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IATA’s Director General and CEO said that airline can operate in Japan. There are no restrictions to normal air transport operations at Japan’s major airports, including both Haneda and Narita. “Safety is our number one priority. If it is not safe, we won’t fly,” he said.
The International Air Transport Association (IATA) welcomed the joint statement issued by the International Civil Aviation Organization (ICAO) on behalf of the International Atomic Energy Agency (IAEA), International Maritime Organization (IMO), the World Health Organization (WHO) and the World Meteorological Organization (WMO), on the continued safety of air transport operations in Japan. These five organizations confirmed that there are no restrictions to normal air transport operations at Japan’s major airports, including both Haneda and Narita.
“Today’s joint statement by the five most authoritative United Nations (UN) organizations on air transport, nuclear energy, shipping, health and weather confirms that it is safe to operate in Japan,” said Giovanni Bisignani, IATA’s Director General and CEO.
The ICAO statement further confirmed that there are no health reasons that would require the screening of passengers emanating from Japan. Moreover the Organizations confirmed that there is no health risk associated with increased levels of radiation that have been detected at some airports. Although not recommended by the UN organizations, several states are implementing screening programs for passengers and flights from Japan. As these measures are not being coordinated among governments, IATA is tracking developments at www.iata.org/japan-measures.
“The combination of crises impacting Japan today is unprecedented. But global standards and best practices exist to protect the safety of all concerned. We must follow the joint advice of these authoritative global bodies to provide the best advice to the industry, its employees, travelers and shippers. The situation is evolving quickly and is being constantly monitored. Today the advice is that normal operations are possible. If the advice changes, the industry will comply and transparently keep all informed of the developments,” said Bisignani.
“Effective air links are critically important at this time. Our members are rising to the challenge of bringing relief supplies, equipment and people to Japan as well as connecting families affected by this tragedy,” said Bisignani.
Maunu von Lueders become the newest airliner in Asia Pacific. He become Regional Vice President for Asia-Pacific based in Singapore. “I am excited to be joining IATA and look forward to contributing to the development of Asia-Pacific aviation. I have always been fascinated by this region, which is taking on increasing importance as aviation’s center of gravity continues to shift eastward. With the IATA Asia Pacific team, my priority is to deliver regional leadership on global industry challenges,” he said in press release.
A Finnish national, von Lueders has served as CEO of two international carriers, JetLite in India and Nordic Airlink/FlyNordic in Sweden. His aviation career began with Finnair where he worked until 2001 in various positions including general management, sales & marketing, commercial partnerships and international relations. Von Lueders has also worked with the oneworld global alliance as Vice President of Sales.
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Singapore Airlines become one of the delegas from airlines in The International Air Transport Association (IATA) announced that its 67th Annual General Meeting (AGM) will be held in Singapore from 5-7 June 2011. In this agenda, IATA AGAM invite airlines industries from airports, airlines comapnies, airplane manufactures and toher aviation industry’s premiere executive event and attracts about 800 delegates,
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The International Air Transport Association (IATA) laid out an agenda for the air cargo value chain to improve its competitiveness with a four point agenda. “The air cargo value chain must offer better quality and improved efficiency with operations that are safer and even more secure,” said Giovanni Bisignani, IATA’s Director general and CEO, in his opening remarks to 900 air cargo executives gathered in Istanbul for the IATA World Cargo Symposium.
“An efficient air cargo industry is in everybody’s interest. Transporting 35% by value of goods traded internationally, it is critical to the global economy. Improving competitiveness to more effectively connect the world requires a team effort across the air cargo value chain. Airlines, forwarders and shippers must work with governments on common goals to solve air cargo’s key issues,” said Bisignani. IATA specifically addressed the following issues: Security: Bisignani noted significant progress in collaboration with the US Department of Homeland Security in 2010.
He also rang a warning bell that many governments and politicians are working on change to air cargo security that dramatically impacts the business. “IATA is taking the lead to engage governments with industry knowledge and expertise. Our message to governments is clear. We must resist the knee-jerk call for 100% cargo screening. The industry must be secure with effective measures that facilitate the speed needed to support global commerce. Air cargo security must be based on a combination of three measures—supply chain security, scanning technology and better use of e-freight data,” said Bisignani.
IATA’s vision for air cargo security includes a supply chain approach that keeps shipments secure from the time of packing to loading. IATA’s Secure Freight initiative helps industry and governments to work together on investment, processes, technology and risk assessment to implement a supply chain approach.
Secure Freight is being piloted successfully in Malaysia and the target is for two other countries to implement in 2011, including the United Arab Emirates. Second, new certified screening equipment is needed to supplement the supply chain security process and handle oversize items and pallets if required. And third, to facilitate effective risk assessments, better use must be made of electronic information. e-freight: The IATA Board of Governors has targeted 10% e-freight volumes on capable trade lanes by the end of 2011, and 100% by 2015. “The e-freight network covers 80% of cargo volumes. But e-freight penetration stands at just 2.8%. Most governments have legislation that recognizes electronic documentation.
The exceptions include Thailand, Indonesia, Russia and Vietnam which much catch-up fast or risk being left behind in this important business, “said Bisignani. The IATA e-freight program was started in 2004 with the aim of saving the industry $4.9 billion by converting 20+ shipping documents and the processes behind them to electronic format. “It’s a no-brainer. If we can be faster, cheaper, more accurate and secure we need to get it done,” said Bisignani. Quality: “Cargo is a competitive business—98% of the volume goes by sea and 2% by air. Customers who pay a premium to ship by air demand premium quality. Cargo 2000 has developed cargo standards. These should not be the property of a club of a few committed airlines and freight forwarders.
They want to know that their shipments are on time and if they are not, they need to know when to expect them to plan around the delay. This is an example of basic good business practice that air cargo needs to adopt if it is to maintain or improve its competitiveness. My vision is to evolve these to global quality standards by the end of this year,” said Bisignani.
Safety: With one accident for every 1.6 million flights in 2010, safety as measured by Western-built jet hull losses achieved a historical low. Benefitting from the IATA Operational Safety Audit (IOSA) as a condition of membership, IATA airlines outperformed the industry with one accident for every 4 million flights. “Safety is our number one priority. The positive numbers from 2010 show the strength of our commitment. This commitment includes constant improvement and there is an emerging risk with internet based commerce that we must address. Individual sellers through websites are not professional shippers. They don’t know their responsibilities to label, pack and declare dangerous goods. All air cargo stakeholders must find a way to bring these websites to action to inform their customers of their responsibility. And we must do this fast, before we have a catastrophe,” said Bisignani.
Asia-Pacific carriers are expected to deliver the largest collective profit of $3.7 billion and the highest operating margins of 4.6%. This is down substantially from the $7.6 billion that the region’s carriers made in 2010 and from the previously forecast $4.6 billion for 2011. While the strong economic growth in the region is still driving profitability, inflation fighting measures in China are slowing trade and air cargo demand. The key reason for the downgrade from December’s forecast is that the region is more exposed to higher fuel prices, due to relatively low hedging on average.
North American carriers are expected to deliver $3.2 billion profit, unchanged from the previous forecast and down from the $4.7 billion profit made in 2010. Higher oil prices will damage profitability in 2011, but earlier cuts in capacity have led to much stronger conditions for yields than elsewhere. The US economy has also been stronger than expected. Compared to our December forecast, better revenues in 2011 will offset higher fuel costs.
European carriers are expected to make a $500 million profit. This is up from the $100 million previously forecast, but well below the $1.4 billion that the region’s carriers made in 2010. It is the carry-over from better than expected 2010 second-half performance that has led to forecast revisions. The ongoing banking and government debt crisis are keeping domestic home markets fragile. But the weak Euro is continuing to provide stimulus to export industries, outbound freight and long-haul business travel which is driving the upgrading of the region’s profit forecast. Even so, Europe’s carriers remain the least profitable among the major regions with an EBIT margin of 1.1%.
Middle East carriers are expected to return a profit of $700 million. This is considerably better than the $400 million previously forecast, but down from the $1.1 billion profit that the region posted in 2010. Political instability in the region is expected to take its toll in Egypt, Tunisia and Libya which combined account for about 20% of the region’s international passenger traffic. This is balanced by the Gulf area which benefits from economic activity related to high oil prices and whose hubs continue to win long-haul market share. Load factors have also improved significantly for these airlines, as new capacity is being added at a slower pace than demand increases.
Latin American carriers are forecast to post a $300 million profit. This is down sharply from the $1 billion that the region made in 2010 and from the previously forecast $700 million. Strong economic growth and international trade in the region are driving travel and cargo demand and the region’s profits for airlines. Exposure to higher oil prices is the key reason for the expected deterioration in the region’s profitability this year.
African carriers are expected to break even. This is unchanged from the previous forecast but down from the $100 million profit that the region posted in 2010. Strong economic and transport demand growth on the back of foreign direct investment and rapidly growing trade links with Asia is keeping the region’s carriers out of the red. However, they face intensifying competition from Middle Eastern carriers and others for lucrative business traffic.
The International Air Transport Association (IATA) downgraded its airline industry outlook for 2011 to $8.6 billion from the $9.1 billion it estimated in December 2010. This is a 46% fall in net profits compared to the $16 billion (revised from $15.1 billion) earned by the industry in 2010. On expected industry revenues of $594 billion, the $8.6 billion 2011 profit equates to a net profit margin of 1.4%.
“Political unrest in the Middle East has sent oil over $100 per barrel. That is significantly higher than the $84 per barrel that was the assumption in December. At the same time the global economy is now forecast to grow by 3.1% this year—a full 0.5 percentage point better than predicted just three months ago. But stronger revenues will provide only a partial offset to higher costs. Profits will be cut in half compared to last year and margins are a pathetic 1.4%,” said Giovanni Bisignani, IATA’s Director General and CEO.
Forecast highlights include:
Fuel: IATA raised its 2011 average oil price assumption to $96 per barrel of Brent crude (up from $84 in December), in line with market forecasts. Including the impact of fuel hedging, which is roughly 50% of expected consumption, this will increase the industry fuel bill by $10 billion to a total of $166 billion. Compared to levels in 2010, oil prices are now expected to be 20% higher in 2011. Fuel is now estimated to represent 29% of total operating costs (up from 26% in 2010).
Growing economies give airlines the opportunity to recover some of these added costs with additional revenues. For example, since early 2009, rising oil prices added 25% to unit costs while average fares (excluding surcharges) rose 20%. But in 2011 higher revenues are not expected to be sufficient to prevent the rise in oil prices from causing profits to shrink by 46% from 2010 levels.
Demand: An increase in global GDP forecasts to 3.1% (from 2.6% in December) bodes well for continuing strong demand for air transport. In line with this, IATA revised its passenger demand growth forecast to 5.6% (from 5.2%) and its cargo growth forecast to 6.1% (up from 5.5%). Overall, this will generate a 5.7% expansion in tonne kilometers flown.
Capacity: Published airline schedules indicate a capacity increase of 6%, slightly lower than the 6.1% previously forecast. Of this, 5% will come from the 1,400 new aircraft being introduced to the fleet over 2011. The additional 1% is expected to come from the normalization of underutilized capacity in the twin-aisle fleet.
Yields: With capacity expected to increase by 6% in 2011 and demand by 5.7%, the gap is 0.3 percentage points. This has narrowed from the previously forecast gap which was 0.8 percentage points. While there has been some weakening in passenger load factors, as of January they remained near record levels at a seasonally adjusted 77.7%. Freight load factors are also high compared to previous cyclical peaks. These tightening supply and demand conditions give scope for yield improvements. Passenger yields are expected to grow by 1.5% (up from the previous forecast of 0.5%) and cargo yields by 1.9% (up from the previous forecast of no growth).
Premium Travel: Premium traffic is an important contributor of a network airline’s profitability. Purchasing managers’ confidence is a leading indicator for business travel. In January, the JP Morgan/Markit Purchasing Managers Index hit a record high. Moreover, strong corporate reporting at the end of 2010 and expanding world trade will continue to drive business travel in 2011, albeit at a slower pace than we saw during the 2010 post-recession rebound.
Risks: Rising oil prices are always a challenge for airline profitability. If they are accompanied by strong growing economies and world trade, airlines have some opportunity to command prices that can offset the rising fuel costs. If, however, rising energy prices stall global economic growth there is a strong downside risk to this forecast. With oil prices now being driven by speculation on geopolitical events in the Middle East rather than strengthening economic growth, this is a significant downside risk.
“This year the industry is performing a balancing act on a very thin tight-rope of a 1.4% margin. It is a structural problem that the industry has faced with an average margin of just 0.1% over the last four decades. There is very little buffer for the industry to keep its balance as it absorbs shocks. Today oil is the biggest risk. If its rise stalls the global economic expansion, the outlook will deteriorate very quickly,” said Bisignani
IATA also highlighted the risk of increasing taxation, particularly in price sensitive leisure markets. In 2010, the industry saw new and increased taxes in the range of 3-5% of ticket prices in the UK, Germany and Austria. Recently, Iceland, India and South Africa have joined with plans for additional taxation. “This is a price sensitive business. Aviation has the power to stimulate economies. But that ability is being compromised by adding taxes at a time when we are struggling to cope with high fuel prices just to maintain anemic margins,” said Bisignani.
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 on released.
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
Reopening Air Space
The Boeing Company tonight honored 14 companies as winners of its 2009 Supplier of the Year award. They are the best companies from 12,000 active aviation supplier companies worldwide. The winners located in Germany, India, Japan and the United States. They were judged on quality, delivery performance, cost, environmental initiatives, customer service and technical expertise. Four are small businesses as defined by the U.S. government.
The Boeing Company released that it has successfully completed its industrial cooperation program for the third phase of the CH-47D Chinook rotorcraft upgrades performed for the Spanish Army’s Airmobile Force, FAMET. Boeing finished the industrial cooperation program on schedule while exceeding the $80 million requirement, demonstrating the company’s continued success in meeting its commitments.
Boeing roll out ANG-15 C today, April 12. Boeing joined the U.S. Air Force and Florida Air National Guard (ANG) in Jacksonville. ANG F-15C equipped with an Active Electronically Scanned Array (AESA) radar. Boeing is under contract to upgrade 14 ANG and 10 Air Force F-15C/D aircraft with AESA. ““The new radar also enhances the capability to find and track small targets at low altitude,”said Jim Means on release.
The Raytheon APG-63(V)3 AESA radar being installed on the F-15s combines the operationally proven APG-63(V)2 software with the advanced APG-79 Transmit/Receive hardware found on the F/A-18E/F Super Hornet. It is a reliable and affordable high-performance AESA for the F-15 air-to-air variant. The AESA radar antenna is 50 times more reliable than the mechanically scanned antenna it replaces.
“The (V)3 AESA radar will greatly improve F-15 pilots’ situational awareness, beyond-visual-range targeting, and weapon accuracy,” said Jim Means, director of Proprietary Programs for Boeing
Global Strike Systems- a capability the ANG will employ in its Homeland Defense Air Sovereignty role. The addition of a built-in test function on the AESA antenna makes the (V)3 easier to
maintain.”
The APG-63(V)3 radar is the latest in a series of planned upgrades that will ensure the F-15C’s combat-proven air supremacy well into the 21st century. These include a fighter-to-fighter data link, GPS navigation and the Joint Helmet Mounted Cueing System, enabling the fighter to conduct network centric operations while employing the latest air-to-air weapons.
Boeing Global Services & Support provides sustainment services for the Air Force F-15 fleet, including spares and retrofit programs, field service teams and a full range of training systems and services.
A unit of The Boeing Company, Boeing Defense, Space & Security is one of the world’s largest defense, space and security businesses specializing in innovative and capabilities-driven customer solutions, and the world’s largest and most versatile manufacturer of military aircraft.
Headquartered in St. Louis, Boeing Defense, Space & Security is a $34 billion business with 68,000 employees worldwide.
The International Air Transport Association (IATA) halved its loss forecast for 2010 to US$2.8 billion (compared to the US$5.6 billion loss forecast in December 2009). The improvement is largely driven by a much stronger recovery in demand seen by year-end gains that continued into the first months of 2010. Relatively flat capacity translated into some yield improvement and stronger revenues.
