New IATA director general and CEO Tony Tyler used his first speech in the U.S. to emphasize the importance of cooperation and innovation among aviation’s stakeholders and to urge governments to take advantage of the industry’s ability to drive economic growth.
But despite aviation’s value, the industry’s ability to turn profits remains a challenge, Tyler told the International Aviation Club in Washington, D.C., on November 9. “2010 was one of the best years we ever had,” he said. “Airlines made a collective $15.8 billion. But our margin was a meager 2.9 percent.” This year, he added, “IATA expects airlines to turn a $6.9 billion net profit on revenues of $594 billion, for a resulting margin of 1.2 percent.”
Given the high price of oil and an anemic economic outlook, IATA expects profits to fall next year still further, to 4.9 billion, resulting in a margin of 0.8 percent.
The European Commission’s controversial plan to include international aviation in its emissions trading scheme will only exacerbate the problem, asserted Tyler. “The industry supports market based measures, including emissions trading, that are globally coordinated through ICAO,” he said.
Tyler again pushed for governments to support IATA’s Checkpoint of the Future to improve aviation security. “Airlines and governments have spent at least a cumulative total of $100 billion over the past 10 years on security,” he said. “Unfortunately, for many of our passengers that investment has made security the single biggest point of dissatisfaction in the travel experience.”
Tyler accused politicians of using airlines as surrogate tax collectors. He cited IATA’s strong support of opposition to recent U.S. proposals to double the passenger security fee and impose a $100 charge on every aircraft that takes off.
Meanwhile, so-called bad regulations, such as those ostensibly designed to protect passenger rights in the U.S., have also hurt airlines, said Tyler. “Delays and flight cancellations are estimated to have cost the U.S. economy some $31.2 billion in 2008,” he said. “Yet we see regulation that is meant to protect passenger rights actually provide incentives to airlines to cancel flights.”
Citing the recent delay by JetBlue at Hartford’s Bradley International Airport, Tyler noted that an American Airlines flight could not unload, because U.S. Customs did not have personnel available. “These things happen, but it’s unfair and unproductive to blame one industry,” he said. “Airlines are required to have formal contingency plans, so why not airports, TSA, FAA and Customs?”