Urgent Change for Brazilian Aviation - Driving Economic Benefits and Improving Competitiveness

Sao Paulo - The International Air Transport Association (IATA) praised President Dilma Rousseff’s strategic focus on aviation and urged a quick follow-up with critical reforms to improve the industry’s competitiveness. Preparations to host the FIFA World Cup and the Olympics make urgent progress necessary.

“President Rousseff recognized the power of air transport to drive long-term gains in the quality of life in Brazil in her inauguration speech. Her intention to create a ministry-level Civil Aviation Secretariat is an opportunity to achieve change. IATA is eager to use our global expertise to play a collaborative role in delivering on the President’s expectations with a strategic plan focused on competitiveness,” said Giovanni Bisignani, IATA’s Director General and CEO. Bisignani made his remarks in a speech at the British Chamber of Commerce in Sao Paulo, with Government nominations for key aviation posts imminent.

Bisignani highlighted five areas for change:

Infrastructure and Regulatory Framework: “The INFRAERO model, which controls 94% of Brazil’s airports, is broken. Terminals at 13 of the top 20 airports cannot cope with current demand. Sao Paulo, which handles 25% of Brazil’s traffic, is in a critical state with insufficient capacity and services that do not meet global standards. Concessions could be a way forward. But they must be accompanied by transparent, robust and independent economic regulation supported by effective industry consultations,” said Bisignani.

IATA supports ANAC’s continued role in overseeing airports. “ANAC’s proposed high level framework for airport regulation is mostly in line with IATA’s recommendation and ICAO’s principles. But four important changes are critical to shore-up Brazil’s competitiveness. First, ATAERO must be abolished. This 50% surcharge on fees contravenes ICAO principles. Second, we need greater transparency and assurances that there will be no cross-subsidization among airports. Third, the solution to insufficient capacity must not be peak hour pricing. Efficiency gains and infrastructure development are the way forward. And finally, the 70% increases for international carriers as a result of a fee recalculation are not acceptable. Charges must come down, not go up. If these four issues are not resolved, the benefits of concessions will be lost,” said Bisignani.

Fuel Pricing: Brazil must follow-up on the 2009 elimination of the $100 million PIS/COFINS fuel tax by addressing the Petrobras import parity pricing policy. A recent study concluded that Petrobras is over-pricing jet fuel by $400 million annually. “There is no justification that Brazil’s jet fuel prices should be 14% more expensive than in the rest of the region. Brazil produces 80% of its fuel needs from its own refineries. It makes no sense to peg prices to the Houston market and include all theoretical costs for importation—including transport. It is destroying the competitiveness of Brazilian aviation,” said Bisignani. Globally, fuel averages at 29% of an airline’s operating cost but for Brazil’s airlines, it is 37%.

Air Traffic Management: IATA urges Federal Government support for DECEA’s improvement efforts. “Airlines have invested in avionics to support more efficient flying. But the infrastructure on the ground, does not match our capabilities in the air,” said Bisignani. Specifically, IATA is encouraging the implementation of more efficient operating procedures, known as RNAV and PBN, to increase capacity and efficiency in both Sao Paulo and Rio. Moreover, IATA is encouraging the Department of Airspace Control (DECEA) to adopt a process for continuous improvement based on analysis of performance data against agreed performance targets.

Environment: Aviation is united and committed to improving fuel efficiency by 1.5% annually to 2020, capping net carbon emissions from 2020 with carbon neutral growth, and cutting net emission in half by 2050 (compared to 2005). Governments, through ICAO, have agreed to find a global approach on economic measures related to CO2 emissions. “Aviation is the only global industry with a global plan—by industry and by governments. Brazil must support the global approach. That means stopping plans by Guarulhos City to impose environmental taxes that are counter-productive to global efforts. And the Government should follow-up on the leadership of TAM’s sustainable biofuels test flight by creating the fiscal and legal framework to support a sustainable Brazilian biofuels industry,” said Bisignani.

FIFA World Cup and the Olympics: “Brazil’s airports will not be capable of successfully hosting the FIFA World Cup or the Olympics without major changes. Time is running out for major infrastructure projects. We are concerned that Sao Paulo’s Terminal 3 is being planned without industry consultation. Whatever is achieved, we will need to make the current infrastructure work much harder with better processes. One simple solution is for all airport stakeholders—ANAC, INFRAERO, customs, immigration, public health and agriculture—to institutionalize cooperation. Airlines could bring solutions to improve terminal operations and reduce congestion, including IATA’s Fast Travel standards for implementing self-service technology, and e-freight to improve cargo handling efficiency. These solutions exist today and can deliver major improvements,” said Bisignani. IATA also encouraged ANAC to add a new dimension to its safety oversight by adopting the IATA Operational Safety Audit as a requirement for all airlines operating to Brazil.

Aviation is important to Brazil’s economy. It drives travel and tourism which supports 9.1% of GDP and over 8 million Brazilian jobs. Aviation has grown by an impressive 10% annually since 2003. The Brazilian domestic market is the fourth largest in the world after the United States, China and Japan. But with 13 million international passengers it ranks 37th, completely disproportionate to Brazil’s economy which is the world’s eighth largest.

IATA has had a Brazilian office since 1991. IATA’s Brazil office processed about $4.5 billion in industry settlements in 2010 and provides a local access to all of IATA’s global expertise including safety, security, infrastructure development and Simplifying the Business. In December 2010, IATA appointed Carlos Ebner, former Chief Financial Officer of Varig and CEO of OceanAir, as Country Director for Brazil.

Volcano Crisis Cost Airlines $1.7 Billion

Berlin - The International Air Transport Association (IATA) estimated that the Icelandic volcano crisis cost airlines more than $1.7 billion in lost revenue through Tuesday—six days after the initial eruption. For a three-day period (17-19 April), when disruptions were greatest, lost revenues reached $400 million per day.

“Lost revenues now total more than $1.7 billion for airlines alone. At the worst, the crisis impacted 29% of global aviation and affected 1.2 million passengers a day. The scale of the crisis eclipsed 9/11 when US airspace was closed for three days,” said Giovanni Bisignani, IATA’s Director General and CEO.

IATA noted there are some cost savings related to the flight groundings. For example, the fuel bill is $110 million a day less compared to normal. But airlines face added costs including from passenger care. “For an industry that lost $9.4 billion last year and was forecast to lose a further $2.8 billion in 2010, this crisis is devastating. It is hitting hardest where the carriers are in the most difficult financial situation. Europe’s carriers were already expected to lose $2.2 billion this year—the largest in the industry,” said Bisignani.

Mitigating the Financial Impact
“As we are counting the costs of the crisis we must also look for ways to mitigate the impact. Some of our airport partners are setting industry best practice. London Heathrow and Dubai are waiving parking fees and not charging for repositioning flights. Others airports must follow,” said Bisignani.

But the larger role is for governments. Bisignani made four specific requests for regulatory relief:

•Relax Airport Slot Rules: IATA urged that rules on take-off and landing slot allocation (use it or lose it) be relaxed to reflect the extra-ordinary nature of the crisis.
•Lift Restrictions on Night Flights: IATA urged governments to relax bans on night flights so carriers can take every opportunity to get stranded passengers back home as soon as possible.
•Address Unfair Passenger Care Regulations: “This crisis is an act of god—completely beyond the control of airlines. Insurers certainly see it this way. But Europe’s passenger rights regulations take no consideration of this. These regulations provide no relief for extraordinary situations and still hold airlines responsible to pay for hotels, meals and telephones. The regulations were never meant for such extra-ordinary situations. It is urgent that the European Commission finds a way to ease this unfair burden,” said Bisignani.
Bisignani also urged governments to examine ways for governments to compensate airlines for lost revenues. Following 9/11, the US government provided $5 billion to compensate airlines for the costs of grounding the fleet for three days. The European Commission also allowed European states to provide similar assistance.

“I am the first one to say that this industry does not want or need bailouts. But this crisis is not the result of running our business badly. It is an extra-ordinary situation exaggerated with a poor decision-making process by national governments. The airlines could not do business normally. Governments should help carriers recover the cost of this disruption,” said Bisignani.

Re-Opening Air Space
On Monday, the European Commission announced revised measures for handling airspace closures, following widespread criticism of their methodology.

“Airspace was being closed based on theoretical models not on facts. Test flights by our members showed that the models were wrong. Our top priority is safety. Without compromising on safety, Europe needed to find a way to make decisions based on facts and risk assessment, not theories,” said Bisignani.

“The decision to categorize airspace based on risk was a step in the right direction. Unfortunately, not all states are applying this uniformly. It is an embarrassing situation for Europe, which after decades of discussion, still does not have an effective Single European Sky. The chaos and economic losses of the last week are a clarion call to Europe’s political leaders that a Single European Sky is critical and urgent,” said Bisignani.


View Giovanni Bisignani's remarks

- IATA -

France Implements One-Stop Security

For immediate release
Date: 07 May 2009 No: 19
News

Geneva - The International Air Transport Association (IATA) welcomed France’s adoption of One-Stop Security. Passengers that have already been screened at a European airport will not need to be screened a second time when making flight connections. High security standards are maintained, but the hassle of connecting is reduced.
With this decision, France is joining the majority of the EU countries that already allow One-Stop Security for passengers arriving from another EU airport.
In France, One-Stop Security for passengers and their hand luggage will be applied to individual airports this year, starting with Lyon and selected terminals at Paris Charles de Gaulle. IATA estimates that this will impact 6 million passengers and save US$30 million a year with no compromise on the quality of security being applied. “It is a waste of time, effort and resources to ask passengers to stand again at security if they have already been checked by a competent screening authority a few hours earlier. This frustrates passengers and drains scarce security resources. The business case for One-Stop Security is clear: faster, hassle-free connections for passengers and lower security costs for everyone involved. There is no compromise on quality. I urge other states - particularly the UK and Ireland - to come on board quickly,” said Giovanni Bisignani, IATA’s Director General and CEO.
The next step is to integrate One-Stop Security into the global system. The International Civil Aviation Organization (ICAO) is working on developing the concept of One-Stop Security to promote it on a global scale. “The key is common recognition of standards. We need more governments to exchange information with each other and conclude security agreements that recognise their security measures as equivalent. This is a global industry with a great track record on safety because of global standards and international cooperation including industry and governments. We must approach security with the same mindset. This is no time for complacency”, said Bisignani.
One-Stop Security is an IATA priority within its security strategy based on threat and risk assessment, innovation, technology and cost-efficiency.
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Airlines Prepared for Swine Flu

Geneva - The International Air Transport Association (IATA) emphasised that airlines are prepared for the heightened level of alert following the World Health Organization’s (WHO) decision to move to Phase 5 of its pandemic preparedness plan.
IATA has worked with WHO to prepare guidance materials for front line staff at airlines, including cabin crew, maintenance workers, cleaners, passenger agents and cargo/baggage handlers.
“We are following the advice of the World Health Organization. Safety for passengers and crew is our top priority. People getting on planes should be reassured of two things. First, even under normal circumstances, airlines have equipment and measures in place to keep the cabin environment safe. For example modern aircraft have air filtration systems similar to those in hospitals, aircraft are regularly disinfected as part of normal cleaning routines and crew are trained in handling procedures for passengers who might become ill on board aircraft. Secondly, the years of planning for the possibility of avian influenza have prepared the industry to deal efficiently with the unfolding situation by following the recommendations of WHO,” said Giovanni Bisignani, IATA’s Director General and CEO.
WHO advises there should be no restriction of regular travel or closure of borders. It is considered prudent for people who are ill to delay international travel and for people developing symptoms following international travel to seek medical attention, in line with guidance from national authorities.
“WHO is the global expert. WHO is not advising any travel restrictions. We hope that governments take decisions and coordinate their actions in line with WHO recommendations,” said Bisignani.
Some governments, however, are adjusting immigration procedures, which can create confusion for travellers. IATA is collecting new requirements through the IATA Travel Centre. Passengers can get the most up-to-date information on travel documentation requirements at www.iatatravelcentre.com.
-IATA-
Contact:Anthony ConcilDirector Corporate CommunicationsTel: +41 22 770 2967Email: corpcomms@iata.org

IATA Expands Agreement with CIS to Improve Aviation Safety

Broad Agenda to Engage Russian Aviation
Moscow - The International Air Transport Association (IATA) today announced the signing of an agreement with the Interstate Aviation Committee (IAC, also known by its Russian abbreviation which is MAK) to improve aviation safety throughout the Commonwealth of Independent States (CIS).
The expanded agreement adds specific points to IATA’s existing cooperation partnership with the IAC including:
Promoting IATA Operational Safety Audits (IOSA), IATA’s Integrated-Airline Management System (IAMS), IATA Safety Audits for Ground Operations (ISAGO) and other similar initiatives and their realisation in the deployment of professional resources of IAC.
Development and enhancement of civil aviation infrastructure in the states united by IAC, including implementation of the ICAO standard for Reduced Vertical Separation Minima (RVSM) and Performance-Based Navigation.
The agreement was signed in Moscow by Tatiana Anodina, Chairperson of the IAC and Giovanni Bisignani, IATA’s Director General and CEO. “Safety is our top priority, and the performance of the CIS is far below the global average. All IATA airlines - including 15 in the CIS are on the IOSA Registry. I look forward to working closely with the IAC to help raise the bar on safety in this region by promoting IOSA and other IATA global standards,” said Bisignani.
Bisignani is visiting Russia to mark a new phase in IATA’s involvement in Russian aviation. “In addition to IOSA, two other IATA programmes have helped transform the landscape of Russian aviation - 100% e-ticketing and the opening of IATA’s Billing and Settlement Plan. This is a solid foundation of success. At this time of crisis - for the global industry as well as the Russian airlines - we have a long list of tough issues to tackle,” said Bisignani.
During Bisignani’s visit, he met with Russia’s Minister of Transport, Igor Levitin, to discuss a workplan with the Russian Ministry of Transport focused on the following areas:
Improving safety: Alongside working with IAC, IATA is encouraging the Russian government to make IOSA a requirement for all airlines registered in Russia.
Infrastructure Charges: Russia has an international obligation to ensure non-discrimination for infrastructure charges. “The current differential system of charges is illegal and must change,” said Bisignani.
Bringing infrastructure charges in line with global standards: Russia has an international obligation to ensure non-discrimination for infrastructure charges. “The current discriminatory system of charges does not comply with international standards and must change,” said Bisignani.
Bringing transparency to fuel pricing: In September 2008 the cost of fuel at Moscow’s airports was 12% higher than in Western Europe. Following IATA’s call for greater transparency, the gap has narrowed. “Now we must formalise the requirement for transparency and work to find a system to ensure that fuel uplifted for international flights meets Russia’s international obligation to be free of VAT,” said Bisignani.
Promoting IATA e-freight: “After achieving 100% e-ticketing, the next big challenge is to implement e-freight. To make this a reality, Russia must sign the Montreal Convention 99 recognising electronic air way bills. Russia is too important to be left out of the US$4.9 billion in benefits that e-freight will bring,” said Bisignani.
Finding Global Solutions for the Environment: Russia has made tremendous progress on making air traffic more efficient. In 2008, at total of 131 routes were optimized. Work on a further 42 routes will take effect by the end of May. “This has a positive impact on environmental performance. Now Russia - as a member of the ICAO Group on International Aviation and Climate Change - has an important responsibility in finding a global solution for economic measures under ICAO auspices,” said Bisignani.
Moving forward with liberalisation: “With Russia’s carriers active in seeking international partnerships, the archaic ownership limitations of the bilateral system are clearly visible. This crisis is an opportunity for change and I hope that Russia will play a leading role in allowing airlines to run their businesses with the same freedoms that other industries take for granted,” said Bisignani.
Bisignani looked beyond the current crisis to the future of Russian aviation. “Russia’s vast geography makes aviation a critical link domestically and internationally. Russia’s location puts it at the crossroads of North America, Asia, Europe and The Middle East. Russia’s seat on the ICAO Council makes it an important player in international aviation policy. IATA’s goal is to work with the Russian government to ensure that this great aviation nation is fully integrated into the global aviation system. That means following its obligations under international law and using global standards. The result will be a safe and efficient air transport industry delivering enormous economic benefits,” said Bisignani.

NOVEDADES IATA...

Date: 03 March 2009 No: 8

News
Managing Cargo in Crisis
-IATA Calls for a Supply Chain Approach-

Bangkok - The International Air Transport Association (IATA) called on the cargo supply chain to battle the current air cargo crisis by improving security, delivering a better product and boosting efficiency.

“The industry is in crisis and nobody knows that better than our cargo colleagues. Cargo demand has fallen off a cliff. After a shocking 22.6% decrease in December it dropped a further 23.2% in January,” said Giovanni Bisignani, IATA’s Director General and CEO in a recorded message to the 700 industry experts attending IATA’s World Cargo Symposium.

Air cargo represents about 10% of industry revenues. As 35% of the value of goods traded internationally is transported by air, air cargo is a barometer of global economic health. “The continued decline in cargo markets is a clear sign that we have not yet seen the bottom of this economic crisis,” said Bisignani.

In December 2008 IATA forecast 2009 freight volumes to fall 5%. Combined with a decrease in yields, this would result in a 9% drop in freight revenues to US$54 billion.

“Unfortunately, the shocking fall in demand that followed is making these projections look optimistic,” said Bisignani.

“As we battle this crisis, we must look for opportunities that will build our future with a more efficient industry focused on meeting customer needs. Customers want a good price and a great product, delivered via the supply chain with speed and reliability. And in crisis, customers will only get more demanding. To meet their expectations and build a solid future for the industry, change is required,” said Bisignani.

Bisignani highlighted three priorities for the supply chain: security, e-freight and Cargo 2000:

Security: Air cargo security costs continue to rise. Screening technology is not being optimised and definitions, requirements and enforcement vary from country to country. IATA called for a strong industry effort to convince the US that its plans to implement 100% cargo screening in 2010 are misguided.

“Scanning everything loaded onto the aircraft is a waste of precious resources. To be effective, we must identify the risks involved with a supply chain approach. IATA’s Secure Freight strategy focuses on a risk-based approach with shared responsibility throughout the supply chain. Governments must remember that this is a global industry. We need a globally coordinated approach that looks at the entire supply chain,” said Bisignani.

Efficiency with e-freight: In the face of falling yields and demand Bisignani stressed that e-freight as a key driver for efficiency and savings is more important then ever. “Improving quality without reducing costs will not get us far. We need to modernise the old paper-based processes of air cargo with e-freight,” said Bisignani. Each freight shipment is accompanied by more than 30 documents. E-freight currently has the capability to convert 12 of these to electronic documentation. Already it is operating at 18 locations covering 26 airports.

“E-freight is not a theory. It is working and putting in place the basis to deliver efficiencies and cost reductions throughout the supply chain. By 2010 our target is to have the capability to remove 64% of the paper from 81% of international shipments. In other words, we will eliminate 20 documents and be live in 44 locations,” said Bisignani.

“To be successful, we need the commitment of the entire supply chain to generate economies of scale. The benefits are enormous: US$4.9 billion in cost savings for the supply chain, a 22% reduction in shipper buffer stock, a 25% reduction in customs penalties, an average 24 hour decrease in shipping time and a 1% increase in market share against sea shipments. Everybody benefits. Everybody needs to participate,” said Bisignani.

Quality - Cargo 2000: Bisignani also called for greater industry participation of the entire supply chain in Cargo 2000 to improve quality. “Cargo 2000 quality standards are even more important in this crisis. IATA is committed to Cargo 2000. It is part of our recommended quality standard. But to be effective, we need the whole supply chain to be aligned with a common vision on how to deliver quality. That is what Cargo 2000 is all about,” said Bisignani.

Cargo 2000 was established over a decade ago to simplify processes by reducing 40 steps in the logistics chain to 19 and to implement effective quality standards.

The IATA World Cargo Symposium is taking place in Bangkok, Thailand from 2-5 March 2009. Under the theme of “Focus on the Customer: Delivering in Turbulent Times,” the World Cargo Symposium is looking at building a solid future for air cargo, while battling the crisis that currently envelops the global economy. IATA will release an updated industry financial forecast on 24 March.

View Giovanni Bisignani's full speech

-IATA-