‘We will not disappoint’

In his report shared at the 76th AGM of IATA, Alexandre de Juniac, outgoing Director General and CEO, IATA, spoke about sustainability, partnership with the travel trade and his stepping down from the position after a tenure of five years.

Nisha Verma

Speaking at the 76th AGM of IATA, Alexandre de Juniac shared that international passenger travel was down 89 per cent, while domestic had reduced by 43 per cent.  “The result is that airlines will lose $66 for every passenger carried this year, and a total net loss of $118.5 billion. This loss will be reduced sharply by $80 billion in 2021, but the prospect of losing $38.7 billion next year is nothing to celebrate,” he shared.

How can aviation truly restart?

De Juniac said that a multi-layered approach for safe travel, called Take-off, had been established to keep passengers and crew safe. It was published in record time with the combined efforts of industry stakeholders, public health authorities and IATA, under the leadership of the International Civil Aviation Organization (ICAO). “The good news is that 86 per cent of people currently travelling report that they feel safe with the new measures,” he added. However, according to him, three challenges still continue to exist: first, implementation of the multi-layered approach being far from universal; second, the need for universal compliance to wearing masks; and lastly, undertaking the mammoth task of reactivating infrastructure and personnel.

Detailing these challenges one by one, de Juniac said, “Airlines and airports must continue to do their part, and we must bring governments on board, focusing on harmonisation. Second, we need universal compliance with mask-wearing. It reduces the potential for on-board transmission to rival the risk of being struck by lightning. It is important that governments give us the support to enforce this community responsibility. We must plan carefully with regulators how to safely ramp-up operations. Reactivating thousands of grounded aircraft, managing the qualifications and readiness of millions of licensed personnel, and dealing with a major drain of experienced workers will be key to a safe re-start.”

Being sustainable

De Juniac informed that owing to the historic Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), aviation’s net carbon emissions from international operations will not grow beyond 2019 levels. “Amid the crisis, IATA worked with our industry partners through the Air Transport Action Group to map the way to our 2050 goal of cutting our net emissions to half of 2005 levels. We will, of course, need the support of our partners in government. They must not invent new taxes. Instead, now is the time for them to invest in an energy transition to sustainable aviation fuels (SAF),” he suggested.

On re-opening borders

“A vaccine is the permanent solution we need. Recent news on progress is encouraging, and IATA is working with WHO, UNICEF, Gavi and others in the COVAX initiative. This will ensure that aviation is prepared, literally, to deliver. Borders must be open for distribution, cold-chain logistics facilities need to be available with trained staff, and security measures must be air-tight. On top of that, passenger operations with belly capacity must be scaled-up. This will be the largest and most complex logistical exercise ever. The world is counting on us, and we will not disappoint,” he said.

Supporting finances

Saying that IATA sounded the alarm early, de Juniac shared that governments came to the table with $173 billion of critical financial support this year. “A full economic recovery will be compromised without the catalyst of aviation. This is not passing the buck to governments and asking them to solve our problems. Airlines worked hard and cut costs nearly in half. And a targeted effort by IATA avoided about $20 billion of infrastructure charges and service fees,” he said.

Still, airlines will lose $118.5 billion this year, feels de Juniac. “Year 2021 is likely to see a $38.7 billion loss. Airlines will approach 2021 hobbled and on life support,” he said, adding, “Getting financial support from governments and doing everything in our power to re-open borders with testing – this will be at the very top of IATA’s agenda.”

Relationship with the trade

On how united the industry is with respect to the travel trade, de Juniac said, “We are cooperating on a day-to-day basis on what we call the BSP-ISS network.

During this crisis, we had to ensure that this system, which is strong, guarantee that all the financing element of aviation is properly done; is safe, secure and efficient; and able to continue. There were extreme tensions because everybody in the system was short of cash. It was difficult without strong cooperation. It doesn’t exclude that sometimes there is a disagreement, but we are able to successfully maintain the system. We have a lot of other contacts with the travel agents through the passenger conference in which we set up the rules and regulations under which we work with agents.”

On stepping down

Speaking on his succession, de Juniac said, “It has been the privilege of a lifetime to serve the global air transport industry—the business of freedom—in this capacity. I will continue to proudly lead IATA until I handover to my successor. He will inherit a team he can count on.”

‘My style will be different’

“My style will be different to what has gone before me. I, too, am a businessman. I, too, understand how governments operate, but I am even more unhappy with and more critical of how they get things done or, more importantly, in many cases how they have failed to get things done. I have spent more than 40 years in this business. About half of them were at the pointy end as a pilot, and the other half at the blunt end as a CEO. I know what it takes to succeed. In those 40 years I have seen first-hand the numerous challenges and significant crises that we have faced and that we have overcome. I have a passion for this industry and a passion for IATA. We need, more than ever, an effective industry body to serve and represent our interests. We have continued to provide vital services and, in many cases, we were the key link in getting critical safety equipment to health services. The virus did not stop our customers boarding our aircraft because we have demonstrated our ability to adapt and to ensure the safety of our customers and our people, and we know they want to fly with us. They have been denied the freedom we provide not by a virus, but by a disjointed political response and the restrictions put in place by certain governments who have failed to adapt to and to adopt the sensible measures that would have allowed almost normal air services to continue. As Alexandre has said, the building blocks are now in place for our industry to get back to business and we should be confident in our ability to succeed.”

Losses to continue till 2021

Passenger revenues are expected to fall to $191 billion, less than a third of the $612 billion earned in 2019. This is largely due to a 66% fall in passenger demand (measured in RPK). International markets were hit disproportionately hard with a 75% fall in demand. Domestic markets, largely propelled by a recovery in China and Russia, are expected to perform better and end 2020 49% below 2019 levels.

Passenger yields are expected to be down 8% compared to 2019 and a weak passenger load factor, which is expected to be 65.5%, down from the 82.5% recorded in 2019, a level last seen in 1993.

Passenger numbers are expected to grow to 2.8 billion in 2021. That would be a billion more travellers than in 2020, but still 1.7 billion travellers short of 2019 performance. Passenger yields are expected to be flat and the load factor is expected to improve to 72.7% (an improvement on the 65.5% expected for 2020, but still well below the 82.5% achieved in 2019).