IATA DG Tony Tyler addresses AGM
Wed 10 Jun 2015 – IATA Director General Tony Tyler told airline industry delegates at this year’s AGM held in Miami that he was confident the ICAO Assembly later next year would prove “another major step forward” towards the implementation of a global market-based measure (GMBM) from 2020. However, he cautioned, the industry had to maintain unity over the issue as there was a common interest in the outcome. The absence of an ICAO global scheme would result in an “untenable web” of local and regional taxes and charges, he said, and added that progress on aviation biofuels was being held back by a lack of government support. IATA forecasts released at the AGM show airlines collectively anticipate emitting 757 million tonnes of CO2 in 2015, up 4.6% on the previous year but is still expected to align with the industry’s annual fuel efficiency improvement goal.
Tyler told the gathering of airline leaders that aviation was at the forefront of industries addressing the challenge of climate change with its targets to improve annual fuel efficiency by 1.5%, achieve carbon-neutral growth from 2020 and cut emissions in half by 2050 compared to 2005 levels through its four-pillar strategy of improved technology, more efficient operations, better infrastructure and an effective GMBM.
“The journey to this point has been challenging,” he admitted. “But we’ve always understood that our common interests and those of the environment are best served by a united industry position.”
However, he added, “Progress on biofuels is being held back because governments have not adopted a policy framework to incentivise production. That’s needed for prices to fall to commercially viable levels.”
He called for more recognition of the fact that many airlines were making significant investments in sustainable biofuels and that governments should step in with aviation specific programmes similar to those designed to encourage the use of other alternative energy sources.
Tyler stated the industry was deeply involved in the ICAO GMBM process and committed to a successful outcome at the 2016 Assembly. “Although the final measure has not been decided, there is considerable interest from governments in the mandatory carbon offset approach,” he said. “It would be the easiest type of scheme to implement and administer on a cost-effective basis. And it has the scope to allow for the different political interests at play to be taken into consideration.
“We are all in this together. We have a common interest in the outcome and we will get the best result for all concerned – including the environment – if we stay together.”
He did not make clear who the unity comment was directed at but IATA’s Director of Aviation Environment, Michael Gill, told FlightGlobal: “The perennial issues of how to determine the obligations that would fall on individual operators in any future MBM scheme and how to reconcile the differing views of developed and developing states, including low-emissions states and emerging markets, remain on the table.”
IATA revealed airlines are expected to use 288 billion litres (76 billion US gallons) of fuel in 2015 and emit 757 million tonnes of carbon in the process. The trade body points out that although this is a 4.6% increase on 2014, it is below the expected 6.7% growth in passenger demand (measured in RPKs) and the 5.5% growth for cargo (FTKs). This is considered in line with the 1.5% fuel efficiency goal, which is currently averaging at 2.9% annually since 2009 according to the industry (see article). With new aircraft a major driver of fuel efficiency improvements, IATA expects airlines to take delivery of more than 1,700 new aircraft in 2015 worth around $180 billion, with about half replacing less efficient older aircraft.
The 6.7% growth in passenger traffic compares with the 6.0% growth recorded in 2014 and passenger numbers are expected to reach 3.5 billion for the first time in 2015. The 5.5% forecasted growth for cargo is down from the 5.8% realised in 2014.
On fuel costs, which IATA says still represents 28% of the industry’s operating cost structure despite the recent heavy fall, the 2015 outlook is for an average Brent crude oil price of $65 per barrel, which is 36% below the 2014 average price of $101.40. Jet fuel prices are expected to decline at a slower rate for a full year price of $78 per barrel, 33% below the $116.60 level of 2014. However, points out IATA, the full impact in the reduction is being moderated by a 20% rise in the value of the US dollar over the past 12 months, as well as by airline hedging policies.
IATA has revised upward its industry outlook and is forecasting a net profit of $29.3 billion for 2015 on expected revenues of $727 billion, a 4.0% net profit margin. Over half the global profit is expected to be generated by airlines based in North America, more than double that of next best performing regions of Asia-Pacific and Europe.
During the AGM, IATA announced an agreement with CITES to cooperate on reducing illegal trade in wildlife and their products, as well as on ensuring the safe and secure transport of legally traded wildlife. CITES – the Convention on International Trade in Endangered Species of Wild Fauna and Flora – is a legally binding agreement between 181 states and parties that sets the rules for international wildlife trade in more than 35,000 species of animals and plants.
“CITES and IATA have long cooperated to ensure that legitimately-traded animals and plants are carried as safely and comfortably as possible. This MOU formalises our work programmes,” said Tony Tyler. “The responsibility for enforcement of the rules governing international wildlife trade is clearly with governments. But well-trained airline staff can be an invaluable source of information on suspicious passenger behaviour and unusual shipments. Airlines are good corporate citizens. Our collaboration with CITES will help the industry to play a role in stopping the terrible scourge of illegal trade in wildlife that threatens some of the most precious animal and plant life on our planet.”
Addressing the AGM, John Scanlon, the Secretary-General of CITES, added: “We live in an interconnected world where the great benefits of global air transport are also being abused by criminals to transport illegally traded wildlife. IATA and its member airlines can play a critical role in assisting customs and other enforcement agencies by gathering valuable intelligence of suspicious activities and raising awareness among customers, passengers, and staff of the devastating impacts of this illegal trade.
“Today we are confronted by transnational organised criminals, and in some cases rebel militia and rouge elements of the military, which are driving industrial scale poaching and illegal trade for illicit off-shore markets. The profound impact this poaching and illegal trade is having upon entire species and ecosystems and the services they provide, local peoples and their livelihoods, national economies, and national and regional security is now increasingly well recognised.”
Next year’s AGM will be held in Dublin.
IATA AGM Newsroom
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