. And we will move into predictive reporting. Advanced AI anomaly detection already allows us to identify risks before they occur.” Further ahead, a transformational analytical framework will provide a better understanding and articulation of the global operational environment and advanced data visualizations will prove a more intuitive way of assessing the information for highly complex environments. “We already know that risk changes on a minute-by-minute basis, and we now have the data to model that and apply it in real-time to a network of ﬂights, delivering a truly systematic and dynamic risk assessment capability,” Nicholson concludes. “But ﬁrst, we need to get the industry to come together to strive for cohesion and consistency in risk management practices. We must lose the political agenda. We want to make aviation and the people involved, from staﬀ to travelers, safer. Otherwise, we may witness another tragedy that could have been avoided.”
For more information on Osprey Flight Solutions, email email@example.com or visit www.ospreyﬂightsolutions.com/
2022 – 02 Airlines
Sustainable aviation fuels
AF are a proven drop-in technology that have the potential to cut carbon emissions in the range of 70% to 100%. To date, they have powered some 450,000 ﬂights. “Even if we have hydrogen and electric propulsion systems for short haul commercial ﬂights by 2035, the majority of emissions come from long-haul widebody ﬂights,” says Hemant Mistry, IATA’s Director of Energy Transition. “We need SAF to be widely available at a competitive price.” The current situation
There is a long way to go, however. Around 0.1% of fuel uptake is SAF, although this ﬁgure has been artiﬁcially inﬂated because of the lower total fuel uptake in the past two years. There is better clarity on SAF availability in 2025. “If you take a ﬂight in 2025, there are decent odds that some SAF will be in the tank,” says Mistry. “There will have been more than one million ﬂights and production will have swollen some 50 times from 2021 volumes. About 50 airports will have some SAF in the system and the next wave of production facilities will have been announced focusing on industrial waste gases, waste agricultural, and forestry material, and aviation will be regularly turning household rubbish into jet fuel.” That extra capacity will translate to some 5 billion liters of SAF being available in 2025. Most will be HEFA (Hydroprocessed Esters and Fatty Acids)-based—meaning such feedstocks as vegetable oils and used cooking oils. HEFA is a ready-to-go solution with established markets and logistics. Feedstock is available and reﬁneries can be easily adapted to be HEFA compatible. The issue will remain the price. Used cooking oil, for example, is trading above the price of jet fuel. “But you have to factor in not only the cost of fossil kerosene but also the cost of burning it,” says Mistry. “Emitting carbon will get more expensive and airlines should build that into any assumptions about the SAF price.” Airlines 2022 – 02
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The long haul to replace jet fuel If aviation is to achieve its target of net-zero carbon emissions by 2050, investment in sustainable aviation fuels (SAF) is absolutely essential. WORDS: GRAHAM NEWTON
Sustainable aviation fuels
SAF STORIES: JOINT VENTURE IN TECHNOLOGY United Airlines Ventures (UAV) and Oxy Low Carbon Ventures (OLCV) are working with Houston-based biotech ﬁrm Cemvita Factory to produce sustainable aviation fuel (SAF) using carbon dioxide (CO2) and synthetic microbes. If work goes according to plan, UAV and OLCV plan to form a joint venture to commercialize the technology. This includes funding such projects as engineering studies and constructing and operating SAF plants. Cemvita is the third SAF-related technology in which UAV has invested. And it will continue to make strategic investments in SAF producers and revolutionary technologies, including carbon capture, hydrogen-electric engines, electric regional aircraft, and urban air mobility.
United has also:
purchased an equity stake in hydrogen-electric engine developer ZeroAvia ﬂown a passenger aircraft full of passengers using 100% sustainable aviation fuel agreed to purchase some 5 billion gallons of SAF invested in electric aircraft startup Heart Aerospace announced an agreement to work with Archer Aviation to accelerate the development and production of an urban mobility solution or air taxi.
0.1% There is a long way to go. Around 0.1% of fuel uptake is SAF, although this ﬁgure has been artiﬁcially inﬂated because of the lower total fuel uptake in the past two years
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In any case, trying to predict a SAF price is notoriously diﬃcult. There are more than 50 diﬀerent SAF feedstock and technology combinations that can be applied in the seven technical pathways that have been certiﬁed. And there are numerous stakeholders in SAF deployment too, from airline buyers to feedstock suppliers, technology companies, SAF producers, logistics ﬁrms, ﬁnancial institutions, and governments. For each of these, geography, cost of labor, and regulatory frameworks must also be factored into the equation. Mistry accepts that SAF may not achieve price parity in the near future, but he does believe that the price will become competitive. “There is more risk in doing nothing than in committing to SAF,” he suggests. “Airlines will 2022 – 02 Airlines
Sustainable aviation fuels
SAF expected to do the heavy lifting Expected SAF required for Net Zero 2050 500
346 Amount of total jet fuel used in 2019 Billion Litres
need to use SAF, and it is better to get experience of it now. It is a drop-in fuel, but airlines might need to know where it is best to use SAF, for example. Some parts of the world will have better availability or attach more importance to their use. SAF will inﬂuence strategic decisions.” Mistry also points out the uncertainty regarding electric or hydrogen options. It isn’t known how much hydrogen will cost, what the maintenance requirements will be or even what the input infrastructure will look like. “There are so many variables with new energy sources that we don’t have clarity on,” says Mistry. “We have SAF. We know they work. The emphasis has to be there.”
23 New pathways
Every new SAF pathway will expand airline
8 0 2025
28 options. Additional technical pathways are expected in the short term and there is close to $20 billion in forward orders. Work is also ongoing on power-to-liquid (PtL) or sun-to-liquid (StL) processes, also known as synthetic fuels. These fuels are 100% carbon neutral and should be hitting the market soon. They are produced using green electricity, which is coming down in price rapidly as photovoltaic improvements come online. But they are more complex than HEFA and stakeholders are still improving their understanding of gathering carbon from air or from waste. Demand will also get a boost from the transition to 100% SAF from the maximum 50-50
$20bn Every new SAF pathway will expand airline options. There is close to $20 billion in forward orders. Airlines 2022 – 02
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SAF STORIES: 100% FLIGHT USING SAF An Airbus A380 has ﬂown using 100% SAF in one Rolls-Royce Trent 900 engine. For the ﬂight, 27 tonnes of unblended SAF were provided by TotalEnergies. It was made from HEFA, was free of aromatics and Sulphur, and primarily consisted of used cooking oil and other waste fats. It is the third Airbus aircraft type to ﬂy on 100% SAF following an A350 and an A319neo.
SAF STORIES: 64% CUT IN EMISSIONS Swedish airline Braathens Regional Airlines (BRA), turboprop manufacturer ATR, and SAF producer Neste are partnering to ﬂy an aircraft on 100% SAF in one engine and 50% SAF in the other. It is anticipated emissions will be reduced 64%. Per G. Braathen, Chairman of Braathens Regional Airlines said: “It is absolutely vital that aviation goes even further to decarbonize. It is what we want, and what our passengers and the general public expect. However, we must be realistic and accept that it is today impossible to
achieve this aim with one concrete action only. This is a process with many steps and, in the short-term, the most eﬃcient way to reduce CO2 emissions is to increase the use of SAF. Partnering with ATR to achieve 100% SAF certiﬁcation will enable us to reach our goal of 100% SAF in our planes in 2030. This is in line with our strategy to become the world’s ﬁrst net-zero airline 10 years ahead of any other airline.”
SAF STORIES: SAF FACILITY IN CHINA Honeywell and Oriental Energy Company Ltd. have announced a SAF production facility in Maoming, Guangdong Province in China. The new facility will produce 1 million tons of SAF annually. China aims to achieve carbon neutrality by 2060.
Is your airline ﬂying on renewables yet? Fly more sustainably with Neste MY Sustainable Aviation Fuel™ (SAF) and reduce GHG emissions by up to 80%*. Commercially available and in worldwide use today. Neste.com/SAF
*) Calculated with established life cycle assessment (LCA) methodologies, such as CORSIA methodology.
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04-05-2022 15:00 13:09 17/05/2022
Sustainable aviation fuels
blend with fossil jet fuel currently allowed. There are no major technical problems with 100% SAF and it has even been tested on a commercial ﬂight by United Airlines. Numerous other trials have also been positive, and the only caveat is that it needs the latest generation of engines. Older aircraft and engines need aromatics— chemicals that make the fuel work better—to swell seals and prevent leaks. In any case, by the time SAF are in widespread use these aircraft and engines will be retiring. Synthetic aromatics are also on the horizon and certiﬁcation body ASTM is looking at the required standards.
Energy density of combustibles Lithium Battery
It is clear that SAF activity is accelerating and on track. Usage will be above the 2% target by 2025 driven by signiﬁcant airline commitments to buy SAF. By 2045, it is estimated that SAF usage will surpass total fuel uptake in 2019. “The key now is to keep policies harmonized,” adds Mistry. “The United States and others are taking bold steps forward but keeping it orderly will be important.” Helping matters is the fact that there is a SAF-compatible feedstock option in more than 90% of countries in the world. By combining international technology with local feedstock to produce SAF locally, governments will enjoy a greater degree of energy security, which is in keeping with most government strategies. IATA estimates that to reach net zero by 2050, the aviation sector will require about 450 billion liters of SAF. Mistry says the association will be working hard to ensure all stakeholders work toward this goal. “IATA plays a role in bringing organizations together, sometimes doing matchmaking and importantly, upholding the technical and sustainability standards that airline passengers and the wider community expect,” he adds. “Increasingly, IATA has been actively engaging with policy makers to help design policies that support accelerating the global deployment of SAF.” Airlines 2022 – 02
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Energy Density of Combustibles (in MJ/kg)
together with our partners. We will continue to collaborate with like-minded partners globally to work towards decarbonization and environmental sustainability in our operations.”
SAF STORIES: FRENCH PRODUCTION SAF STORIES: SAF DECLARATION Airbus, Rolls-Royce, Safran, and Singapore Airlines signed a Global SAF Declaration that commits them to promote the acceleration of the development, production, and consumption of SAF. The Declaration aims to ensure a steady increase in SAF utilization over the next decade through enhanced collaboration. Lee Wen Fen, Senior Vice President Corporate Planning, Singapore Airlines, said: “The Global SAF Declaration reaﬃrms SIA’s commitment to achieve net-zero carbon emissions by 2050. SIA remains ﬁrmly committed to our sustainability goals and has been actively advancing the use of SAF in Singapore
TotalEnergies’ Normandy platform has begun production of SAF. Two other company sites are also involved in SAF production and from 2024 TotalEnergies will also produce SAF at its Grandpuits zero-crude platform south-east of Paris. The move is partially a response to French legislation, which calls for aircraft to use at least 1% SAF.
SAF STORIES: JAPAN UPTAKE TO HIT 30% SAF must make up 10% of Japanese airlines’ total fuel uptake by 2030. To help, the government will set up a public-private committee to encourage domestic production. JGC Holdings and Cosmo Oil have already announced a SAF production facility that is expected to produce up to 30 million liters from 2025.
When you fly an ATR aircraft you burn 40% less fuel than regional jets, which means 40% less CO2 emissions. Along with reduced noise levels, they offer a more responsible alternative, minimising the effect air travel has on the environment. Find out more at atr-aircraft.com
Sponsored Feature: Venari Partners
James Parker, Director, Aviation, Transport and Logistics, at executive search ﬁrm Venari Partners
HOW TO ATTRACT THE BEST TALENT FOR FUTURE SUCCESS A proactive and agile recruitment strategy has never been more important as we emerge from the pandemic.
The trials and tribulations of the past two years are well documented. Aviation lost a lot of skilled personnel. Retaining existing staﬀ and recruiting the right people to maintain the momentum of the recovery has become mission critical.
James Parker, Director of Aviation, Transport and Logistics at Venari Partners, warns that airlines are not out of the woods yet. “There could be more attrition to come,” he says. “For many of the younger generation, this is the ﬁrst big shock to the industry that they have witnessed. They are questioning whether it is the right industry to be in and they are looking elsewhere.” At the same time, aviation skills have become more transferable. Take the logistical requirements of such companies as Amazon, for example. An aviation background is highly prized. There are, however, solutions to help an airline, or any stakeholder in the aviation value chain, attract and retain the best talent. Recruitment strategy A good start is building a talent pool. Recruitment can never be about just ﬁlling jobs. The aim is to engage with talent in advance of them making a move. It allows an airline to build for the future. “Recruitment needs to be ﬂexible,” says Parker. “And it must be proactive. If airlines identify a talent, then they need to forge a relationship and think strategically. There should always be roles for good people.” In essence, airlines need to understand where the best talent is coming
Airlines 2022 – 02
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from to ensure they have a strong pipeline of talent coming through the ranks. Do they have a Chief of Maintenance successor, for example? The recruitment process also needs to be more akin to a customer experience. Allowing the company culture to shine through the narrow tunnel of recruitment is a proven methodology. Associated with this is the speed of the recruitment process. Long wait times are not a good sign in any aspect of the industry. Seamlessness is the name of the game. This extends beyond the job interview and into the ﬁrst few months of the new placement. “The idea of a recruitment experience and helping people understand the industry is quite new for many aviation companies,” says Parker. “The traditional mindset that says people never leave aviation and that it is best to recruit from within needs changing. For many new recruits, there will be a transition period that needs to be managed carefully to assist retention.” Diversity is another area that cannot be ignored. Airlines are working hard to understand that the Diversity, Equity and Inclusion (DE&I) demographic can add signiﬁcant value and breadth to the talent pool. Investing in DE&I can take many routes. It can mean a proactive recruitment strategy, examining how competitors achieve diversity or understanding which internal functions lack diversity. Some airlines do this better than others, but ultimately more work must be in done in this space. A ﬁnal factor in the recruitment process, and perhaps the hardest to implement, is the issue of salaries. Simply, airlines need to pay more for the top talent. In general, says Parker, base salaries are increasing, and
“The traditional mindset that says people never leave aviation and that it is best to recruit from within needs changing.” bonuses are becoming less formalized. But the fact is that if other industries pay more, airlines will lose or fail to attract talent. This may be a bitter pill to swallow in the ﬁnancial climate, but top talent will always bring value. Success in the job For staﬀ in situ, as well as new employees, aviation will also need to look closely at remote working, a concept that has become especially popular due to the pandemic. “It is an interesting debate for airlines,” says Parker. “People want that ﬂexibility and if you dismiss the notion of remote working you will immediately have a smaller pool of talent. But, of course, senior leaders especially need to be visible. And some aviation jobs simply can’t be done remotely.” The solution again lies in being agile. If an airline recruits from abroad, for example, does the new employee need to move immediately? Perhaps the transition can happen over 12 months, allowing them time to get to know their new home so that the ﬁnal move is easy and doesn’t aﬀect their focus on the job. Innovative thinking will also allow aviation companies to address key areas of recruitment, such as technology experts. Tech Hubs in diverse locations may be a way to access talent from around the world. “Recruitment and staﬀ retention are absolutely vital to the industry’s recovery and future resilience,” concludes Parker. “Airlines and aviation stakeholders can get this right if they are creative and break free of the traditional mindset. It has been a challenging two years but with every challenge comes opportunity and we are entering into an exciting time for aviation.”
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“The passion for our airline runs deep through all our team members and this has helped us all get through periods of very little ﬂying, to periods now where we are seeing soaring demand.”
IMAGE: ©GLENN HUNT-VIRGIN AUSTRALIA
Airlines 2022 – 02
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Profitable and sustainable business Jayne Hrdlicka, CEO of Virgin Australia, believes it is vital to keep the world accessible through great value fares. INTERVIEW BY: GRAHAM NEWTON
he pandemic hit Virgin Australia hard, leading to a complete overhaul of its business and a restructuring of the airline’s operations and organizational model. But it has emerged stronger as a result. How diﬃcult has it been to survive the crisis?
There’s no denying the toll COVID-19 has had on the aviation industry, and it has been no easier for Virgin Australia. Before the revenue disruption of COVID-19, Virgin Australia was over-burdened with debt and a bloated cost structure. When borders closed internationally and domestically, Virgin Australia had no choice but to enter Voluntary Administration. This was a devastating moment for both our suppliers and our people. We have not wasted this opportunity, however, to quickly renew under new ownership, restructure our cost base, and completely rebuild our commercial function. In a little under 18 months, we were able to remove over $300 million in costs while rebuilding our revenue generation capability. This period was incredibly diﬃcult for our amazing people. But their passion and commitment to rebuilding a hugely successful Virgin Australia means we have made some remarkable progress in the last two years. By fully
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standing back up all Virgin Australia employees, growing our ﬂeet size over 50%, hiring an additional 3,000 people, launching a new loyalty program for small and medium-sized business ﬂiers, re-launching short-haul international ﬂying, adding new world class international partners, and committing to net-zero emissions by 2050, we have made some major changes to our business and aren’t done yet. We are now much more agile, adaptable and prepared for the world of possibilities than ever before.
Was it easier to manage the restructuring of the airline because operations were so limited?
There is no doubt that it has been beneﬁcial to have a period of relative quiet to rebuild our business model. With strategic new owners, we were able to begin investing in the future and investing in our transformation on our ﬁrst day under new ownership. It would have been easy for Bain Capital to say please wait for the revenue before signiﬁcant investments in IT infrastructure, people, and organizational transformation. They did the opposite, and instead asked us how fast we could deliver and what we needed to make that happen. We are continually grateful for their strategic orientation about their ﬁrst aviation investment.
2022 – 02 Airlines
now where we are seeing soaring demand. We nurture and uphold a workplace culture which emphasizes an authentic, fun loving, hardworking, and irreverent challenger nature. Our employees feel assured bringing their true selves to work every day and we’re grateful for it. We are delighted that with borders open and lockdowns a thing of the past, we have been able to re-hire hundreds of people who left the business during the pandemic and are hiring hundreds more to support our growth. Despite an increasingly competitive recruitment market, we continue to attract amazing people to the airline.
What is your strategy for the airline?
Our ambition is to be the most loved airline in Australia with a winning team that attracts the very best, generates extraordinary loyalty from our guests and delivers strong ﬁnancial returns. Through the administration process we reset the perimeter of our business, removing activity that was structurally or strategically disadvantaged. We then renewed focus on our core domestic business through a simpliﬁed ﬂeet and fundamental transformation of our commercial and operations model. Since exiting administration, we have taken a further $400 million in cost out of the airline with signiﬁcant transformation yet to come. Virgin Australia’s comprehensive transformation enables us to now deliver exceptional travel experiences at great value. Underpinning our strategy is our laser focus on 33% domestic market share, and we have grown our 737 ﬂeet by over 50% in the last 12 months from 58 aircraft to 88 aircraft to support this. In terms of our guest oﬀering, it is focused on great value, choice, and delivery with the unmistakable Virgin ﬂair. This includes great pricing combined with our global airline partnerships, rewards through Velocity Frequent Flyer, great travel experiences in our lounges and on board our ﬂights, and partnerships with some of Australia’s most recognised brands. This is largely delivered by our crew who live and breathe our values and our unique Virgin Flair and enable us to remain Australia’s most loved airline. How will you improve the company culture?
The strength of Virgin Australia has and always will lie with our people. They are the reason we have been able to recover so strongly over the past two years. They have stayed resilient, demonstrating both loyalty and commitment in times of uncertainty, been incredibly ﬂexible, and worked passionately every day to make a diﬀerence for our guests and our airline. The passion for our airline runs deep through all our team members and this has helped us all get through periods of very little ﬂying, to periods Airlines 2022 – 02
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88 We have grown our 737 ﬂeet over 50% in the last 12 months from 58 aircraft to 88 aircraft
50% Fully standing back up all Virgin Australia employees, growing its ﬂeet size over 50%, and hiring an additional 3,000 people
6 The Australian Government has release an Aviation Recovery Framework, which has six priorities
What more could the Australian Government have done to support the travel industry and what still needs to happen to help airlines recover?
We are grateful for the support we received as an industry through the worst of COVID-19. It helped keep vital infrastructure ready to ﬂy and support both the community and the economy rebuild post lockdowns. Going forward, the Australian Government has released an Aviation Recovery Framework, which among its six priorities looks at enhancing and modernizing regulatory settings, including airports regulation, to help the entire industry thrive, and building a sustainable pipeline of workforce skills for the future. In addition, there is a Strategic Aviation Advisory Forum that will engage with industry and provide feedback to government on the recovery and future issues. It’s important these initiatives are continued regardless of the election outcome. We would also hope to see a funding program to assist in the development of sustainable aviation fuels (SAF) in Australia. Is the digital transformation of the industry technology for technology’s sake or is it the only way forward?
It is absolutely the only way forward and the shift in consumer behavior post-pandemic has only hastened the need for change in our industry. airlines.iata.org
The transformation of industry technology is critical to meet customer expectations in how to shop, book, manage, and enjoy their travel experience—on the ground and in the air. The best online retailers have lifted the bar, and our customers expect simplicity, consistency, speed, and ease when they interact with us. The use of data science and more ﬂexible integration of technology platforms will help make this possible. There are also many signiﬁcant opportunities to use data more dynamically to drive signiﬁcant real-time operational performance improvements. We are heavily investing in technology and the digital experience as part of our wider transformation strategy to best position ourselves to serve the next-generation customer and to continue managing down our costs. As part of that, we have prioritized upgrades to internal and external digital interfaces and to commercial and operational tools and platforms.
reduce all ground emissions, waste management, carbon oﬀsetting programs, and the use of alternative fuels. How do we encourage the production of sustainable aviation fuels to scale up?
33% Underlying our strategy is a laser focus on 33% domestic market share
Can airlines aﬀord to pursue sustainability in the current climate, and do you look at green initiatives from a business or environmentalist point of view?
We’ve all got an obligation to do the very best job we can protecting the environment and protecting our futures. We’re very realistic with the challenges associated with getting to net zero by 2050. Though SAF is a key piece of the puzzle, it is not the only piece. Our focus is on the elements of our emissions proﬁle that are within our control, and to work closely across the industry to encourage investment in SAF. Cracking the commercial viability of SAF is the key to our industry goals. Australia is behind other scale markets, so we have work to do as an industry to deliver against our ambition. Virgin Australia announced its commitment to Net Zero Emissions by 2050 in November 2021. We are actively building out our wider sustainability strategy, which includes modernizing our ﬂeet, continuing our success with operational eﬃciencies, working to further airlines.iata.org
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We are grateful for the support we received as an industry through the worst of COVID-19. It helped keep vital infrastructure ready to fly and support both the community and the economy rebuild post lockdowns.
In Australia, there are economically viable solutions in the works. The industry will ﬁnd answers to the dilemmas we face and work out a way to make SAF commercial. What does diversity bring to the industry and are airlines doing enough to encourage it?
At Virgin Australia, we encourage and embrace diversity in all its forms. We do this not just because it’s the right thing to do, but because we fundamentally believe it is economically rewarding for any company to reﬂect diversity. As an Australian airline, we operate in one of the most culturally diverse nations in the world and we believe in an inclusive, diverse, and equitable workforce that is representative of the communities in which we live, work and ﬂy. We recognize that an important part of this is meaningful action toward reconciliation with Aboriginal and Torres Strait Islander peoples and communities. In March, we launched Virgin Australia’s ﬁrst Reconciliation Action Plan (RAP), which was our commitment to cultural recognition and reconciliation through a formalized plan to ensure Aboriginal and Torres Strait Islander peoples have the same opportunities to work, travel, and do business with Virgin Australia as other Australians. As part of our RAP, our priority is building career opportunities for our Aboriginal and Torres Strait Islander team members and ensuring they feel supported and valued for their contribution to the Group. For over a decade now, Virgin Australia has proudly supported signiﬁcant partnerships and sponsorships to create opportunities and improve outcomes for Aboriginal and Torres Strait Islander peoples in Australia, and we recognize the importance of continuing this journey.
2022 – 02 Airlines
Future of flight
Aviation can’t decarbonize without Sustainable Aviation Fuel (SAF) The aviation industry has an ambitious goal. The target is to reach net-zero CO2 emissions by 2050 through a mix of revolutionary aircraft and propulsion technologies, alternative fuels and operational improvements. In a matching ambition to be a net-zero company by 2050, GE Aviation is helping lead the industry to reduce CO2 emissions from flight. The biggest lever to pull is Sustainable Aviation Fuel (SAF), a lower carbon alternative jet fuel. GE Aviation has been actively involved in assessing and qualifying SAF since 2007 and works closely with producers, regulators and operators to help ensure SAF can be widely adopted for use. All GE engines can operate today and in the future on approved SAF, which can be made from plant-based material, fats, oils and greases, alcohols, waste streams, captured CO2, and other alternative feedstocks. SAF is the same composition as the jet fuel
most commonly used today. The key diﬀerence is that instead of being made from crude oil, SAF is made from more renewable sources that capture carbon from the atmosphere and other various sources. The use of alternative feedstocks and processes reduces lifecycle CO2 emissions during production, processing and distribution compared to fossil-based fuels.
New aviation technologies in development don’t replace the need for SAF. GE Aviation technology demonstration programs for hybrid electric and open fan engine designs are fully compatible with SAF. Hydrogen fuel, which doesn’t emit CO2 during combustion, will need supporting markets and infrastructure to meet jet fuel demand like SAF.
Additionally, all SAF approved today is drop-in, able to replace conventional jet fuel, requiring no changes to aircraft equipment and fueling infrastructure to use it.
While there is no single solution to reach net-zero, SAF is critical because it works to reduce CO2 emissions now. GE Aviation is developing a series of technologies to make engines more fuel eﬃcient and fuel flexible with hybrid electric, open fan and hydrogen technologies projected to enter service in the mid-2030s. Meanwhile, SAF is here. SAF could reduce more CO2 emissions with greater use, now, with the right market incentives that encourage investment in production and bring costs down. Learn more at GEtoNetZero.com
However, SAF production is now less than 1% of global jet fuel demand and is more expensive than conventional jet fuel. More economic development incentives are needed worldwide to boost SAF supply, which is why GE Aviation is taking action. By joining organizations like The Roundtable on Sustainable Biomaterials, GE is collaborating on standards-setting and policy discussions.
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Our unrelenting passion fuels change.
Because we believe the world works better when it flies.
Having researched and tested Sustainable Aviation Fuel (SAF) for over a decade, GE’s cutting-edge technology research and development has already enabled the first passenger, freighter, and military demonstration flights using 100% SAF in at least one engine. With the commitment, determination, and scale to play our part in the industry’s goal to achieve net- zero, we’re not stopping there. As well as ensuring that all GE and GE partnership engines can operate with approved SAF today, we continue to innovate and bring to market changes in propulsion on our journey to net-zero carbon emissions. See what we’re doing today for the benefit of us all tomorrow.
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The journey to customer-centricity 40
New Distribution Capability (NDC) is the first step towards enabling the travel industry to introduce the concept of airline retailing, replacing the existing distribution paradigm of bespoke legacy processes with a modern technology retailing ecosystem built on offers and orders. WORDS: GRAHAM NEWTON
irline retailing, meaning the transformation of distribution away from legacy processes and artifacts into the world of modern retailing, has become a hot topic in the post-pandemic world. “The last two years has seen the journey to digitalization accelerate, and modernizing distribution has remained among airlines’ top priorities,” says Yanik Hoyles, IATA’s Director, Distribution. “It creates value for our members and their customers, and that is what will drive its success.” Airline retailing aims to give the airline ownership of the oﬀer regardless of shopping channel and put the customer Airlines 2022 – 02
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at the center of the shop/order/pay ecosystem. To support the airlines in their move to retailing, IATA has been working on several programs based on standards: NDC, ONE Order, Settlement with Orders, Dynamic Oﬀers, the Future of Interline. The goal is the decommoditization of the airline product and a focus on customer-centricity. While the NDC standard is the crucial gateway to enabling airline retailing by giving airlines control of the oﬀer, achieving true customer centricity also requires the industry to retire legacy systems and processes associated with ticketing and back-oﬃce accounting. The move to e-tickets in eﬀect made the
related paper processes electronic but did not otherwise change them. Hoyles explains that it is impossible to come anywhere close to true online retailing if fulﬁllment is dependent on e-tickets, electronic miscellaneous documents (EMDs) to record ancillary purchases, and Passenger Name Records (PNRs). This is the focus of ONE Order (the “order” in oﬀers and orders). It will mean moving to a unique identiﬁer to replace PNRs, e-tickets, and EMDs and beyond the traditional Passenger Service System (PSS) to retailing platforms common to other consumer retailing businesses. Revenue management will then be able to move away from traditional pricing, based on ﬁled fares and booking classes, to indeﬁnite price points and dynamic bundles. And whereas before a change of ticket would also require changes to the EMD and PNR and then force another reconciliation of these information silos, a retailing architecture simpliﬁes matters. Restrictive legacy systems will be left behind so there will be just one order to handle. airlines.iata.org
IATA’s Board of Governors discussed the subject in their December 2021 meeting and arrived at three conclusions. First, the maturity of NDC suggests IATA should now broaden its scope in supporting all of its members looking to embark on the journey. To help them, IATA has just relaunched its guide to getting started in NDC for all stakeholders in the value chain. Second, the logical consequence of adopting the NDC standard is more control in payment. Improving customer choice in this area translates to improved conversion rates and a better customer experience. And third, the board requested IATA and willing airlines to develop milestones towards an end state of 100% oﬀers and orders—no more e-tickets, PNRS, and EMDs. This is a signiﬁcant transformation that will deliver true customer-centricity. What does it mean in practice?
The key point is that airlines can be more creative with their oﬀers, expanding them through third party products where appropriate, updating them in real time, and personalizing them. Whether customers buy via the airline website or through a travel agent, they will be able to see the value in the oﬀer through a multitude of options beyond fare and schedule. And whatever oﬀer is chosen is fulﬁlled with a single order. Customers won’t have to wrangle with various reference numbers for diﬀerent providers, or airlines struggle to reconcile diﬀerent elements of the journey should it be disrupted. To complete the cycle, new payment options will make it possible for a customer to use the payment method of their choice while airlines may beneﬁt from reduced merchant fee costs and the ability to onboard new forms of payment as demand dictates. Airlines 2022 – 02
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It is estimated that most players in the distribution value chain will be using the standard by the end of
2023 Individual journeys
Each airline will have its own journey to a retailing environment. Currently more than 60 airlines have some degree of airline retailing capability and already the end of EDIFACT messaging by 2025 is being talked about by the likes of Finnair. IATA has also established the Airline Retailing Maturity (ARM) index that was launched in October 2021. The ARM index looks at an airline’s technical capabilities, its partnerships with sellers, and a “value capture compass”—a tool to help airlines capture where value is being created and where it could come from tomorrow. The necessary changes in an organization to make airline retailing function correctly is an ongoing project. But it is clear that the status quo cannot be maintained. Already, some airlines have created new roles in oﬀer management, a combination of distribution and revenue management skills. And revenue management professionals will revamp their abilities to consider ancillary products and bundled packages. Business travel is another area in need of some work. There is no issue with the business case in this sector but rather it is a question of how that business ﬂows
through a travel management company (TMC) and online booking tools. User interfaces need adapting, for example, to better display content. No major regulatory hurdles are anticipated although proposed disclosure regulation in the United States could complicate matters. “But all players in the value chain realize this is the only way to go,” says Hoyles. “They can each choose their partners based on the value they bring. It will make for a stronger, more competitive market and that beneﬁts the end customer.” Global Distribution Systems (GDS), for example, may become aggregators and oﬀer other back-oﬃce support. No single airline can connect with every travel agent worldwide so there will still be a need for partners with reach. In the second half of 2021, the industry endorsed the latest NDC convergence standard 21.3, which contains everything needed for NDC to become mainstream, including backward capability. Most players in the distribution value chain could be using the standard by the end of 2023, cementing airlines’ evolution into retailers, and ﬁnally making true customer-centricity possible. There is even value for low-cost carriers, who once were ahead of the game in terms of online retailing. Due to the maturity of NDC and the increasing maturity of the airline retailing concept, LCCs may decide their proprietary systems are limiting potential where they once enabled it. Converging on NDC with other stakeholders may give LCCs cheaper, faster and more extensive market reach. “Airline retailing means customercentricity and a more eﬃcient and eﬀective distribution value chain,” Hoyles sums up. “Airline boardrooms throughout the world are recognizing that this work can spearhead the industry recovery.” airlines.iata.org
Sponsored Feature: Pratt & Whitney
ENGINES OF THE FUTURE
Pratt & Whitney is at the forefront of achieving the goal of making the aviation industry more sustainable
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Sponsored Feature: Pratt & Whitney
GETTING READY FOR DISRUPTION Shane Eddy, President, Pratt & Whitney
Shane Eddy, President of Pratt & Whitney explains the long-term strategy for the company.
What are the most important new developments in existing engines? This is a very exciting time for Pratt & Whitney and the entire industry. We are embarking on the most disruptive period of commercial aviation yet, with our shared focus on achieving net-zero carbon emissions by 2050. As a leading developer of aircraft propulsion systems, we recognize that our technologies have a signiﬁcant role in making net zero a reality, both through our drive to continually improve engine eﬃciency—for example, with hybrid-electric systems—and through our work to enable the use of non-fossil, alternative fuels, such as sustainable aviation fuels (SAF) and hydrogen. Pratt & Whitney has been at the forefront of aircraft engine eﬃciency, most recently with the GTF, which increased fuel eﬃciency 16% to 20% over prior generation engines. Since the GTF entered service in 2016, it has helped single-aisle aircraft operators save 700 million gallons of fuel and avoid 7 million metric tons of CO2 emissions. And the GTF is getting even better. Last year, we introduced the GTF Advantage engine, which will provide greater thrust for operators and an additional 1% in fuel and CO2 savings. We are advancing exciting technologies to take this even further, such as with hybrid-electric systems and advanced materials like ceramic matrix composites.
How long will engines be reliant on fossil fuel (at least as a blend) and what can be done to speed up the adoption of SAF? SAF are a critical component in a net-zero future for aviation. Pratt & Whitney was an early supporter of SAF and helped develop the standards that today allow SAF to be used on a “drop-in” basis across all engines at a blend of up to 50% with traditional jet A kerosene. But the challenge is to rapidly scale up supply from the paltry 0.01% of global fuel demand in 2019. The development of aﬀordable, reliable, and ubiquitous SAF will rely on public-private partnership, and we’re delighted to see the momentum from government initiatives like the White House’s SAF Grand Challenge, along with airlines making major SAF purchasing commitments. We think a blenders tax credit, rather than additional taxes on Jet A, is the best path forward to accelerate adoption by airlines, especially as our airline customers are recovering from the pandemic. Scaling up SAF production will take time as well as strong global government support, but
“We will continue to invest in the development of engines that will ﬂy for the next several decades”
our products have long service lives, and we need to make sure they are ready for the future. That’s why we committed to make our next generation GTF Advantage engine compatible with 100% SAF, and we demonstrated its readiness with successful tests earlier this year. The challenge of transitioning away from fossil fuel use cannot be underestimated, but it further reinforces our focus on continually improving engine eﬃciency across our portfolio. On average, we improve fuel eﬃciency 1% per year, and we will continue to invest in the development of engines that will ﬂy for the next several decades. What is the best prospect for a new energy source for aircraft? There is no single solution to achieve net-zero emissions by 2050. Hybrid-electric systems hold real potential to drive greater fuel eﬃciency across a range of applications, from new urban air mobility platforms to larger single-aisle aircraft. We’re already developing a regional aircraft-scale, hybrid-electric ﬂight demonstrator in collaboration with our Raytheon Technologies sister company, Collins Aerospace. Hydrogen is promising as without a carbon molecule there is no carbon footprint, but we have to optimize our propulsion technology to take full advantage of the opportunities of hydrogen, such as adapting design to accommodate it in its super-cooled liquiﬁed
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Pratt & Whitney : Sponsored Feature
45 state. Hydrogen produced from green sources is a powerful energy, with many applications that aviation will compete with, but it is very promising. SAF will bridge us to potentially new energy sources in the coming decades. How has your manufacturing process changed and what new technologies will help the monitoring and maintenance of engines? The biggest change in our advanced manufacturing is the advent of Industry 4.0, the fourth industrial revolution. Industry 4.0 includes digitization, automation, data, and connectivity and is changing the nature of industrial manufacturing while making it cleaner, greener, smarter, and safer. We are also deploying Customer Oriented Results and Excellence (CORE)—the Raytheon Technologies operating system—
across our company, including our manufacturing and aftermarket facilities. Our advanced turbine airfoil coating system capacity was an area of expansion necessary to keep up with the anticipated volume ramp; and our team initially estimated investments of some $200m to keep pace with volume. To maximize our existing capacity, we utilized our CORE Operating System Overall Equipment Eﬀectiveness (OEE) methodology to eliminate lost production time and increase the maximum capacity of our existing equipment install base. This not only reduced the required investment 63% but also deferred the need for that investment by at least two years, enabling reallocation of that capital into strategic investments. EngineWise® Data by ADEM™ (Advanced
Diagnostics and Engine Monitoring) allows us to manage customers’ engine health and maintenance planning requirements, working to maximize each customer’s speciﬁc engine performance and engine time on-wing, while maintaining predictable MRO spend. Our system provides analysis for more than 9,500 in-service engines. Our expert data analysts help to reduce operational disruption through predictive and preventative maintenance. Over the years, as the sophistication of engine controls has improved so has the amount of data generated by the engines. Our GTF series of engines generate about 40% more data than the V2500 family of engines. An average two-hour ﬂight for a GTF engine generates about 4 million data points. We’re bringing the power of digitization into our facilities as well, to reduce energy usage and facility emissions footprint. The
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Sponsored Feature: Pratt & Whitney
facilities engineering team at Pratt & Whitney’s East Hartford and Middletown, Connecticut sites have been using advanced analytics for the past 18 months to pull HVAC (heating, ventilation and air conditioning) system data and review trends from the building management system. So far, the results are very promising.
What are your long-term plans for the company? Pratt & Whitney will celebrate its 100th anniversary in 2025, and it’s stunning to look back on our industry and see how much has changed, and how Pratt & Whitney helped shape today’s landscape. The next 15-20 years will be the most disruptive of the industry’s history, all focused on the goal of net-zero carbon emissions for aviation by 2050. We are talking with airframers and airline customers to determine their needs and designing propulsion solutions for their missions. Customer focus has been central to our DNA as a company since the ﬁrst air-cooled Wasp engine. Long-term, our mission is to attract and retain the best engineering talent in the industry, to take what we’ve done with the revolutionary GTF architecture and apply the same spirit of innovation throughout our company. Our focus is on attracting and retaining the best talent throughout the company. We implemented one of the industry’s most innovative work-remote policies as our salaried staﬀ found the ﬂexibility of work-anywhere to be a great value. Today, about 80% of our headquarters staﬀ are hybrid or remote, with the ability
to access campus when necessary. This ﬂexibility adds value to their experience as employees. Is diversity an important part of your strategy? Diversity, equity, and inclusion are fundamental to our strategy. We believe that inclusion is the engine of innovation, and we work hard at fostering an inclusive culture for our global employee population. We do this through our Diversity, Equity and Inclusion Taskforce, Employee Resource Groups and educational opportunities. It is important to foster a culture where employees can bring their whole and best selves to work. In 2017, we signed on to the Paradigm for Parity initiative, a goal to have gender parity in leadership roles at Pratt & Whitney by 2030. We will achieve this by minimizing or eliminating unconscious bias, broadening the talent pool, and providing mentorship and sponsorship to women of potential. Today, 35% of our executives are women. What are the biggest challenges ahead for aviation? Pratt & Whitney will always put safety ﬁrst. Every second of every day, aircraft powered by our engines take oﬀ. Air travel connects people, helps grow economies, and helps defend freedom around the world. Since our earliest days, our motto has been “Dependable Engines” for a reason, and we never stray from that. A big challenge is ensuring that airlines can continue to ﬂy their current ﬂeets well into the
GTF engines Since entering service in early 2016, GTF engines have saved more than 700 million gallons of fuel avoided more than seven million metric tonnes of carbon emissions reduced the noise footprint 75% powered more than 1,200 aircraft, 62 airlines and three aircraft families
future while simultaneously reducing their carbon footprint. But what’s good for the environment is also good for business—our business, our airline customers’ business, and the aviation ecosystem. That’s why we are advocating for public-private partnerships to signiﬁcantly expand the availability of aﬀordable drop-in SAF solutions, alongside our continual work to develop technologies that will make current and next generation propulsion systems more eﬃcient. And ﬁnally, the eﬃciencies that come with Industry 4.0 will require investments for us as well as our supply chain, and we have to be mindful in managing that change. We are fortunate that we can build our new Asheville facility from the ground-up but importing Industry 4.0 principles into our existing facilities and supply chain will take time and attention. It will be well worth the eﬀort. I’m excited about the possibilities. Not many people get the opportunity to drive this level of fundamental change in our industry. Every airline CEO and every OEM are facing the same direction on the core challenges, from sustainability to eﬃciency, to workplace culture. But from a personal perspective, I have the utmost conﬁdence in the people of Pratt & Whitney to create the future we need.
SMART. RESPONSIVE. GLOBAL. LEARN MORE AT PRATTWHITNEY.COM/ENGINEWISE
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GEARED FOR SUSTAINABILITY Delivering the most sustainable power for single-aisle aircraft with up to 20% less fuel and CO2. Compatible with 50% SAF today and 100% tomorrow. A proven platform for cleaner, greener LQQRYDWLRQ 3RZHUHG E\ DQ LQGXVWU\ ¿UVW JHDUHG DUFKLWHFWXUH Sustainability starts with the gear.
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Sponsored Feature: Pratt & Whitney
POWERING A SUSTAINABLE FUTURE Sean Bradshaw, Engineering Fellow, Pratt & Whitney
Sean Bradshaw, Engineering Fellow, Sustainable Propulsion, on net-zero carbon emissions aims.
Aviation is committed to net-zero carbon emissions by 2050. Propulsion systems will clearly play the major part in achieving that aim and Pratt & Whitney is at the forefront of industry innovation. The core of the company’s work is its GTF engine family. GTF engines are 16-20% more eﬃcient than the engines that they replace, a considerable step forward in sustainability as more eﬃcient engines mean lower emissions. The GTF Advantage engine for the A320neo family will build on this leadership while also delivering greater thrust. Nevertheless, other factors must come in to play if air transport is to be carbon neutral. In the short term, the goal is ﬂying on 100% sustainable aviation fuels (SAF). There are seven SAF blends certiﬁed for use on aircraft,
some up to a 50% blend with normal jet fuel, with more SAF technical pathways on the cards. For Pratt & Whitney, readiness is the key. To this end, they have already tested the GTF Advantage engine on 100% SAF. “There was no change to thrust or operability and no issues with any of the hardware in the engine,” says Sean Bradshaw, Engineering Fellow, Sustainable Propulsion, Pratt & Whitney. “All results were as expected, which indicates that GTF engines will be fully compatible with all 100% SAF approved by ASTM International.” Over 16 years of testing SAF, Bradshaw reports, Pratt & Whitney has not identiﬁed any impact on hardware or changed engine maintenance requirements, even at levels beyond the approved blends. One hundred percent SAF also contains about 2% more energy per kg compared with conventional kerosene, equating to a 2% reduction in fuel burn and associated emissions. But SAF represent just 0.1% of global aviation fuel use. The expectation is to reach 2% by 2025 and 5% by 2030. The goal in the United States is to double this 2030 ﬁgure. “The technology works,” says Bradshaw. “SAF are now an economic decision.” Synthetic fuels—most notably electrofuel or power-to-liquid (PtL) fuel—will complement SAF eﬀorts to scale the production of SAF produced from biological feedstocks. PtL is a mixture of captured CO2 and hydrogen. A hydrogen molecule is produced using green technologies and
combined with CO2 through a carbon capture process. This generates drop-in liquid hydrocarbon fuel. The Air Transport Action Group’s Waypoint 2050 says such fuels will be critical to the industry achieving its net zero target by 2050. Hybrid-electric engines Beyond SAF, the next step in sustainability is likely to be hybrid-electric engines, which could be operating on single-aisle aircraft like the Airbus A320 family by the mid-2030s. Pratt & Whitney is working with De Havilland Canada to demonstrate the technology on a Dash 8. The project includes an advanced electric motor and controller from Collins Aerospace. The expectation is a signiﬁcant improvement in aircraft eﬃciency across all phases of ﬂight. Reductions of up to 30% in fuel burn and CO2 emissions compared with a modern regional turboprop are anticipated. Pratt & Whitney is targeting ground testing in 2022, with a ﬂight test scheduled for 2024. One of the most interesting aspects of the project is increased hybridization to a 50/50 mix. Combined with a number of electric initiatives in general aviation, it means the industry is constantly developing the potential of the technology. Bradshaw doesn’t see this progressing to fully electric single-aisle aircraft any time soon, however. “I don’t think we should expect to see a fully electriﬁed A320 ﬂying across the
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Pratt & Whitney : Sponsored Feature
Atlantic,” he says. “The energy density of a battery relative to jet fuel is far too low. There simply isn’t enough power for an aircraft to travel any signiﬁcant distance.” Hydrogen The big hope, therefore, is hydrogen. “The more we look at it, the more potential we see,” says Bradshaw. “There is no CO2 in the tailpipe, no particulates to aﬀect air quality, and it may even mitigate the impact of contrails, although more research will be needed.” With an engine designed to run on the
appropriate thermodynamic cycle, hydrogen oﬀers a 30-35% eﬃciency improvement. Pratt & Whitney has been selected by the US Department of Energy (DoE) to develop hydrogen-fueled propulsion technology for commercial aviation, as part of its Advanced Research Projects Agency-Energy (ARPA-E). The work is known as the HySIITE (Hydrogen Steam Injected, Inter-Cooled Turbine Engine) project. Cryogenically stored liquid hydrogen is heated by an exhaust recovery system before it enters the combustion chamber. This creates water
vapor, which is converted to steam and reinjected back into the chamber. The approach not only boosts power but also reduces NOx emissions up to 80%. Also, because the hydrogen is stored at cold temperatures, less cooling of the engine is necessary, making it more eﬃcient. There are challenges. Most obvious is the need for global, green hydrogen infrastructure. Most hydrogen is derived from fossil fuel, but it needs to originate from hydro, solar, or wind power. Its distribution is also troublesome as hydrogen requires more power to transport due to its low density. This low density also means its storage on aircraft requires three or four times more volume than normal jet fuel. And as the lightest gas in the universe, hydrogen also has a tendency to leak. “There is a lot of work to be done but we can overcome these challenges,” says Bradshaw. “[We] will continue to work with the industry to advocate for the necessary infrastructure changes and to ensure hydrogen propulsion is a safe, eﬃcient alternative to liquid hydrocarbons by the mid-2030s.”
Conclusion There is no silver bullet to solve aviation’s sustainability challenges. “Rather, it will be a plethora of solutions, representing everything from small steps to giant leaps,” he concludes. “That makes it a very exciting space to work in. “Whatever the future of sustainability holds, Pratt & Whitney will be leading the way.”
GEARED FOR SUSTAINABILITY SUSTAINABILITY STARTS WITH THE GEAR. LEARN MORE AT PWGTF.COM
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Sponsored Feature: Pratt & Whitney
CUSTOMERS FIRST AND FOREMOST Rick Deurloo, President, Commercial Engines
Rick Deurloo on how Pratt & Whitney is helping airlines fly more sustainably
If aviation is to fly in clear skies by 2050, powered by carbon-neutral propulsion systems while delivering social and economic benefits worldwide, it must get there from a standing start. In early 2020, the industry was effectively grounded, slamming shut revenue sources. Two years later, the green shoots of recovery are only just becoming apparent. That gives aviation less than three decades to finance sustainability in every aspect of operations.
The GTF engine Pratt & Whitney is determined to help airlines recover and achieve their goal of net-zero carbon emissions. Of course, Pratt & Whitney has had to weather a formidable storm too. “But one of the biggest lessons we learned from the pandemic is the resilience of our people,” says Rick Deurloo, Pratt & Whitney’s President, Commercial Engines. “They had to be creative and resourceful, and they were. The focus on our customers had to be exemplary.” Customer service ranged from daily webinars on best practice for storing engines to flexible maintenance plans to revised payment schedules. The biggest decision, however, was to double down on upgrades to its GTF engine, continuing to improve it even as the horizon darkened. This commitment to the GTF fleet is already paying dividends as the utilization
rate of the engine is the highest in industry. “Investing in the GTF was the right move, even though it was a big commitment at the time,” says Deurloo. “Everybody had to make tough choices. At Pratt & Whitney, we did not cut as deep as others because we had confidence in the GTF. We knew that it would come back quickly.” That confidence has been vindicated, with a strong recovery in the single-aisle sector. And as Pratt & Whitney largely maintained its skilled workforce, both the short and long-term future looks secure. The continuing development of the GTF engine during the pandemic led to the
December 2021 announcement of the GTF Advantage, which offers a further 1% efficiency gain compared with today’s GTF and up to 34,000lb of take-off thrust. This will be especially beneficial for A321XLR operators, as well as those who fly out of hot and high airports. The engine will also be compatible with 100% sustainable aviation fuels. “Essentially, modifications in the compressor give us improved efficiency,” says Deurloo. “But the engine is so much more than that. We have enhanced ability for real-time monitoring, for example. Everything has been optimized to give our customers what they need.” The GTF Advantage is planned to enter service in 2024 as the new production standard and will serve the Airbus A320neo family. Market dynamics Pratt & Whitney needed to get its strategy right to help its customers as the markets rebounded. “The bounce back has been stronger than we thought,” explains Deurloo. “US domestic travel is almost reaching pre-pandemic levels and traffic is building in Europe too. Once we get through the short-term disruptions in Asia-Pacific that will be the biggest region for growth again. Both China and India have enormous potential. Pure demographics will tell you that these are going to be big markets.”
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Pratt & Whitney : Sponsored Feature
“Everything has been optimized to give our customers what they need” Rick
GTF Advantage flight testing
To maintain its core customer focus, Pratt & Whitney is examining how to deploy more teams into the field in those regions. They have already invested in production and MRO facilities and run training centers in Beijing and India. There is a short-term challenge though. Because of the pick-up in demand in 2022, Pratt & Whitney must manage its supply chain carefully. Most materials for the engine hardware are outsourced. So, though the technicians are available to build the engines, the parts they need have been harder to secure. The company is working closely with suppliers to mitigate the impacts. “We have to keep up with demand,” says Deurloo. “Of course, you can’t escape a crisis of such magnitude without some fundamental shifts in the markets and new
business models. But Pratt & Whitney is a growth company, and 2022 and 2023 will be huge years because of our strength in the narrowbody segment. “GTF engines are very well positioned, and the Embraer E2, Airbus A220 and GTFpowered A320neo families have become industry benchmarks in fuel efficiency and sustainability,” he adds. “These platforms deliver an incredible range of options. Whether you’re a regional operator or fly transatlantic routes, we can deliver worldclass economics across multiple fleets.” The right stuff In fact, the GTF has already clocked up over 13 million flight hours. And the benefits of the engine will only be heightened when the GTF Advantage takes to the skies.
Deurloo, Pratt & Whitney, President, Commercial Engines
The engines will be complemented by sustainable aviation fuels (SAF). These are the least disruptive of all sustainable solutions available immediately. Aircraft are certified to fly on 50-50 blends but 100% SAF is on the horizon. Hybrid-electric propulsion is a little further on and the big hope will be hydrogen-powered propulsion systems, probably in the mid-2030s. “Every conversation with our customers is about sustainability,” says Deurloo. “And the agenda is accelerating. But Pratt & Whitney is in a great position. We have the right balance sheet, the right structure, and the right people. But most of all we have the right engines. They are the best predictor of how the company will perform. Our products are leading the field in efficiency and sustainability and will continue to do so.”
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Sebastian Mikosz, SVP for Environment and Sustainability at IATA, says more thought is needed to make the EU’s Fit for 55 proposals effective. 53
Making Fit for 55 fit for purpose
limate change represents an existential challenge to our way of life, and the airline industry is committed to a sustainable future. At the IATA AGM in October 2021, airlines agreed to achieve net zero CO2 emissions by 2050. To reach this ambitious goal, the aviation industry has unveiled a raft of initiatives, from major purchases of sustainable aviation fuels (SAF) and investments in the SAF supply chain, to prototype electric and hydrogen aircraft. But bringing suﬃcient SAF to market, and making radical new technology a reality, will need a massive eﬀort from industry and governments working together.
With its aim to cut emissions across the EU 55% by 2030, the European Commission’s Fit for 55 environmental proposals are a vital opportunity to deliver a signiﬁcant boost to sustainable aviation, unleashing investment in green technologies and operational eﬃciencies. Unfortunately, if the Fit for 55 proposals are adopted in their current form, it will likely represent a missed opportunity. Instead of promoting green technologies and operational eﬃciency improvements, making ﬂying sustainable for all, the package aims to reduce ﬂying by raising economic barriers and making it signiﬁcantly less aﬀordable. For aviation, Fit for 55 has three distinct proposals: a mandate for the use of SAF; a
2022 – 02 Airlines
reform of the EU Emissions Trading Scheme (EU ETS); and a proposed fuel tax. Taken together, our estimates are that by 2035 Fit for 55 could add €38 per ticket on an average ﬂight in Europe, and €205 on the average transatlantic ﬂight. This would mark the end of low-cost air travel in Europe as we know it and reverse decades of democratization of ﬂying. Flexible fueling with SAF
The key to sustainable air travel is to increase the amount of sustainable aviation fuel (SAF). Airlines used every drop of the 100 million liters of SAF that was delivered in 2021. Thanks to billions of dollars in forward purchase agreements from airlines, more SAF producers are entering the market and we expect SAF production to expand over the coming years. Nevertheless, the European Commission proposal envisages a challenging mandate for airlines to use 20% SAF on all ﬂights departing EU airports from 2035. The problem with this approach is that forcing all airports to source SAF will lead to logistical issues, localized monopolies, and excessive costs. It would be far better to provide greater ﬂexibility by allowing airlines to purchase SAF from wherever it is cheapest. It is also environmentally ineﬃcient to insist on transporting SAF to almost every airport in Europe. This problem could be addressed through a ﬂexibility mechanism that separates the physical use of SAF from the sustainability gain claimed by the airline. This will drive greater eﬃciency, reduce costs, and encourage more production. There is also the problem of the geographic scope of such a mandate. If applied to all international ﬂights leaving the EU, this could simply beneﬁt non-EU airlines that can refuel at non-EU airports with no SAF mandate. The diﬀerence could amount to around €42 per passenger on a typical Europe-Asia ﬂight. In short, we believe that incentives on fuel producers to deliver more SAF would be a simpler and better solution than a complicated Airlines 2022 – 02
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mandate on use. This is the approach that has been taken in the United States, which has delivered considerably higher SAF production and use than the EU. A global solution
Airlines used every drop of the 100 million liters of SAF that was delivered in 2021
Reducing CO2 is a global challenge, and aviation is a global industry. Therefore, coordinated global action to reduce aviation emissions should be the goal of the industry and regulators alike. In 2016, ICAO agreed to introduce the Carbon Oﬀsetting and Reduction Scheme for International Aviation (CORSIA). CORSIA obliges airlines to purchase veriﬁed carbon oﬀsets to cover emissions increases above a baseline level and applies to all international ﬂights between countries participating in the scheme. At present, EU airlines do not comply with CORSIA for international ﬂights between European States because the EU applies its own Emissions Trading Scheme rather than CORSIA. The failure to apply CORSIA gravely undermines multilateralism in ICAO on climate change. CORSIA’s scope and environmental eﬀectiveness is considerably wider than that of the EU ETS. For example, the EU has no airlines.iata.org
someone needs to ﬂy then an increase in the ﬂight cost may cause them to economize on the trip elsewhere, rather than choose not to travel at all. It would also take a signiﬁcant reduction in passengers to render a ﬂight uneconomical for the airline, so even if a few passengers can no longer aﬀord to ﬂy, the ﬂights and associated emissions would likely still occur. “Greenwash” is when someone claims something is environmentally eﬀective when in fact it makes little diﬀerence. An aviation fuel tax ﬁts that description very well. A fuel tax reduces investment in green technologies and hurts the travel and hospitality sectors. Fit for purpose
jurisdiction to apply its ETS to a ﬂight between Japan and the United States, whereas that ﬂight would fall under CORSIA. Unfortunately, by insisting on its own solution, the EU is risking the international consensus for CORSIA and potentially causing the collapse of the world’s ﬁrst and only sector speciﬁc market-based measure. The Commission should propose to implement CORSIA in the EU. This would put the EU in a position to lead the debate on a long-term governmental goal for international aviation emissions that will match the industry’s own target of net-zero emissions by 2050. Government greenwash
The bluntest tool for reducing emissions is a jet fuel tax. Based on the average price of oil in 2021, the Fit for 55 jet tax proposal would lead to an almost 90% increase in the cost of jet fuel. By increasing the costs to the industry such a tax diverts resources that could otherwise be dedicated to investments in green technologies. Most importantly, increasing the cost of ﬂying does not lead to a proportionate reduction in fuel burn and emissions. If airlines.iata.org
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By 2035 Fit for 55 could add €38 per ticket on an average ﬂight in Europe, and €205 on the average transatlantic ﬂight
Overall, if adopted in their current form, the Fit for 55 proposals will succeed only in damaging the competitiveness of the EU’s own airlines for a marginal reduction in CO2. They could slow down the overall progress toward net zero, and, on some routes, even lead to increases in emissions. The proposals undermine the international consensus for aviation climate action that has been delicately forged at ICAO. They fail to create appropriate regulatory incentives for the increase in SAF production that we desperately need. And they throw into reverse the process of connecting the peoples of Europe with each other and with the rest of the world that has been a driving force of European integration, employment, prosperity, and social development for generations. With some amendments, however, Fit for 55 can be made ﬁt for purpose. In short, we have three key requests: one, implement a more ﬂexible SAF quota allocation system; two, apply CORSIA to intra-EU ﬂights; and three, drop the impractical fuel tax proposal. European air transport would then have a package of measures that would play a practical, eﬀective role in helping aviation achieve its ambitious emissions targets. And consumers and Europe’s connectivity and competitiveness are protected, and air travel does not return to being a preserve of the rich.
2022 – 02 Airlines
Sponsored Feature: Shell Aviation
Jan Toschka, President, Shell Aviation
Clearing the runway for sustainable aviation fuel
We spoke with Jan Toschka, President of Shell Aviation, about how the company is working with others to accelerate the supply and use of sustainable aviation fuel in order to decarbonise aviation.
How important are sustainable aviation fuels (SAF)? At Shell, we believe the clearest pathway to achieving net-zero emissions ﬂying is investing in SAF and scaling it up. The faster the aviation sector can deploy SAF, the likelier it is to achieve net-zero emissions by 2050. Let’s put the scale of the task in perspective. In 2019, fewer than 200,000 metric tonnes of SAF were produced globally, amounting to less than 0.1% of the roughly 300 million tonnes of jet fuel used by commercial airlines. Even if all SAF projects that have been publicly announced are completed, capacity will scale to just 4 million metric tonnes in the next few years, reaching volumes just over 1% of expected global jet fuel demand in 2030. To achieve greater supply and demand of SAF, Shell will collaborate with businesses, industry organisations, and governments to advance a sectoral policy framework that incentivises customer demand and provides ﬁscal support for infrastructure development, new technologies, and SAF production plants. Why has SAF take-up been slow so far? The SAF supply chain currently faces a “chicken and egg” problem with supply and demand. The price of SAF is high but costs will come down if production scales up— thanks to learning curve eﬀects and economies of scale—yet demand is aﬀected by the high price premium. SAF is between two and eight times more
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expensive than conventional jet fuel. It’s essential to close this cost gap so that demand for SAF can drive increases in production volumes. Though new capacity is set to come online over the next ﬁve years, considerably more is required to achieve signiﬁcant reductions in emissions. What can energy companies do to encourage SAF supply and use? Energy companies like Shell have an important role to play. We recognise the challenges of both the cost and scalability of SAF and are committed to working with the wider industry and governments to address them.
We announced last year an ambition to produce around 2 million tonnes of SAF a year by 2025
I am proud that as well as facilitating collaboration across the ecosystem, we are also taking a leading role in helping the industry increase ﬂying on SAF. We announced last year an ambition to produce around 2 million tonnes of SAF a year by 2025, and that we also aim to have at least 10% of global aviation fuel sales as SAF by 2030. To deliver on this, we are working with partners as well as investing to create a step change in the volume of SAF available. This includes transforming our reﬁnery assets into biofuel facilities, accelerating a range of technology pathways, and collaborating with customers and partners across the aviation ecosystem to increase demand. We’re already taking action, committing to build an 820,000 tonnes-a-year biofuels facility at the Shell Energy and Chemicals Park Rotterdam. With production expected to start in 2024, the SAF facility is set to be among the biggest in Europe. Shell is also bringing SAF to new markets, supplying SAF for the ﬁrst time ever to Singapore and Hong Kong airports. Recently, we also became the ﬁrst energy company and fuel supplier to sign the Global SAF Declaration, which calls on industry partners from the aviation value chain to jointly work toward the uptake of SAF.
Shell Aviation: Sponsored Feature
“We recognise the challenges of both the cost and scalability of SAF and are committed to working with the wider industry and governments to address them.” How can governments help? What would be the right policies? The adoption of SAF will be supported initially by voluntary demand, but ultimately will have to be policy-led, meaning that governments have a key role to play. What the last few years have shown clearly is that to develop SAF you need long-term, consistent policies. We also know single policy measures, such as mandates, on their own are not eﬀective to drive investments, and so you need a sectoral approach that looks to synchronise supply and demand, develop the appropriate infrastructure, put a price on carbon, and share the costs across all parts of the value chain and governments. Can airlines do more to help the situation? The pandemic may have caused some changes to the future of air travel, as people ﬁnd new ways to meet virtually and work remotely. And we must consider that airlines emerged from the pandemic burdened by
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signiﬁcant operating losses and large debts. But we do not have time for the pandemic to hold us back; as an industry we must act now. Long-term forecasts suggest COVID-19 is unlikely to have a lasting impact on aviation volumes. So, it is encouraging that there has been consistent desire from across the value chain to tackle decarbonisation, as shown by IATA recently committing to reach net-zero emissions by 2050. Business travel has been positioned as a sector with potential for increasing demand for SAF. How true is this? Across all industries, we are seeing businesses committing to ambitious emissions reductions targets from their operations. For many corporations that rely on aviation to do business, emissions from corporate travel and particularly aviation are likely to make up a signiﬁcant part of their carbon footprint. So, there is a huge opportunity to work with the aviation sector—with companies such as Shell—to help reduce those emissions.
Corporates can play a key role to stimulate demand for ﬂights using SAF, and for large-scale oﬀtake agreements with SAF producers. They also form a more concentrated segment than leisure passengers. Such concentration creates an opportunity to focus decarbonisation eﬀorts on a relatively small number of customers who could form a critical mass. This was the main driver behind our alliance with AMEX Global Business Travel (GBT), announced last year. Together we are developing a platform that will aggregate SAF demand for corporate travel. This collaboration combines the buying power of airlines and AMEX GBT’s corporate business travel customers to drive a step change in production and usage of SAF. This, in turn, will help airlines and corporations to progress towards long-term emissions targets. For more information, visit Shell Aviation at the Shell Global website: https://go.shell.com/37E9AWj
2022 – 02 Airlines
Our approach to D&I is based on respect and covers many communities.
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Diverse talent creates business success Shinichi Inoue, President and CEO, All Nippon Airways (ANA) talks to Tony Concil about his passion for diversity and inclusion.
apan may be one of the last countries to re-open its international aviation borders, but the country is slowly emerging from the pandemic and ANA will be ready to rebound with its new agendas and commitments when the green light is given. How important is the diversity and inclusion agenda for ANA?
Japan is not a leader in this area, but it is critical. Understanding our customers through a workforce that is equally diverse will help us to create better value. Teams that are diverse perform better. A good example is the Japanese Rugby team. A few years ago, when Japan hosted the Rugby World Cup, a diverse group of athletes from across the world and diﬀerent nationalities represented Japan. The team made it into the top eight. Without such diversity, I don’t think they could have accomplished what they did. If you translate this example into the operations of ANA, it means creating an atmosphere where all employees can bring their best to work. I want to create a culture in ANA where we recognize that we are all diﬀerent—in ways that we can see and in ways that we cannot see—and we use that diversity to create a better value proposition. airlines.iata.org
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In April 2015, we announced the ANA Group Diversity and Inclusion Promise. Now ANA has committed to having women comprise at least 30% of our managers by the end of this decade. And in 2020, we joined the IATA 25by2025 commitment—the ﬁrst Japanese airline to do so. Results, of course, mean more than commitments. Today, about 18% of our managers are women. We have some work to do, but we are on the right path. Our approach to D&I is based on respect and covers many communities. We also have established corporate policies for the LGBTQ+ community, recognizing same-sex partnerships among our employees and in our loyalty program. This is an area that is very important for me. There is still much to learn and improve, but we are making progress.
Does this approach extend to passengers with disabilities?
To help passengers with disabilities travel with ease and dignity, we have lower check-in counters to enable interaction at eye-level with those using wheelchairs. We have also developed a wheelchair made of resin which allows passage through metal detectors while seated. Our inﬂight magazine is available in Braille, and we have sign-language translators to help with passengers with hearing disabilities. 2022 – 02 Airlines
What is ANA’s sustainability strategy and how important are sustainable aviation fuels (SAF)?
We are working together with other airlines, including JAL, in the World Economic Forum’s Clean Skies for Tomorrow initiative. The aim is to power 10% of aviation with SAF by 2030. Airlines 2022 – 02
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Sustainability is a societal issue. Solutions for a sustainable world will only be found through a global approach of partnerships. SAF will be a large part of our eﬀorts. We are working together with other airlines, including JAL, in the World Economic Forum’s Clean Skies for Tomorrow initiative. The aim is to power 10% of aviation with SAF by 2030. In October 2021 we launched the ANA SAF Flight Initiative. We know how important sustainability is for our customers, so we are working with them to jointly reduce carbon emissions across their supply chains and for their business travel. It is the ﬁrst such program in Asia. By working with our customers, ANA is able to increase SAF usage and our customers get clear evidence that their transport activities are sustainable. So it is a win-win proposition. Key challenges are availability and price. SAF is more expensive than conventional jet fuel and there is more demand for SAF than there is supply. One solution is to develop SAF production in Japan. Japanese energy companies are starting to show interest in developing production facilities in Japan. But with limited experience in production and the associated supply chains there is much catching-up to do. The good news is that the Japanese Government understands this is important and incentives will be needed. However, developing suﬃcient production capacity in Japan could take until 2030. We are trying to unite governments, producers and airlines to accelerate that. What are the prospects for Japan re-opening its borders?
It is true that Japan and China remain largely closed to international travelers. In the case of Japan, the biggest wave peaked in February 2022 and the government started a cautious relaxation of measures in March. Numbers on our routes to North America and Southeast Asia are increasing. But the majority is transit traﬃc with few passengers able to enter
Japan. Normally, with the signiﬁcant weakening of the yen, travel in Japan would be a bargain and we would expect very strong demand. Japan’s ministers have begun to travel abroad. This enabled them to see ﬁrst-hand how the rest of the world is returning to normal. Prime Minister Kishida announced that Japan will be as open as the other G7 countries from June. How did ANA manage through the COVID-19 crisis?
The crisis is not over. Things are improving, but we cannot take anything for granted just yet. There are three fundamental areas that are helping in the recovery and that will contribute to our future success. First, we are very carefully working to understand our customers—matching their demands with capacity. We do this in real time with the size of aircraft deployed on a route or by adjusting the number of ﬂights. This helps tremendously with cash preservation. It is a practice that we will continue beyond the crisis. Second, we have targeted cost reduction of ¥300 billion ($2.3 billion) with a focus on ﬁxed costs. In 2021, we managed to achieve ¥325 billion in cost reductions. Of this, ¥130 billion has been permanently removed from the cost structure, improving the breakeven point for us. Third, we implemented unique revenue streams. We sold inﬂight meal products online, converted an A380 to a restaurant, and even sold used catering carts. The latter was requested by our customers and our supply sold out almost immediately. These are not game changers. But they had a positive impact by enabling our staﬀ to experience directly how responding to customer demands leads to revenue opportunities—even without an investment budget. Who were your most important partners in managing through the crisis?
The crisis made it clear just how important our partners and supporters are, starting with our customers. For example, we had customers from Nagoya dine on our A380s which were at Narita. airlines.iata.org
Nagoya is a short bullet train-ride from Tokyo, but I met some who traveled from Nagoya to Okinawa and back to Tokyo because there is no direct ﬂight to Narita now, and they just wanted to support our ﬂights. That kind of loyalty is inspirational. Our shareholders were also supportive. They understood that we could not pay dividends and shored-up our capital when needed. Similarly, our bankers helped with loans and other concessions. Business partners helped too. Several took our staﬀ on secondment, which helped us to avoid redundancies and at the same time presented opportunities for our employees to gain new skills outside the ANA Group. And the government helped with supportive measures to reduce the tax burden and keep people employed. Underlying all of this were our staﬀ. They accepted restructuring, salary cuts, and no bonus payments for two years. And lastly, our international partners— members of Star Alliance and other joint venture partners—shared information that gave us a good understanding of the situation in other parts of the world. And I cannot forget IATA’s work as the voice of the industry.
30% We see an encouraging trend with international traﬃc tripling from 10% of 2019 levels in January to 30% in May.
How has war in Ukraine impacted the business?
We do not overﬂy Russia. We ﬂy to Europe on the Northern Polar route and return via central Asia. Japanese airlines are not banned from overﬂying Russia, but we could not take the risk of an irregular operation resulting in a plane needing to land in Russian territory. On a very practical manner, with the ﬁnancial sanctions in place, it would be diﬃcult to pay for refueling in Russia. Avoiding Russian airspace adds time and burns more fuel. The result is increased costs and the need for more crew. With fuel prices high already, this is a ﬁnancial challenge. And longer ﬂight times puts pressure on crew scheduling. The long-term consequences of the conﬂict are not yet clear. But I do not expect it to have an impact on demand. We are gradually growing our services to Europe. We maintained service to Brussels even after the conﬂict developed, as it was the source of vaccination shipments to Japan. airlines.iata.org
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18% Today about 18% of our managers are women. We have some work to do, but we are on the right path
Frankfurt has already restarted and we are bringing back London in June. How do you see the prospects for travel in Asian markets?
We are optimistic. IATA’s own statistics for March show that demand for carriers based in APAC doubled compared with the previous year. An encouraging trend is with our international traﬃc tripling from 10% of 2019 levels in January to 30% in May. The biggest improvements are in markets like Indonesia and Vietnam that have relaxed their COVID-19 measures. What will ANA learn from Peach operations?
I started Peach and remained as its CEO for almost ten years. It is a low-cost carrier and the diﬀerences from a full-service operation like ANA are big. At ANA, the focus is on schedules for business travelers. Some people think that a successful LCC is a simpliﬁed full-service carrier. That is not true, LCC success is driven by aircraft utilization. At Peach, we aimed to use the aircraft for 11 hours a day so that we could provide passengers with cheaper fares. The schedules were more of an outcome of aircraft utilization. I believe that understanding how both business models work is one of my unique attributes. Peach and ANA are both in the ANA group. Both can be successful independently, but each with limits. One of my objectives is to create new value propositions by getting the two airlines to complement each other without compromising their unique business models.
What are the most important skills to be a successful airline CEO?
You need passion to excite people and leadership to direct them. These come together like conducting an orchestra. The conductor creates beautiful music by combining the unique skills and talents of each member. It is the best illustration of the value created by D&I and it describes perfectly the role of the CEO—creating business success by combining diverse talents. 2022 – 02 Airlines
Sponsored Feature: Datalex
Ryan Estes, Vice President of Technology and Academy, Datalex
AI-powered pricing that thinks like your airline, not for it
Ryan Estes, Vice President of Technology and Academy at Datalex says the company’s new product, Datalex Pricing AI could transform the industry.
Why does Datalex Pricing AI exist and what problem does it solve? Traditionally, airlines have been constrained by static pricing. An airline constructs its fares using diﬀerent price points based on reservation booking designators (RBDs) and then publishes them for distribution. Relying on RBDs limits the number of price points the airline may use. Moreover, this process is not real-time and cannot account for ﬂuctuating market demands and travel environments. Most airlines and their revenue management departments use their long-standing tools to establish their pricing strategies. But to eﬀectively segment their customers and capture more revenue opportunities in real time, airlines need to understand complex and ﬂuctuating market conditions as they happen. That involves sophisticated data analytics and machine learning capabilities. Ultimately it moves airlines on from outmoded, restrictive pricing processes to an intelligent, real-time process that drives increased demand and revenues for the airline. What are the advantages of AI-based dynamic pricing? Data-driven/AI-powered price optimization considers many more factors than traditional revenue management, leading to a positive impact on long-term revenue, brand awareness, and customer loyalty thanks to more optimized pricing.
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There is a faster response to demand ﬂuctuations, for example, which means immediate revenue uplift. Traditional revenue management has to trade-oﬀ between speed of response and price accuracy, but AI and automated, smarter decision-making helps airlines to achieve both optimal price accuracy and speed to market. It all leads to competitive advantage and an opportunity for increased revenue and to realize signiﬁcant change in airlines’ underlying technology. Why is scale and real time so important in this product? Better and smarter reactivity brings immediate returns. Since we can’t collect data from the future, models must rely on historical data to predict the future and that is a lot of data! The market is very dynamic, things are changing all the time, so those forecasts are less reliable the further you get into the future. Forecasts are like code—outdated the moment they are written. Hence, the importance of real time.
Keep your best people focused on your best performing markets and Pricing AI will take care of the rest.
Airlines need to move beyond ﬁxed fare classes to a customer-centric world in which pricing never sleeps and dynamic price tags are continuously generated and aligned with market conditions and customer needs. What does your solution do diﬀerently? To begin with, it is easy and fast to implement. It is plug and play AI-powered pricing that seamlessly integrates with any shopping engine. We like to describe ourselves as disruptors without causing disruption for the airline. We don’t restructure revenue management, we enhance it, make it better, and more proﬁtable. We scale airline intelligence in real time. By automating complexity and optimizing pricing, this product will do what an airline does today—only supercharged. So there is no impact to existing revenue management systems and/or processes. The AI does not even need to be deployed across the entire network. Airlines can choose as many or as few routes as they like to use the product on. It’s completely conﬁgurable and ﬂexible. Our market-leading reasoning behind the AI is also an important diﬀerentiator. We use multiple machine learning models to achieve human-level decision making, and then that is cross-checked and ‘reasoned’ with to apply the same level of common sense that a human would. Essentially, Datalex Pricing AI thinks like you, but not for you. It is the next generation of AI-powered airline pricing. What do you need from potential airline clients? Not much! We only need access to the airline’s data. There is no big bang. The adoption of the
Datalex: Sponsored Feature
AI-driven pricing will out-perform traditional revenue management and pricing processes, but it doesn’t replace the human. product across the network is a journey. Datalex ingests the airline’s data and we use it to train the AI models. Does this solution replace the human? No. AI-driven pricing will out-perform traditional revenue management and pricing processes, but it doesn’t replace the human. AI is more about driving eﬃciencies within revenue management by achieving greater output in less time and at a much lower cost. And because it does not necessarily need to be deployed across the entire network it allows revenue management professionals to put all their time and energy into pricing the markets that matter the most while the AI prices the rest. Thus, also driving greater human output. This product doesn’t claim to replace your
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revenue management team. Rather, it will work as a collaborative team member to scale decision-making, make it smarter and in real time. Airlines trust Datalex Pricing AI thanks to advanced drift detection techniques and parameter safety nets that give airlines peace of mind that they are very much in control. How will your solution develop? Datalex demonstrated a signiﬁcant revenue uplift for an airline when it completed a production trial in 2021. Our Pricing AI product will be oﬃcially launched and in production by summer 2022. We have a very ambitious roadmap to extend to more price inﬂuencing factors, such as competitive pricing and consumer willingness to pay. We surveyed airline executives at the end
of 2021 and the research found a number of factors that are important to them when determining price. These inputs include (but aren’t limited to) government regulations, new market penetration pricing, and customer reaction and sentiment. Our product will develop in line with market needs, taking into account the multitude of factors that airlines deem most important to determine their price. Airlines can choose as many or as few markets across their route network as they wish to use Pricing AI, which replicates and scales in-house intelligence. Keep your best people focused on your best performing markets and Pricing AI will take care of the rest. The Datalex webinar for airlines, “From incremental to exponential: The power that AI-driven airline pricing has to transform and supercharge revenue management strategies”, will be held on Wednesday July 6th 2022
2022 – 02 Airlines
Revamped safety strategy emphasizes leadership Although aviation’s safety record is exemplary, IATA is constantly looking to make the industry even safer. INTERVIEW BY: GRAHAM NEWTON
he latest ﬁgures show that in 2021 airlines on the IATA Operational Safety Audit (IOSA) registry—which includes all IATA members— experienced zero fatal accidents. And, for the ﬁrst time in at least 15 years, there were no runway/taxiway excursion accidents. On average, a person would need to take a ﬂight every day for 10,078 years to be involved in an accident with at least one fatality. Nevertheless, the desire to continuously improve ﬂight safety remains, stresses Mark Searle, IATA’s Global Director for Safety. “And, as air traﬃc resumes its growth after a hiatus, it’s more important than ever that we identify new opportunities to mitigate the risks of an aircraft accident,” he says. “This isn’t easy because our achievements to date have delivered signiﬁcant improvements in ﬂight safety and so, looking forward, we are focused on creating marginal gains through a more reﬁned approach to enhance safety performance.” This desire to progress in an ever-changing, ever-safer industry has led to a new IATA safety strategy based on a holistic, end-to-end approach built on three pillars.
The ﬁrst pillar in the revamped safety strategy is safety leadership. This aims to support airline executives and industry leaders across the world, set a tone that enables eﬀective safety conversations across the workforce, and through consistent messaging ensure staﬀ take personal ownership of safety, no matter the job title. Safety leadership emphasizes the importance of individual safety accountability within an organization’s safety culture. It provides a huge boost to safety eﬀorts by promoting the importance of reporting, increasing safety intelligence, and ensuring safety performance programs are delivering on the right things. It is typiﬁed by Just Culture, which entitles an employee to make observations on their own performance or the performance of others in a non-punitive environment. To assist safety leaders, IATA has developed the Safety Leadership Charter to support a positive safety culture within airlines. The Charter lays out a number of guiding principles, including: 1. Fostering safety awareness with
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employees, the leadership team, and the board 2. Integrating safety into business strategies, processes, and performance measures 3. Creating the internal capacity to proactively manage safety and collectively achieve organizational safety goals 4. Developing an atmosphere of trust, where employees are encouraged and conﬁdent to report safety-related information 5. Establishing a working environment in which clear expectations of acceptable and unacceptable behaviors are communicated and understood 6. Building an environment where all employees feel responsibility for safety. A forthcoming series of talks from safety leaders— available from the IATA website in due course— will reinforce the principles of the charter. “Leaders set an example and demonstrate, through their words and actions, a commitment to safety,” says Searle. “It is an approach that is proven to improve safety.” Safety risk
The second pillar of the new safety strategy is safety risk—how could IATA support, in a single repository, the eﬀective dissemination of systemic industry hazards and risks? The pandemic provided an opportunity to collate speciﬁc issues in a constantly changing operating environment, including how the industry managed the need for staﬀ to be retrained following furlough, how airframes and engines were being brought out of storage, and a host of new working practices introduced to comply with health regulations. The Global Safety Risk Management Framework (GSRMF) was developed to address these emerging safety risks. The GSRMF is available to all IATA members and generates a global picture of safety risks which, through generic safety risk assessments and guidance material, highlights potential mitigations. The GSRMF will also identify, prioritize, and deliver IATA safety improvement programs to support the continued reduction in global accidents. airlines.iata.org
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On average, a person would need to take a flight every day for 10,078 years to be involved in an accident with at least one fatality
Additional developments will support the safety risk pillar. IOSA, for example, will provide more granular safety insights as it evolves into a risk-based audit program. “There is a lot of knowledge gained from IOSA audits that can provide additional detail through the safety conversations we have with those in the program,” says Searle. Pilot audits for the IOSA risk-based approach will be conducted later this year. The most obvious illustration of the change is a focus on local conditions to see where an airline might be exposed to greater risk. As before, all data will feed into the Global Aviation Data Management (GADM) platform, which will further industry understanding of safety through artiﬁcial intelligence (AI)-driven data analytics.
65 Safety connect
The third pillar of the new safety strategy is safety connect. It is a platform designed to enhance the global collaboration through proactive communication on all things related to aviation safety. Beneﬁts include: Discussion channels where safety professionals can ask and answer questions to help evolve best practice Easy access to the appropriate IATA team members for assistance Regular news and updates from IATA’s central and regional safety teams A repository of documentation related to various safety disciplines. “Safety connect will make sure that detail gets out to wider world. We have the potential to help the less mature airlines through eﬀective information exchange and, by growing the safety connect community all the time, we are reaching every corner of the world. “We have always been committed to safety,” he concludes. “But now is the time to be overt and shout about it. The new safety strategy is an important development that will empower us to make a safe industry even safer.” 2022 – 02 Airlines
Sponsored Feature: Hitit
Nevra Onursal Karaagac, CMO at Hitit, shares her opinion about the retailing process in the airline industry under the umbrella of NDC and ARM. As one of the largest airline IT providers in the world, Hitit is a long-term proponent of enhanced capabilities for the industry. Hitit is certiﬁed in NDC Level 4 for distribution and ARM Index for retailing in its dual roles as both a system provider and an aggregator. Why has New Distribution Capability been so important to the airline industry? Well after other similar industries had proven the viability of online sales and tailor-made rich content, the airline industry was still artiﬁcially restrained in such capabilities. This was mainly due to the dominance in our industry of what
Airlines 2022 – 02
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was in essence telex messages left over from the 1980s, and what should replace it. NDC has managed to put those issues to rest and pave the way for the industry to take the leap forward. This enabled airlines to ﬁnally catch up with the evolving demands of the hyper-connected and mobile-ﬁrst customers of our times, by oﬀering the right content at the right touchpoint. While it might have had a rocky start and some growing pains, the NDC framework as a whole has proven itself to be robust enough to sustain further growth, as we can see evidenced in the latest iteration of IATA ARM. What changes do airlines need to make to realize the full potential of retailing? Airlines should approach proper retailing as an organization-wide exercise rather than
shoehorning it into their IT or Commerce departments, as they often tend to do. The facts are not only that a single department simply cannot bear the entire scope of a retailing transformation, but also that there are signiﬁcant synergies to be unlocked in taking a wider approach. Considerations include what sort of value-added services and partner oﬀerings could be made available within the conﬁnes of the airport or aircraft, and what the overhead would be in terms of trickle-down costs. These and more are all equally as important as having a proper retailing-capable passenger service system or channel content strategy. What are the biggest challenges? The technological hurdles are usually the ones that ﬁrst come to mind. Though NDC and now
Hitit: Sponsored Feature
Nevra Onursal Karaagac, Chief Marketing Oﬃcer, Hitit
ARM are major strides in the right direction, not all airline technology (especially PSS and GDS) providers are capable of leveraging the intended beneﬁts quickly—if at all. This leads to gaps in the industry and hampers the synergetic growth potential of the concept. But putting the proper technological capabilities in place is only one half of the equation, and one should never lose sight of the fact that organizational challenges are equally important to properly realize the full potential of retailing. Airlines should try not to fall into the trap of stuﬃng their whole retailing approach into a couple of organizational silos and then hoping for the best. The optimal outcomes require not only a coherent vision and drive at the upper levels of the organization, but also awareness and insights across diﬀerent business units
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throughout. In most cases this might very well prove to be the biggest challenge in implementing a full retailing strategy.
variety of diﬀerent options, they can then have the opportunity to observe from a distance and see what sticks.
How important are new payment options to the retailing experience? The payment space has been undergoing radical (and accelerating) shifts over the last decade. Numerous diﬀerent online payment methods are being followed by an even greater number of “DeFi” (Decentralized Finance) payment applications, and it feels like every day brings a new Ethereum-derivative or other blockchain payment options. In such chaotic times, airlines could be well served in adopting a “second mover advantage” approach. By advancing their technical and organizational capabilities along common paths that could branch into a
Why is the airline retailing maturity (ARM) index important? Just as the NDC Registry has been an important part of providing both guidance and recognition to all stakeholders involved in the NDC rollout, the ARM Index fulﬁlls a similar role for the more complicated retailing standards that are now being built upon the NDC foundations. It establishes a common framework for diﬀerent retailing capabilities, enabling providers and airlines to optimally partner up for the desired outcomes. For more information on how Hitit can help, please visit https://hitit.com/
2022 – 02 Airlines
Safeguarding the future Delta Air Lines CEO, Ed Bastian, says sustainable operations can be combined with good business decisions and a strong response to demand. INTERVIEW BY: PERRY FLINT
sustainable aviation sector is the goal for everyone in the industry. Despite the diﬃculties in decarbonizing airline travel, the social good derived from bringing people and communities together must not force travelers to have to choose between seeing the world—and saving the world.
Has the recovery been quicker and stronger than you expected and how are you coping with returning demand?
If you think back two years ago, the entire airline industry was forced to put down our operations essentially overnight as travel demand collapsed. If you ﬂash forward to today, we’re seeing an entirely diﬀerent picture. Our customers are more excited than ever to be traveling and are looking to reclaim their lives after this challenging period. We’re currently seeing demand for consumer domestic travel that exceeds our 2019 levels, and we continue to see the acceleration and recovery of business and international travel as oﬃces reopen and travel restrictions are lifting. At Delta, we’ve been working hard to prepare for the months ahead. We’ve hired around 15,000 people since the start of 2021 to meet the travel demand. We’ve invested in digital tools that will help both our employees and customers navigate their needs eﬃciently. Lastly, we’re committed to investing in creating a more seamless travel experience that prioritizes well-being every step of the way. Our goal is for ﬂying to be just as enjoyable as the destination. Airlines 2022 – 02
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We’re currently seeing demand for consumer domestic travel that exceeds our 2019 levels
What do your ﬁrst quarter results tell you about the outlook for the rest of 2022?
Our March quarter results marked another important step in our recovery. In fact, the month of March brought the best cash sales we’ve seen in Delta’s nearly 100-year history. We’re optimistic about demand for summer travel but will remain nimble on capacity for the second half of the year. Overall, we are conﬁdent in our outlook for a meaningful full-year proﬁt for 2022. airlines.iata.org
“I hear from young people every day who want to invest their time in travel because they value the experience” airlines.iata.org
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2022 – 02 Airlines
Have there been fundamental shifts in demand, markets, or business models over the past two years?
We’ve seen many shifts over the past two years. One area where we’ve seen signiﬁcant growth is our premium products. They continue to lead the recovery, and we expect this seat growth to continue to outpace main cabin over the next few years. The introduction of Delta Premium Select on Transatlantic ﬂights has been successful and exceeded our expectations. Can you discuss how the Sky Way project at Los Angeles (LAX) ﬁts into your hub strategy? What beneﬁts will it bring for the airline and the traveler?
This past spring, we oﬃcially welcomed customers to Delta’s latest airport investment and expansion—the completion of Phase One of the Delta Sky Way at LAX project—a premier facility designed to meet the needs of modern travelers. We’re very proud that this project was able to be completed 18 months ahead of schedule due to lower passenger volumes during the pandemic. Customers can now enjoy a centralized check-in lobby, security checkpoint, and baggage claim. We also just opened the ﬁrst of three gates in the new Terminal 3, just in time for the busy summer travel season. I encourage customers to stop by the new state-of-the-art Delta Sky Club as well. It’s one of our largest, complete with a Sky Deck that has an indoor and outdoor double bar, premium showers and more. Delta’s infrastructure investments continue to roll out as our new Terminal C headhouse at New York-LaGuardia will open to passengers this summer. It will also feature a centralized departures and arrivals hall that will simplify the check-in, security check, and baggage claim touchpoints. The new Delta Sky Club at Terminal C oﬃcially becomes the largest we have at 33,000+ sq ft, which is only a tad bigger than the new Club in LA. We’ve also had major airport projects coming Airlines 2022 – 02
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, 15 000
At Delta, we’ve hired around 15,000 people since the start of 2021 to meet the travel demand.
online in Salt Lake City and Seattle. Needless to say, no matter what coast you’re traveling to or through, we’re delivering an elevated experience on the ground and in the air. Has the crisis changed the relationship with your partners in the aviation value chain? What more can they do to aid industry recovery?
COVID has been incredibly diﬃcult across the entire aviation industry and for so many businesses. I think we’ve all learned to appreciate those relationships, especially the value of face-to-face communication. Working with partner organizations is vital to our mutual success, and we’re all focused on recovering together. Given the direction of the current US Administration in terms of its Competition Policy, are there any concerns that airlines could face potentially harmful government intervention in the market?
Competition in the US airline industry is as ﬁerce as ever, with a diverse array of carriers oﬀering record levels of service and beneﬁting the traveling public. As our nation recovers from the pandemic, we are proud to continue oﬀering competitive fares, unprecedented choice, and industryleading customer service to travelers who are returning to the skies. Can environmental sustainability be integrated into a positive business strategy?
It has to be. Protecting our planet for future generations is vital and needs to be integrated across all aspects of our business. We can’t walk out of this pivotal time in our history without a renewed commitment to safeguarding our world for the future. Aviation is a hard to decarbonize sector, which is why we must all come together to create meaningful solutions. I strongly believe in the social good that travel produces by bringing people and communities together, airlines.iata.org
while creating opportunities and connecting the world. That’s why we never want travelers to have to choose between seeing the world and saving the world. In particular, what can be done to scale up production of sustainable aviation fuels? Right now, sustainable aviation fuel (SAF) costs considerably more than conventional jet fuel, and the market is underdeveloped. As an industry, we need the government and energy producers to help us ensure the advancement of production. This can in part be accomplished with a robust, long-term SAF-speciﬁc Blenders Tax Credit (BTC), which Congress and the administration must come together to pass. We’ve set an audacious goal to replace 10% of jet fuel with SAF by the end of 2030, and we’re working with suppliers to secure nearly 400 million gallons over the next few years. It’s ambitious, but we envision a future of net zero aviation and are actively advancing policies and partnerships to get us there.
400m Delta is working with suppliers to secure nearly 400 million gallons of SAF over the next few years
Do you see future generations still wanting to travel by air at the same level/frequency as we see today?
The world has become smaller and more accessible for every generation. I hear from young people every day who want to invest their time and resources in travel because they value the experience. It’s hard to see that changing— you can’t replicate the energy and feeling you get from traveling to new places or reconnecting with friends, family or business partners. That’s why we’re committed to a vision of net zero aviation. We are working within our industry and beyond to help build a new future for aviation where travel and sustainability are not mutually exclusive.
“We’ve set an audacious goal to replace 10% of jet fuel with SAF by the end of 2030.”
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“Protecting our planet for future generations is vital and needs to be integrated across all aspects of our business.”
How is Delta tackling diversity and inclusion?
At Delta, we’re boldly on the pursuit of equity through our actions and inﬂuence. We’ve been listening and learning from our people to become a better, more equitable company. A recent initiative that I’m proud of is how we’ve committed to removing unnecessary barriers, like degree requirements, from our hiring process. This is happening through a “skills ﬁrst” focus, and these programs give our employees the resources to develop and excel. Beyond this initiative, we’re sharing ongoing progress reports that detail our actions to end systemic racism. I’ve also been having important conversations to learn more about what I can be doing through our Gaining Altitude discussion series, meeting with our Black Employee Resource Group and with our Diversity, Equity & Inclusion team. We’re focused on speciﬁc, measurable goals and being transparent with our people and stakeholders about our progress. 2022 – 02 Airlines
Sponsored Feature: Daon
Tom Grissen, CEO, Daon
VeriFLY’s Second Act
As pandemic restrictions ease, the world’s most widely adopted COVID travel wallet is just getting started, says Tom Grissen, CEO at Daon.
Why is VeriFLY important in a post-pandemic world? VeriFLY wasn’t actually built for COVID. It feels funny to say this when we’re the world’s most popular app for managing COVID credentials, but the truth is we created VeriFLY to solve a much broader problem for airline passengers and other travelers—how to remove the total burden of physical travel documents. For decades, passengers have been suﬀering from the slow pace and inconvenience of physical document checks. For airlines, it’s been even worse, causing longer counter transaction times, higher ground handling costs, and slower boarding processes that require more staﬀ and often lead to ﬂight delays. We built VeriFLY to remove all those negative eﬀects, which will persist long after the pandemic subsides. Can you expand on the non-COVID applications of VeriFLY? Think of all the physical travel documents that airlines need to verify and process— ESTAs, visas, and passports to name a few. VeriFLY can validate all these travel documents digitally, in advance of travel, creating a better experience for passengers and greater eﬃciencies for airlines. Any time we can reduce the need for passengers to visit a check-in desk or interact with an agent, we’re helping our airline partners boost online check-in rates,
Airlines 2022 – 02
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increase on-time departures, and improve the airline experience for passengers— many of whom are keenly interested in moving to entirely digital and self-service travel processes. Remember, the desire for seamless, contactless travel didn’t start with COVID. Nearly all the behavioral shifts we’re seeing from airline passengers today were merely accentuated and accelerated by the pandemic. What are the biggest beneﬁts of VeriFLY for airlines? If you ask our airline partners like American Airlines and British Airways, they’ll tell you our single biggest beneﬁt is to operations planning—by insulating these companies from having to “surge hire” additional staﬀ for physical document checking, whether those documents are COVID certiﬁcates, visas, or passports. After that, they’ll probably mention the carry-through beneﬁts of a faster, smoother process: more on-time ﬂights, more boardings per minute, less counter transaction time, fewer ground handling costs, fewer inadmissible passengers and related ﬁnes, better audit trails, and more
passengers using online check-in and self-service. One of our airline partners reported 70% online check-ins and over 35,000 person-hours saved per year. Last but not least, they’ll tell you their passengers really love the VeriFLY experience. Last I checked, we had a 4.6 star rating in the App Store with over 200,000 positive reviews, and we’re routinely seeing 75-80% airline user satisfaction scores.
Some airline partners have already seen up to a 30% reduction in costs and 45% faster processing times airlines.iata.org
Daon: Sponsored Feature
We created VeriFLY to solve a much broader problem than COVID—how to remove the total burden of physical travel documents. 73
Have we seen the beginning of the end of Digital Health Credentials? Many of our airlines, cruise lines, and hotel partners still have a requirement to check health credentials. Not all countries in the world apply the same COVID rules, and many apply one set of rules for returning nationals and another for visitors. In all likelihood, checking for vaccinations, up-to-date boosters, and other health credentials will remain an on-again-oﬀ-again obligation for airlines for the foreseeable future. As a result, some of our airline partners have used VeriFLY to make digital credentialing a standard part of their passenger processing, with the ability to dial up or down the use of
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those credentials, depending on a destination’s speciﬁc requirements. Thanks to that ﬂexibility, those partners were able to respond in real time to unexpected outbreaks like the Omicron surge. By keeping their infrastructure active, they can protect themselves from painful operational disruptions in the near or distant future. What’s next for VeriFLY? Right now, we’re investing even more in our artiﬁcial intelligence (AI) and machine learning (ML) capabilities, which have proven to signiﬁcantly drive down costs and spur operational eﬃciencies. Already, some of our airline partners have seen up to a 30%
reduction in costs and 45% faster processing times. These are outcomes that really drive margins and tangible value for our partners, so we’re keenly focused on AI/ML innovation. We’re also planning to roll-out a new set of features later this year, many of them in line with the aspirations of IATA’s Digital ID initiatives. Our aim is to continue breaking down silos so that passengers can share data across their entire travel journey, and not just at one or two stops along the way. As an industry, travel is still only scratching the surface of what’s possible through digital transformation, and we’re proud to continue working alongside our innovative, passionate airline partners to imagine, design, and deliver the faster, smarter, more seamless travel experiences of tomorrow. VeriFLY by Daon is used by major airlines, cruise lines, hotels, and other businesses, including American Airlines, British Airways, Aer Lingus, Japan Airlines, Carnival Cruise Lines, Holland America Line, Viking Cruises, Hyatt Hotels & Resorts, and many others. For more information, visit www.daon.com/veriﬂy
2022 – 02 Airlines
“Vistara has one of the youngest ﬂeets in this part of world, with an average age of three years. It makes us more sustainable.”
Airlines 2022 – 02
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With challenges come opportunities Vinod Kannan, CEO Vistara, expands on his opinion that airports and airlines must work together as partners. WORDS: GRAHAM NEWTON
he outlook is positive for Indian airline Vistara, with domestic demand higher than prepandemic levels and a renewed focus on international growth going forward. And although corporate travel is slow to get going, visiting friends and relatives travel is rocketing up at this moment in time. What are your plans for international expansion and how have they been aﬀected by the pandemic?
The pandemic aﬀected every airline. But Vistara was fortunate in the sense that India fared slightly better than most countries. Domestic demand has come back strongly and is at 80–90% of pre-COVID levels on average. For Vistara, it is more than 100%, meaning we are doing better now domestically than we were pre-pandemic. Credit must go to our staﬀ and the entire aviation ecosystem for getting us to this point. We are continuing to take delivery of new aircraft and, in fact, have had more than 10 aircraft delivered during the pandemic. We would like to be using them more, but we are getting there. Overall, I would say I have cautious optimism. airlines.iata.org
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10 We are continuing to take delivery of new aircraft, and, in fact, have had more than 10 aircraft delivered during the pandemic
The pandemic is still there and cases in India have risen recently. But the general outlook is much more positive than it was a year ago. International growth is our focus. We added seven international destinations during the pandemic, including London, Frankfurt, and Paris. This decision has served us well from an operational resilience point of view and has increased our understanding of what we need to do going forward. Do you expect it to be business as usual in the next few years or have we seen fundamental changes in the industry, markets, and passenger expectations?
There have certainly been changes and we can see that clearly in certain streams. There is more leisure and visiting friends and relatives (VFR) travel at the moment, because people haven’t been able to do that. At the same time, corporate travel is slow to pick up. But I think these trends are temporary and we will get back to a more recognizable balance. The way people travel will be a permanent change though. For Vistara, most of our check-in is oﬀ-airport now and that is a big 2022 – 02 Airlines
“Airlines and airports can’t exist without each other. We are joined at the hip. Airports lost two years of revenue but so did airlines and so we can’t be responsible for paying airports back for those losses.” change. People want seamless travel and a suite of online, self-help options. They also want to travel direct. Transit journeys may not be so popular because of the health and paperwork issues that still exist. What hasn’t changed and never will is people’s desire to travel. The most important point is that the demand exists. Overall, what are the major challenges facing
76 airlines as they try to recover? The pandemic is still causing uncertainty. As
80-90% Domestic demand has come back strongly and is at 80–90% of pre-COVID levels on average
10% Over 10% of our pilots are women, which is double the world average
Airlines 2022 – 02
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mentioned, we are still seeing COVID-19 cases going up in certain countries. That is clearly aﬀecting international travel as people don’t want to be stuck somewhere due to travel restrictions imposed at short notice. And there are other reasons for uncertainty too, including the Ukraine situation. It means that the corporate travel budget and discretionary travel is being aﬀected. In India, taxation is still a huge challenge. It has to be reduced, especially the tax on fuel. The cost of doing business here is high and we are always lobbying to change that. There are a couple of elements that are both challenges and opportunities. Cargo has taken on a new importance as airlines have realized that it can be a good revenue stream. But we will have to wait and see to what extent cargo has moved up the agenda for airlines that are passenger carriers. Travel Insurance, which traditionally was not so popular in the Indian context, has also become more important, but airlines will have to look at how to oﬀer that in a better way. What is your view of price increases at some Indian airports?
Airlines and airports can’t exist without each other. We are joined at the hip. Airports lost two years of revenue but so did airlines and so we can’t be responsible for paying airports back for those losses. There are lots of ongoing discussions and meetings and it is not all bad. Bangalore, for example, gave us a rebate during the pandemic so credit where its due. We keep making the point that we are partners and hope that better sense will prevail. What other regulatory changes are needed to help Indian aviation recover?
The tax on fuel is the biggest change we need. Fuel in India is among the most expensive in the world. There are lots of customs duties too. The way the Indian goods and services tax (GST) is set airlines.iata.org
up on imports and exports basically means we build GST credit that we are unable to utilize. And maintenance is another area where we need some harmonization. But there is an openness and willingness to look at these problems, which we appreciate. And the government is also trying to make it attractive for lessors to locate in India, which would help Indian airlines. What technology will have the biggest impact on the industry?
Technology is a function of the airline, so the impact of any particular technology varies. Vistara never stopped investing in digitization and, if anything, the pandemic has accelerated the process. We are trying to make sure we have the right tools for customers to use. They want options. As an example, we are making it easy for customers to block the seat next to them or get assistance at the airport through meet and assist services. It’s what customers want and serves as additional revenue for the airline.
How important is sustainability to your strategy?
These days, every business must be sustainable, and especially airlines. It is fundamental to doing business. One of the biggest factors is the eﬃciency of the ﬂeet. Vistara has one of the youngest ﬂeets in this part of world, with an average age of three years. Automatically, it makes us more sustainable. Sustainable aviation fuels are a chicken and egg situation. Demand is low because the price is high. We need to reach a critical mass of supply and oil companies should take the initiative. Vistara is seriously studying SAF, the production volumes needed, and the source of the SAF. But it’s important to look at the ground as well as the sky. There are sustainable options in ground support equipment and even our oﬃce building is working hard to reduce its carbon footprint. airlines.iata.org
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2013 In 2013, Tata Sons and Singapore Airlines fulfilled a shared dream to offer a top-class flying experience to air travellers in India. The Tata group had wanted to re-enter the aviation sector, after Tata Airlines was renamed Air India and then nationalized. After the lifting of foreign investment restrictions in 2012, the partners sought approval for a tie-up. On November 5, 2013, Vistara’s holding company, TATA SIA Airlines Ltd, was incorporated.
50% Almost half our staff are female and we have developed a diverse workforce and an open environment
Is diversity important to aviation’s future and what is Vistara doing to encourage it?
Almost half our staﬀ are female. Perhaps most encouraging is that over 10% of our pilots are women, which is double the world average. As a company, we have made it known that we are open to getting the best talent regardless of race, gender or anything else. It means we have developed a diverse workforce and an open environment. If you get the culture right, diversity will follow. If you could change one thing about the industry, what would it be and why?
Broadly speaking, Vistara gets most of its income in Indian rupees and pays its costs in US dollars. I would change that equation if possible! The Indian rupee is depreciating so this is a major consideration for us. We hope that our international expansion will alleviate the problem to a degree. 2022 – 02 Airlines
Sponsored Feature: Block Aero Technologies
A single source of truth to improve safety and sustainability Todd Siena, Founder and CEO, Block Aero Technologies
Block Aero is solving the challenge of data validation with blockchain technology.
Safety is always aviation’s top priority. This commitment extends throughout the value chain, touching all aspects of operations. Parts supply is critical, for example. Airlines need to trust in the parts they use in maintenance, repair and overhaul (MRO). That means traceability and compliance with all relevant regulations. But the data can be inconsistent, duplicated, or missing. The Block Aero platform is explicitly designed to solve these problems.
stakeholders and that creates value in an asset. It puts an end to walled gardens of data. The aim since inception has been to move the industry beyond mundane rows and rows of Excel spreadsheets. The Block Aero platform is a distributed ledger, meaning it is a single source of truth between multiple organizations. No longer are there static reports that have taken time and resources
to repeatedly compile. Blockchain means certiﬁcates and reports are never lost and can be easily audited when required. This immutable data adds considerable resale value to an asset.
Third generation blockchain Block Aero uses blockchain technology to link data with physical assets, eﬀectively creating digital passports. “This is the third generation of blockchain,” says Todd Siena, Founder and CEO, Block Aero Technologies. “Cryptocurrency came ﬁrst, followed by tokens to represent intangible assets, such as intellectual property. Now, we are unlocking underutilized data and latent value by digitizing physical assets.” At a basic level, Block Aero can save an organization time and money by simplifying and validating data. But blockchain is more than that. It is a technology that can balance the relationship between airline, OEMs, and other stakeholders. It is the best solution to create a shared space around data and implement rules that are mutually fair to all
In 2019, Block Aero won an Innovation Challenge by improving the visibility of assets moving through the MRO supply chain Airlines 2022 – 02
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Block Aero Technologies: Sponsored Feature
Block Aero has a clean and simple interface for role-based asset management. Users are given access to read and write data according to their role. It democratizes digital asset management while ensuring top-level security. “But it would wrong to think of the platform as merely software,” says Siena. “The Block Aero solution creates a scalable and customizable network with your partners.” Industry understanding The solution also builds in signiﬁcant understanding of the industry. CEO Siena has been working in aviation for close to two decades. He has had numerous conversations with airlines that matched his own experiences of inadequacies in MRO and parts supply. As time progressed, the discussions about how blockchain could help involved ever greater sophistication. “The knowledge and understanding of blockchain has been increasing year on year,” says Siena. “The industry is eager for solutions that leverage the advantages that blockchain can oﬀer.” The Block Aero platform is about to launch with its ﬁrst production customer consortium, a member of the Japan Airlines Group. The customer’s particular area of expertise is parts repair for engine overhaul. The project involves a massive digital transformation but will help the customer greatly simplify processes in their ecosystem and also extend their market reach.
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“The knowledge and understanding of blockchain has been increasing year on year. The industry is eager for solutions that leverage the advantages that blockchain can oﬀer” Mandatory blockchain Blockchain solutions are not part of an airline’s core business, making partnering with companies such as Block Aero essential. Airlines can have notable input, however. Without any rebuild being required, the platform can be adapted to requirements, such as end-to-end logistics visibility or customer quotations. In other words, every solution is appropriate for the customer. “Even so, most customers will use the platform out of the box,” says Siena. “After all, it is based on a thorough understanding of the needs of the industry and so is comprehensive from the outset.” Block Aero recently renewed its memorandum of understanding with ICAO that will see the company endeavour to bring blockchain technology to states that have fewer resources and oversight capabilities. Siena even suspects blockchain will become mandatory in time and part of the ICAO standards and recommended practices (SARPs). The technology can even help with sustainability eﬀorts, keeping track of carbon oﬀsets, for example. “Our latest oﬀering on sustainability is attracting huge demand,” says Siena. “It will
be vital to have a clear record of oﬀsets for compliance and airline marketing purposes.” As it stands, centralized carbon trading solutions cannot leverage the full potential of open markets to drive eﬃciencies. Airlines need diverse programs that will work seamlessly with the Carbon Oﬀsetting Reduction Scheme for International Aviation (CORSIA) but also create meaningful ties between green projects and speciﬁc routes. Blockchain technology can achieve this and also help prevent greenwashing accusations—where companies claim to be more environmentally friendly than they really are. A distributed ledger system provides total accountability. “Block Aero creates a trust framework,” says Siena. “It saves an organization money but more important is the trust it brings to concepts like carbon oﬀsets, remote inspections, and parts traceability. The industry will be more safe, more sustainable, and more secure with widespread adoption of Blockchain.”
For more information on how Block Aero can help your business, email firstname.lastname@example.org
2022 – 02 Airlines
Digital identity drives today’s travel experience
Decentralized digital identity will redefine the entire distribution chain, where airlines will be able to identify all their customers and partners. WORDS: GRAHAM NEWTON
$1bn It is estimated that fraudulent transactions cost the industry $1 billion per year Airlines 2022 – 02
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ew Distribution Capability (NDC) is the ﬁrst step towards the evolution of airlines into retailers through a data exchange format based on oﬀer and order management processes. It enables the decommoditization of the industry and allows new products to be sold in innovative ways regardless of the distribution channel. The end result is dynamic oﬀer creation, personalization, and a richer customer experience. But to make the most of this world of oﬀers and orders, airlines need to authenticate the identities of their partners in the distribution value chain. And that will require an upgrade of the existing codes and practices. “The path to value creation must put the customer in the center of every process involved in the airline industry,” says Stephan Copart, IATA’s Head Digital Transformation. “Airlines who adapt their business models, operations, systems, and culture will unlock opportunities and forge long-lasting customer relationships, based on personalized and engaging experiences. “Digital Transformation is a critical enabler of customer centricity. Airlines must accelerate their journey to becoming digital retailers, using modern technologies.” Traditionally, global distribution systems (GDS) sit at the center of an EDIFACT (Electronic Data Interchange for Administration, Commerce and Transport)-based ecosystem. When a travel agency uses a GDS, it logs in using a seven-digit, human-readable code. The closed environment means it is the GDS that
authenticates the identity of an airline’s business partner. Despite existing safeguards around authenticating travel sellers and credit cards, it is estimated that fraudulent transactions cost the industry $1 billion per year. In this new environment, however, the GDS does not necessarily play the role of centralized gatekeeper. The ability to authenticate all the participants in the transaction thus takes on additional complexity. Going digital
In a world of oﬀers and orders, the oﬀer is controlled by the airline. That means an airline needs to authenticate the identity of a travel agency, rather than the GDS. Adapting the existing EDIFACT system to a world in which the oﬀer is controlled by the airline would require the partner (such as an agency or aggregator) to have a login for each airline with which it does business. The idea, therefore, is for each agency to establish a single unique digital identity that can be used with every airline. In fact, every entity in the distribution chain will have a unique identiﬁer. This digital ID is quite easy to generate using open standards and widely available software or third parties. Importantly, even if a third-party solution is used to generate an identity, that identity is still controlled and owned by the holder. The overall aim is to introduce a standard authentication methodology in distribution rather than use the proprietary systems used by each of the GDSs. But there is value in it for all partners, particularly in having a common industry approach to onboarding new parties. The proposed solution solves a number of challenges. Most obviously, it will help reduce fraud. Airlines will have complete visibility on distribution partners and know those partners are who they say they are. For both airlines and agencies, it will also reduce the need to manage multiple identities and so make for a more eﬃcient back-oﬃce process. Furthermore, the concept introduces decentralized identity to a business-to-business airlines.iata.org
environment. This works much like IATA codes today, essentially providing a trust framework in which identities are independent and self-owned. Trusted organizations, such as IATA, can then provide accreditation or certiﬁcation services based on that identity. Decentralized identities are already becoming commonplace for business-toconsumer platforms. Many governments and private entities use the technology to provide secure access to personal data. Using it in B2B will provide that same mix of security and user-friendliness. “The travel experience today is driven by airline-centric processes, in a language the customer does not understand, including codes, acronyms, and complex instructions,” says Copart. “Leveraging modern and open technologies, such as decentralized digital identity and veriﬁable credentials will enable
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a framework of trust throughout the entire distribution chain. Airlines will be able to digitally identify all their customers and partners, distributing and delivering content for the beneﬁt of a true personalized and seamless customer experience.”
“Airlines will have complete visibility on distribution partners and know those partners are who they say they are”
Proof of concept
IATA is driving a proof of concept (POC) of the technology, and this is expected to be complete within the next few months with a rollout of an initial digital identity service planned to begin by the end of 2022. The POC involves travel agencies, GDSs working as aggregators, and airlines, and is based on direction from the Distribution and Digital Transformation Advisory Councils. Claire Barber, CEO at MATTR, a partner in the digital ID in distribution initiative, says “decentralized identity and veriﬁable credential technology have huge potential in the aviation sector to reduce fraud, create eﬃciencies, and improve experiences. “We’re looking forward to seeing the innovation and value that these new tools are used to create for airlines, customers, crew, and distribution partners,” she adds. Naturally enough, to maximize the impact of digital ID in distribution, a critical mass of adopters will be required. IATA is leading an eﬀort to set the standards in this space and lower the implementation barriers for all participants. “Digital identity in distribution based on open industry standards will unlock true value creation,” Copart concludes. “Moving away from legacy coding and building a modern ecosystem and trust framework using decentralized digital identity and veriﬁable credentials across the entire value stream will require all participants to embark in this journey and IATA’s role is to facilitate this process. “IATA is also exploring the concept of ‘Customer as THE reference’ that is bridging the B2C and B2B world based on digital identity.” • For more information, see The Innovation Hub at www.iata.org
2022 – 02 Airlines
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Keeping airport costs down in a post-pandemic world Airport operators—along with the rest of the industry —were badly hit due to the COVID-19 shutdown, but price hikes are not the answer, argues IATA. BY GRAHAM NEWTON
T IMAGES: ISTOCK
he entire aviation value chain suﬀered when the pandemic struck. All partners lost money, skilled people, and business potential. Similarly, the road to a successful recovery depends on a harmonization of eﬀort. Airports seeking to raise charges—and campaigning against the regulatory
Airlines 2022 – 02
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review of such increases—is therefore an extremely disappointing development, says Nick Careen, IATA’s Senior Vice President for Operations, Safety and Security. London Heathrow and Amsterdam Schiphol are prime examples of companies pushing for price hikes, but the problem is expected to proliferate. “Airports across the globe are
announcing their plans to increase charges in the coming years,” says Careen. “Many are looking to recoup revenues not realized but this implies that airports assume virtually no risk. How is it possible to have customers pay for losses or revenue which had been anticipated but did not materialize? Or pay for a service that they did not use or receive?” Airport competition
To compound matters, Airports Council International (ACI World) is campaigning for the removal of economic oversight of airports. Their belief is that airports compete and so
should not have their charges subject to regulatory review. IATA counterargues that airport market power remains signiﬁcant, and that regulation is needed to protect the interests of consumers. The increases being proposed demonstrate the strength of this argument. Moreover, airports are not subject to the strong incentives that drive the eﬃciency gains that are standard in the airline sector. Major airports remain in an extremely strong market position. If there are shifts in traﬃc patterns, it is not likely to be the result of airport competition but rather airline activity. IATA is calling for independent economic regulation for airports with market power to ensure infrastructure user charges support competitive and cost-eﬃcient air services. “Given that there won’t be a one-sizeﬁts-all solution, provisions are in place, such as ICAO policies on charges, to guide states,” says Careen. “ICAO policies are ﬁt for purpose as they provide states with suﬃcient ﬂexibility to decide on the most appropriate form of economic oversight depending on the market conditions and the market power of the providers.” IATA accepts that regulation should be proportionate and only implemented where necessary. When enacted eﬀectively, regulation would balance requests from both sides so airports can argue their view support airport investors looking for a robust process and a transparent, stable income, which is evidenced by positive credit ratings demonstrate airport ability to invest in the required capacity with the expected service quality act in the interest of the consumer. “Why wouldn’t you support Airlines 2022 – 02
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London Heathrow and Amsterdam Schiphol are prime examples of companies pushing for price hikes, but the problem is expected to proliferate appropriate and independent regulation?” Careen asks. “It restricts excessive pricing and safeguards the interests of the traveling public.” Access to capital
Another element to the debate is whether airports could aﬀord to invest in critical infrastructure without price rises. In reality, airports can easily manage their ﬁnances without resorting to exorbitant cost increases for their airline customers and the end consumer. It is worth noting that no regulated airport has either ﬁled for bankruptcy or is in danger of doing so. Airport credit agency ratings barely dropped during the crisis, and it is reasonable to expect them to return to pre-pandemic levels in 2023 alongside the traﬃc recovery. Reﬁnancing—adjusting the original terms of the debt to facilitate repayment—is another option. For many airports, there is also the possibility of
obtaining guarantees from their government. The multilateral development bank, which would enable access to ﬁnancing for infrastructure projects where commercial banking can no longer be reached, will likely play an important future role too. “According to our analysis of key airport groups, the majority managed to access private sector ﬁnancing,” says Careen. “The airports funded their cash shortfalls through debt instead of equity injections provided by bank loans or bonds in the market. This demonstrates that airports can ﬁnance short-term losses without increasing costs to the customer. For those airports analyzed, the average cost of debt decreased, which conﬁrms that airports are perceived as safe investments for the market.” Recent public oﬀerings from Fraport and Schiphol prove how easy it is for major hubs to access capital. Fraport, operator of Frankfurt, has issued a bond worth €1.15 billion at an annual yield below 2%. Schiphol issued a €750 million green bond with a 2% yield. “We need a healthy and balanced aviation system that delivers wider social and economic beneﬁts,” Careen concludes. “Dampening aviation connectivity, stiﬂing economies and jobs, through increased charges or a lack of ﬁnancial oversight is not the way forward. “It is critical that the right regulations are in place to ensure an in-depth consultation process and to give authorities the power to decide whether investments are justiﬁed or just an excuse to increase the regulated asset base. In our view, regulators should be able to assess and disallow any capital projects that cannot be substantiated with a business case that looks at the total cost of operation, eﬃciency, and its eﬀect on emissions.” airlines.iata.org