IATA DG: Privatization not a ‘magic’ solution

The just concluded International Air Transport Association (IATA) Annual General Meeting (AGM) held in Seoul, South Korea is said to be the most attended global aviation event in recent years. In this interview with WOLE SHADARE, the Director-General of IATA, Alexandre de Juniac speaks on various issues on aviation safety, the weak and fragmented nature of African airlines and other matters affecting airlines’ growth. Excerpts:

When do you expect Middle East carriers to overcome slot?

Middle East carriers have taken the measures. A classical measure of usually capacity control, programme re-shuffling that the alliances all do is to slow down in our traffic. The difference is that for the Gulf carriers, it is something pretty new compared to the other carriers that have had to do it for decades.

When does it start?

It depends on the carriers. It is difficult to give you a precise date. For me, it is difficult to comment on individual alliance or group of airlines.

What is your evaluation of airlines’ performance from the Middle East last year?

Last year, you know we are published regionally our figures. Middle East in terms of profitability is so far more than US and even Asia and Africa.

One of the problems you mentioned is congested airspace in the Middle East. What type of dialogue is IATA involved, which is encouraging opening of airspace?

 

Usually, we ask the civil aviation to do two things; to invest in technology and to cooperate more. In the gulf before the blockade, there was a problem of close cooperation to cooperate in the skies. After the blockade, it is even more. We are pushing them to cooperate when the political situation allows it. We do work with all the civil aviation authorities. We also leverage our relationships with heads of civil aviation organisations in the Arab countries on ability to bring everything to the table and to do the good things we have mentioned here on investment, real design of airspace of all members. It is an ongoing process.

East Africa is expanding, building new airports and in your speech, you raised the issue of infrastructure. How can this be sustainably affordable infrastructure. You also said African airlines are bogged down by high cost and others, how can they navigate their ways out of these?

On the cost control of big investment in traffic management even more on airports, the solution we always propose is to have early collaboration with users, mainly airlines to define the project at the right level in terms of size, level of service at the right level for the airlines that are serving there. Early stage consultation is the main topic because of inappropriate designs.

 was actually surprised when IATA talked about congestion in European airspace and further surprised when it calculated minutes of delay runs into about 36 years. In Africa, it is a different situation, we don’t have that problem. We are struggling with Single African Air Transport Market; it is neither here nor there for now. Twenty-eight countries have signed up to SAATM. We still have a long way to go, the agreement seems to be slow, what are the impediments to achieving SAATM?

I think they are similar to those of Yamoussoukro Declaration, which has been there 20 years ago. Firstly, it is political reason. You are touching on a subject that has sovereignty, economic reasons because some of the incumbent airlines owned by governments want to protect their airspace and their operators against what they perceive as threatening competition. They also think that it will kill any initiative of national carrier and the reasons they don’t want to open their borders. It is all about political control and sovereignty issues. It is protection, political issue.

 

But that has affected African carriers and that has made them very weak, small and fragmented. Is IATA pushing for them to relax their hard stance?

 

We will push further. We think that any initiative that is favourable to our opening the sky is generally good for everybody. It generates traffic; it brings prosperity and builds Gross Domestic Product (GDP).

Is it a co-operation between IATA and African Airline Association [AFRAA]?

We are an international body. We deal with AFCAC, AFRAA, ADB and efforts led to the release of funds by the African Development Bank to the Africa Union to support the con  ducting of the different kinds of study in all of Africa in how to develop their skies. We have seen that in Europe, people are opposing Open Skies.

 

But that has affected airlines in Africa that are weak, small, making people think that IATA will push for more its reality by engaging governments in these countries?

We will push further. We think that any initiative that is favourable to opening the sky will generate a lot of money for the airlines. It generates traffic and allows the creation of expansion. It will create prosperity and jobs.

 

With regards to the blocked funds in Angola and other places, how much dollars do they owe?

We have solved the problem and many of the problems are behind us. Nigeria and Egypt have remitted all blocked funds to airlines. The problems now have shifted to other countries such as Zimbabwe, Eritrea, Sudan and others. We are going to go to these countries with my suit case.

Have you started discussion with government of Zimbabwe?

Yes of course. We immediately started discussion with them. We have gone to the highest level in that country. I will be travelling to Zimbabwe before the end of July and address this particular issue with the President. Zimbabwe is really a tough one for us. The figures of the funds change.

If I appoint you as the CEO of my airline or the CEO of Ethiopian Airlines, what would you do to make sure you are not hurt?

When you run an airline, it is not particular to Kenya Airways or Air France, the first point is the key obsession. We are-cost driven industry. The competiveness of the organisation is key to your product adapting to the market segment. It is useless to propose First Class when nobody can afford it. As far as our partners in Africa; not having business class is also a mistake because a lot of people are asking for that. A lot of people ask me for that. Huge investment in distribution system, digitalisation to improve efficiency, market access and cost of distribution is required. The digitalisation has heavily impacted this type of business. The main impact is distribution and saving cost. The main thing is digitalisation and saving costs are very important. Distribution method, the customer relation management systems are very important.

What will you do about fuel?

It differs from one state to another. What makes the fuel price expensive are physical and fuel contribute about 30 per cent of cost to airlines. We urge states to reduce by all means what makes fuel price expensive by removing physical restrictions on fuel supply. Taxes, supply chain and others have made fuel price to go up. Africa is not the only place where the cost of fuel is high. India is same. In Brazil, which is a big oil producing country, the costs are high. We lobby everywhere. It is such an important cost factor for us.

 

According to IATA’s projection in 2025, passenger traffic in Africa will double. There isthe desire to have infrastructure. In most African countries, the governments cannot build airports but IATA is not pleased with so much idea of concession. What is your take?

What we said is this. We tell governments that they have to manage with infrastructure. We have several ways of doing it and please, be cautious before rushing to privatisation. We have management and concession contracts before selling the assets. We urge governments to consider all options. If they have chosen some of the solutions that are provided by the guidelines we have to tell them. We have seen so many bad experience and good ones, we have been able to give them best guidelines for best practices. We understand that many governments might go for privatisation to attract private funds because they don’t have budget and public funds to finance the airports. We understand them. We ask them to be careful because privatisation is not a magic solution.

 

On SAATM, we have 28 countries that have signed. I think the major challenge is the arbitrary charges. A Nigerian airline flying to Ghana or Senegal may face outrageous charges and this may discourage it from coming, is IATA looking at uniform charges?

Not uniform charges. At least, there are ICAO principle and we try to make this principle apply in each country in terms of airport charges. There is no problem. The problem has not started in Africa. ICAO has prepared standard and we ask them to implement worldwide standards

 

You said safety in sub Saharan Africa has improved substantially, how can you relate that to the Ethiopian Airline crash. Would you say there is a subconscious bias that in Africa, things always go wrong?

In the case of Ethiopian Airways, it was not the first reaction. I have heard blames on the aircraft system. I have heard blames on Ethiopian. In my point of view, you find it difficult to say anything on that until after investigation is concluded.
Even with safety, you still have 50 per cent of ICAO SARPS for safety standards.

It is not only the airlines, it involves the regulatory bodies. Both ICAO and IATA work in partnership in doing workshops, training, initiatives to help the authorities and airport operators for airlines to lift up the safety standards. We have all that relates to airlines in IASA, IASAGO. By implementing the standards of IOSA, we say automatically we uplift compliance with ICAO recommended standards. They go hand in hand and ICAO has accepted the IOSA as standards to uplift countries’ standards to where they should be.

 

In Africa, we have small fleet size, would you support the argument for fleet renewal?

Because of the fleet size and the environment issues, airlines are concentrating in developed areas in Europe, the US and Asia.

We have an ageing fleet at the same time.

In the continent, if you have a big growth, you have to have a fuel-efficient fleet.

For many African youths that aspire to work in the industry, some of them want to first do IATA training, but for those in developing countries, funding is still a very big challenge for them, is IATA looking at making it affordable?

There are two things. You said people who are trying to enter into the aviation industry or they want to get employed by an airline. This is one aspect that we have looked at in designing our training strategy. We have an ongoing programme and looking into the entire training worldwide and regionalise it and priotise it in each region. The cost can be managed by using technology in the form of online training. The traditional training are usually expensive because of logistics and cost of travel. Digitising channels will help reduce the cost and make the training materials more affordable for youths around the world. We are looking at our entire training strategy.

Could you tell us the level of collaboration you have with the United States Federal Aviation Administration (FAA]) AFCAC IASA. I ask this question not for you to delve into the Ethiopian crash because investigations are on-going?

We have a high level of cooperation with FAA, IASA, CAC but we are not doing the job at that place. For instance, for the B737MAX, we are not in the certification process, we just expressed our need to have harmonise airlines collaborative certification process.

 

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