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News
Asia-Pacific: Challenges
and Opportunities
-Intra-Asia Market
Eclipses North America as World’s Largest-
Singapore - The International Air Transport
Association (IATA) said that in 2009 intra-Asia-Pacific travel had
eclipsed the number of travelers in North America as the world’s largest
aviation market. Asia-Pacific’s travelers numbered 647 million compared
the 638 million who travelled within North America (including domestic
markets). By 2013 an additional 217 million travelers are expected to
take to the skies within Asia–Pacific.
“Achieving Asia-Pacific’s tremendous potential is
contingent upon short-term efforts to battle the impacts of the economic
downturn with cost reductions and efficiency gains. Longer-term
Asia-Pacific must also face global challenges including environment,
security and liberalization,” said Giovanni Bisignani, IATA’s Director
General and CEO at the start of the Singapore Air Show Aviation
Leadership Summit.
The global aviation industry is expected to reduce losses
from US$11.0 billion in 2009 to US$5.6 billion in 2010. The loss
reduction is being led by Asia-Pacific’s carriers who are expected to see
their losses shrink from US$3.4 billion in 2009 to US$700 million in
2010. “Asia-Pacific’s prospects are improving faster than other regions,”
said Bisignani.
Bisignani noted that the Asia-Pacific region is diverse,
dynamic and with great potential:
Diverse:
Asia-Pacific is home to two of the world’s top five airlines in terms of
profitability. At the same time, the region’s governments provided over
US$10 billion in government bailouts to airlines in the first quarter of
the year. The region’s two biggest growth markets—India and China—face
completely different circumstances. India’s challenge is to reduce costs
and improve infrastructure, while China is adjusting to new global trade
patterns.
Dynamic:
Over the last decade China replaced Japan as Asia-Pacific’s largest
player. Today China’s fleet is 1,400 aircraft compared to Japan’s 540.
Its domestic market of 5.7 million weekly seats is more than double
Japan’s 2.6 million and China’s 1.4 million weekly international seat
market is now slightly larger than Japan’s 1.3 million.
Potential:
In the US, there are three aircraft seats per year for each of the 300
million people who live there. China’s population of 1.3 billion is
served by only 0.3 seats per person and India’s 1.1 billion population
has only 0.1 seats available per person. “The global air transport
industry will triple in size when Asians travel as much as those in the
US,” said Bisignani.
“Asia-Pacific’s diversity, dynamism and potential are a
great opportunity. Rapidly developing markets are defining aviation’s
future. Is Asia-Pacific prepared for the challenges that this will
bring?” said Bisignani. In his opening address, Bisignani highlighted
three global issues for Asia-Pacific leadership:
Environment: The global aviation
industry presented the UNFCCC Climate Change talks in Copenhagen with
three targets shared by airlines, airports, air navigation service providers
and manufacturers. These are: improving fuel efficiency by an average of
1.5% per year to 2020, stabilizing emissions with carbon-neutral growth
from 2020 and cutting our emissions in half by 2050 compared to 2005.
These targets are backed by a clear strategy based on technology
investment, effective operations, efficient infrastructure and economic
measures.
“Even without a binding agreement in Copenhagen aviation
is united and committed to its targets. The ICAO Assembly in
September-October is an opportunity to build government consensus leading
to COP-16 in Mexico,” said Bisignani.
The challenges for Asia include: working through
ICAO to accommodate the diverse needs of the region, taking
advantage of the tremendous business opportunities in developing
sustainable second generation biofuels. Biofuels have the potential
to reduce aviation’s carbon footprint by up to 80%. “Five airlines have
successfully tested biofuels and we expect certification within 2011 at
the latest. Aviation biofuel is a US$100 billion plus business
opportunity. And I hope that this region will play a key role in its
early development,” said Bisignani.
Security: “We live in a global
world—global connectivity and global threats. Governments and industry
must protect the connectivity and eliminate the threats. That challenge
requires industry and governments to work together for effective and
efficient security measures,” said Bisignani.
“Ten days ago, I saw some hope for a new collaborative
approach when the Secretary of the US Department of Homeland Security
consulted the airline industry in our Geneva offices,” said Bisignani.
IATA presented recommendations to (1) work together, (2) align
requirements with the industry’s capability to implement, (3) make
passenger collection more efficient, (4) ensure that governments
coordinate their requirements across borders and (5) look to develop a
new approach to checkpoint screening that combines technology and
intelligence so that we look for bad people, not just bad objects.
Asia-Pacific must define government/industry cooperation
on security and find a better way to deal with the cost burden. Currently
airlines pay US$5.9 billion a year for security. “These are national
security measures. That is a government responsibility, including the
bill,” said Bisignani.
Liberalization: “Asian aviation will
not reach its potential if the airlines are constrained to old ways of
doing business. Industry is preparing for regional liberalization of
market access with the ASEAN target date of 2015. It is important that
the target date is met. This is already well-behind the industry leading
developments in the US-EU Open Skies agreement. Second stage talks will
conclude this year with ownership being the most important issue,” said
Bisignani.
“To move liberalization forward, IATA took the
extra-ordinary step of calling governments together with IATA’s Agenda
for Freedom. After a year of talks, in November 2009, seven
governments, including the US, the European Commission, Singapore and
Malaysia signed a multilateral statement of policy principles. These
principles preserve a level playing field while addressing liberalization
of market access, pricing and ownership. The challenge for Asia is to
implement these principles in the region’s bilateral arrangement,” said
Bisignani.
View
Giovanni Bisignani's full speech
- IATA -
For more information, please contact:
Albert Tjoeng
Assistant Director, Corporate Communications
Singapore
Tel: +65 6499 2286
Email: tjoenga@iata.org
Notes for Editors:
- IATA
(International Air Transport Association) represents some 230
airlines comprising 93% of scheduled international air traffic.
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