By: Giovanni Bisignani |
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© Billypix |
Air transport today is almost unrecognisable compared with the 1985 industry in which Airline Business was born.
Passenger numbers increased from 900 million to 2.4 billion, driven by prices that are at least 30% cheaper. Paper tickets have disappeared and check-in is now as common online or at a self-service kiosk as it is at a traditional desk. On-demand in-flight entertainment has replaced videos, and we now see internet connectivity at 30,000 feet. Three of the top 10 airlines by passengers carried in 1985 have also disappeared. Four others are merging into two. And two Chinese carriers have joined the top 10 grouping. Over the same period, employee productivity tripled while global airline revenues grew from $112 billion to $560 billion.
Some fundamental aspects of the industry have stayed the same. Safety remains the top priority. As a result, the accident rate has improved by 35%. The same is true of our priority on the environment. Aircraft are 50% quieter, the fleet is 42% more fuel-efficient, and we are committed to carbon-neutral growth from 2020 and to cut our emissions in half by 2050 compared with 2005 levels. The industry's poor profitability, unfortunately, has also not changed. In 1985, airlines achieved a profit of $1.6 billion, or a margin of 1.4%. After a decade of losses totalling $50 billion, this year we are celebrating a 1.6% margin for an $8.9 billion profit.
The importance of celebrating an anniversary is to reflect on the past to build the future. Coincidentally, IATA this year launched Vision 2050. I am inviting leaders past and present, from inside and outside the industry, including Singapore's minister mentor Lee Kuan Yew and Harvard University's Michael Porter to look ahead four decades and challenge the industry and governments to achieve strategic change. We will think much bigger and look much further, beyond the crises and shocks that dominate today. Our goal is to identify the needed changes for aviation to be both sustainable and successful.
My vision for aviation in 2050 begins with safety. We will be very near zero accidents. Biofuels will supply our energy. Integrated systems ensuring security as we process passengers will eliminate queues. Delays will virtually disappear with global air traffic management. We will be a consolidated industry of a dozen global brands supported by regional and niche players. The value chain will be rebalanced, with risks and profits shared equitably. And we will deliver value to investors. On the road to this vision, the 2020 milestone is marked with $100 billion in profits on revenues of $1 trillion. As we near 2050, this 10% margin will become stronger.
CRAZY DREAM?
You may ask: "Is this another crazy Giovanni dream?" The answer is yes. But like my other crazy ideas, such as 100% e-ticketing and biofuels, the technology aspects of this vision are completely achievable. And we have proven it again with our impressive record on safety and environment. When we control all the parameters, speed is not a problem. In 48 months we changed the way the entire world travels thanks to e-ticketing. In just five years, IATA delivered more than $47 billion in industry savings. Our long-term problems are political. The biggest challenge is to bring governments along with the speed and breadth of change that the industry needs.
Airlines take part of the blame. We left our story largely untold. Why? Because the challenges of managing through business cycles punctuated by shocks and crises have kept the focus on day-to-day survival at the expense of driving long-term structural change.
We cannot go on like this. All our partners in the value chain must reflect and take their responsibility. But governments in particular need a wake-up call. Aviation supports 32 million jobs and $3.5 trillion in economic activity. Just five days without aviation in Europe brought normal life on the Continent to a standstill. This is a powerful case for change. Aviation deserves much better policies. Governments must come to the table, not with inefficient regulation, but with effective solutions.
By the time Airline Business celebrates its next 25 years the industry will be very different again. By then we should be looking ahead towards the next generation for the well-established NextGen and the Single European Sky programmes. Airlines should be a normal industry, generating sustainable profitability with the freedom to fly where markets exist and to consolidate or merge wherever it makes business sense. Most importantly, our passengers will be happier. They will be travelling securely and hassle-free through uncongested airports.
We can be sure that the next quarter of a century will feature a faster pace of change. It is also certain that the mobility provided by aviation will become an even more integral part of the lives of globally connected people and businesses. The challenge for all is to bring our passengers on board-not just onto the aircraft, but as activists joining the industry in shouting politely for relevant change to support a sustainable industry.
COVER STORY: JULY 2005
| FROM THE ARCHIVES Armed with his trademark slogan of “shouting politely” at suppliers and politicians alike, IATA director general Giovanni Bisignani has been relentless in his quest to make the association relevant again. |
Source: Airline Business
