iata-annual-review-2014.pdf

Annual Review 2014

Tony Tyler

Director General & CEO

International Air Transport Association

Annual Review 2014

70th Annual General Meeting

Doha, June 2014

Note: Unless speciﬁed otherwise, all dollar ($) ﬁgures refer to US dollars (US$).

IATA ANNUAL REVIEW 2014

Members List

Chairman’s Message

Director General’s

Message

100 Years of

Aviation

Industry Story

in 2013

Beneﬁts of Aviation

Safety

Passenger

Experience

Security

Financial Services

Regulation

and Taxation

Aviation Solutions

Infrastructure

IATA Ofﬁces

Environment

Cargo

CONTENTS

MEMBERS LIST

ABSA Cargo Airline

Adria Airways

Aegean Airlines

Aer Lingus

Aero República

Aeroﬂot

Aerolineas Argentinas

Aeromexico

Afriqiyah Airways

Aigle Azur

Air Algerie

Air Arabia

Air Astana

Air Austral

Air Baltic

Air Berlin

Air Botswana

Air Caledonie

Air Canada

Air China Limited

Air Corsica

Air Europa

Air France

Air India

Air Koryo

Air Macau

Air Madagascar

Air Malta

Air Mauritius

Air Moldova

Air Namibia

Air New Zealand

Air Niugini

Air Nostrum

Air One

Air SERBIA a.d.Beograd

Air Seychelles

Air Tahiti

Air Tahiti Nui

Air Transat

Air Vanuatu

AirBridgeCargo Airlines

Aircalin

Airlink

Alaska Airlines

Alitalia

All Nippon Airways

AlMasria Universal Airlines

ALS

American Airlines

Arik Air

Arkia Israeli Airlines

Asiana Airlines

Atlas Air

Atlasjet Airlines

Austral

Austrian

AVIANCA

Avianca Brasil

Azerbaijan Airlines

B&H Airlines

Bangkok Air

Belavia - Belarusian Airlines

Belle Air

Biman

Binter Canarias

Blue Panorama

Blue1

bmi Regional

British Airways

Brussels Airlines

Bulgaria air

C.A.L. Cargo Airlines

Cargojet Airways

Cargolux

Caribbean Airlines

Carpatair

Cathay Paciﬁc

China Airlines

China Cargo Airlines

China Eastern

China Southern Airlines

CityJet

Comair

Condor

Copa Airlines

Corsair International

Croatia Airlines

Cubana

Cyprus Airways

Czech Airlines

Delta Air Lines

DHL Air

DHL Aviation

Donavia

Dragonair

Egyptair

EL AL

Emirates

Estonian Air

Ethiopian Airlines

Etihad Airways

Euroatlantic Airways

European Air Transport

Eurowings

EVA Air

Federal Express

Fiji Airways

Finnair

ﬂybe

Freebird Airlines

Garuda

Georgian Airways

Gulf Air

Hahn Air

Hainan Airlines

Hawaiian Airlines

Hi Fly

Hong Kong Airlines

Hong Kong Express Airways

Iberia

Icelandair

InselAir

Interair

InterSky

Iran Air

Iran Aseman Airlines

Israir Airline

Japan Airlines

Jazeera Airways

Jet Airways

Jet Lite (India) Limited

JetBlue

Jordan Aviation

JSC Aircompany Yakutia

JSC Nordavia-RA

Juneyao Airlines

Kenya Airways

Kish Air

KLM

Korean Air

Kuwait Airways

LACSA

LAM - Linhas Aéreas de

Moçambique

LAN Airlines

LAN Argentina

LAN Cargo

LAN Perú

LAN Ecuador

Libyan Airlines

LLC “NORD WIND”

LOT Polish Airlines

Lufthansa

Lufthansa Cargo

Lufthansa CityLine

Luxair

Mahan Air

Malaysia Airlines

Malmö Aviation

Martinair Cargo

MAS AIR

MEA – Middle East Airlines

Meridiana ﬂy

MIAT- Mongolian Airlines

Montenegro Airlines

NIKI

Nile Air

Nippon Cargo Airlines (NCA)

Nouvelair

Olympic Air

Oman Air

Onur Air

PAL – Philippine Airlines

Pegasus Airlines

PGA-Portugália Airlines

PIA – Pakistan

International Airlines

Precision Air

PrivatAir

Qantas

Qatar Airways

Rossiya Airlines

Royal Air Maroc

Royal Brunei

Royal Jordanian

SAA – South African Airways

Safair

Saﬁ Airways

SAS

SATA Air Açores

SATA Internaçional

Saudi Arabian Airlines

Shandong Airlines

Shanghai Airlines

Shenzhen Airlines

SIA – Singapore Airlines

SIA Cargo

Siberia Airlines

Sichuan Airlines

Silkair

South African Express Airways

SriLankan Airlines

Sudan Airways

SunExpress

Surinam Airways

SWISS

SYPHAX AIRLINES

Syrianair

TAAG - Angola Airlines

TACA

TACA Peru

TACV Cabo Verde Airlines

TAM - Transportes Aéreos

del Mercosur

TAM Linhas Aéreas

TAME - Linea Aérea del Ecuador

TAP Portugal

TAROM

Thai Airways International

THY - Turkish Airlines

Tianjin Airlines

TMA – Trans Mediterranean

Airways

TNT Airways

Transaero

TransAsia Airways

TUIﬂy

Tunis Air

Ukraine International Airlines

United Airlines

UPS Airlines

US Airways, Inc.

UT air

Vietnam Airlines

Virgin Atlantic

Virgin Australia

Vladivostok Air

Volaris

Volga-Dnepr Airlines

VRG Linhas Aéreas

White Airways

Wideroe

Xiamen Airlines

Yemenia

MEMBERS LIST

CHAIRMAN RICHARD ANDERSON

Commercial

aviation,

catalyst

for change

In 2014, airlines will safely transport some 3.3 billion

passengers and 50 million metric tons of cargo across a

network of almost 50,000 routes. This connectivity has

an immense economic footprint—58 million jobs and $2.4

trillion of business activity. Over a third of the value of

goods traded internationally is delivered by air.

This year, we are celebrating the centennial of scheduled

commercial aviation. In just 100 years, aviation has become

an essential part of our global infrastructure. It has also

been a catalyst for change.

By turning our big planet into a global community, aviation

has had a transformational impact on how we live together.

The exchange of ideas, cultures, and experiences enriches

us. Prosperity is spread by people working together in

CHAIRMAN RICHARD ANDERSON

CHAIR OF THE BOARD:

Mr. Richard Anderson

Chief Executive Ofﬁcer

DELTA AIR LINES

MEMBERS:

Mr. Akbar Al Baker

Chief Executive Ofﬁcer

QATAR AIRWAYS

Mr. Khalid Abdullah

Almolhem

Director General

SAUDI ARABIAN AIRLINES

Mr. David Barger

President and Chief

Executive Ofﬁcer

JETBLUE

Mr. David Bronczek

President and Chief

Executive Ofﬁcer

FEDEX EXPRESS

Mr. Yang Ho Cho

Chairman and Chief

Executive Ofﬁcer

KOREAN AIR

Mr. Chu Kwok Leung, Ivan

Chief Executive

CATHAY PACIFIC

Mr. Andrés Conesa

Chief Executive Ofﬁcer

AEROMEXICO

Mr. Enrique Cueto

Chief Executive Ofﬁcer

LAN AIRLINES S.A.

Mr. Alexandre de Juniac

President and Chief

Executive Ofﬁcer

AIR FRANCE-KLM

(representing AIR

FRANCE)

Mr. Germán Efromovich

President of the

Board of Directors

AVIANCA

Mr. Tewolde GebreMariam

Chief Executive Ofﬁcer

ETHIOPIAN AIRLINES

Mr. Goh Choon Phong

Chief Executive Ofﬁcer

SINGAPORE AIRLINES

Mr. Naresh Goyal

Chairman

JET AIRWAYS (INDIA) LTD.

Mr. Rickard Gustafson

President and Chief

Executive Ofﬁcer

SAS

Mr. Peter Hartman

Vice Chairman

of the Board

AIR FRANCE-KLM

(representing KLM)

Mr. James Hogan

President and Chief

Executive Ofﬁcer

ETIHAD AIRWAYS

Mr. Harry Hohmeister

Chief Executive Ofﬁcer

SWISS

Mr. Alan Joyce

Chief Executive Ofﬁcer

QANTAS

Mr. Temel Kotil

President and Chief

Executive Ofﬁcer

TURKISH AIRLINES

Mr. Liu Shaoyong

Chairman

CHINA EASTERN

AIRLINES

Mr. Pham Ngoc Minh

President and Chief

Executive Ofﬁcer

VIETNAM AIRLINES

Mr. Titus Naikuni

Group Managing Director

and Chief Executive Ofﬁcer

KENYA AIRWAYS

Mr. Masaru Onishi

Chairman

JAPAN AIRLINES

Mr. Calin Rovinescu

President and Chief

Executive Ofﬁcer

AIR CANADA

Mr. Vitaly G. Saveliev

Chairman

AEROFLOT

Mr. Si Xian Min

President/Chairman

CHINA SOUTHERN

AIRLINES

Mr. Carsten Spohr

Chairman and Chief

Executive Ofﬁcer

LUFTHANSA

Mr. Antonio Vázquez

Chairman IAG

Board of Directors

(representing IBERIA)

Mr. Willie Walsh

Chief Executive

Ofﬁcer International

Airlines Group

(representing

BRITISH AIRWAYS)

global supply chains. And uncountable opportunities—

human and economic—are generated by the freedom to be

almost anywhere in a short 24 hours.

Aviation is a romantic industry with very practical purposes.

Our world would be very different—poorer in spirit and

wealth—without it.

IATA plays an important role in the industry’s success.

Airlines compete vigorously to generate proﬁts. But there

are many areas where cooperation and global standards

deliver value for all industry players and consumers.

The IATA Operational Safety Audit (IOSA), a condition of

IATA membership, demonstrates the important contribution

of global standards. In 2013, the safety performance for

IOSA-registered carriers was more than two times better

than the rate for non-IOSA carriers. And the superiority

of that performance will only rise as Enhanced IOSA is

progressively adopted.

IATA Board of governors 2013- 2014

The IATA Settlement Systems (ISS) play an important role

in the global distribution of airline products. Fully 46% of

airline passenger revenues are channeled reliably through

the Billing and Settlement Plan (BSP).

The industry also has a strong global voice in IATA.

Running an airline is challenging, especially when you do

business across borders. Harmonization in the regulatory

and operational environment assures a better passenger

experience and helps airlines to manage costs efﬁciently.

Governments and regulators need constant reminding

of this.They also need reminding of the unintended

consequences of their actions—or inactions.

Taxes illustrate the former. Airlines and airline passengers

are a soft target for taxes. Taxes may provide short-term

budget relief for governments. But taxes dampen demand

for connectivity in the long run, and eventually that places

a greater burden on the economy.

Government inaction on such critical issues as delivering

Next Gen air trafﬁc management in the United States or the

Single European Sky in Europe is equally problematic. The

inefﬁciency of European air trafﬁc management is a burden

on the airline industry and a ¤5 billion disadvantage for

Europe’s economic competitiveness.

It has been an honor to serve as the Chairman of the IATA

Board of Governors over the past year. This review highlights

the considerable progress made in 2013 on the industry’s

main challenges.

We can be proud of aviation’s many achievements and

contributions during its ﬁrst 100 years. But in marking this

important milestone, it is more important to look forward.

IATA’s challenge is to continue supporting its members so

that they can proﬁtably deliver efﬁcient global connectivity

that is safe, secure, and sustainable.

Richard Anderson

Chairman

DIRECTOR GENERAL TONY TYLER

Strong

partnerships,

strong

business

This is a special year for the global airline industry. On 1

January 2014, we marked the ﬁrst 100 years of scheduled

commercial aviation. Our industry took root with the

transport of a single paying passenger on a 23-minute

ﬂight across Tampa Bay, Florida, on New Year’s Day 1914.

In the century since, aviation has grown and made amazing

progress. Aviation is today the lifeblood of the global economy.

It is also a competitive and difﬁcult business. In 2013, the

airline industry made a collective proﬁt of $12.9 billion on

revenues of $708 billion. That is a 1.8% net proﬁt margin.

Put another way, airlines made a proﬁt on average of just

$4.13 for every passenger carried.

DIRECTOR GENERAL TONY TYLER

In 2013, the main challenges were high oil prices and a weak

global economy. The cargo side of the business has been

particularly challenging. Cargo volumes have not grown

since their postrecession spike in 2010. The passenger

business has been more robust, with demand growing in the

historical 5% to 6% range. This, combined with an improved

industry structure and efﬁciency gains, kept the industry in

the black in 2013.

The current year promises an improvement in proﬁtability,

with developed economies leading growth. Passenger

demand remains strong, and rising business conﬁdence is

expected to stimulate the cargo business as 2014 progresses.

This review highlights the progress that aviation is making

in fulﬁlling its vital role of connecting people and linking

economies. It also discusses the challenges that must

be overcome.

For both, the role of global standards and strong partnerships

are critical. The greatest example of this is in safety.

Safety is the top priority for everyone in aviation. As a

result, ﬂying is very safe and accidents are extremely rare.

Of the 29 million ﬂights of Western-built jets (WBJ) in 2013,

there were 12 hull losses. That is 1 hull loss for every 2.4

million WBJ ﬂights. It was a step back from the exceptional

performance of 2012 but a 14.6% improvement on the ﬁve-

year average hull loss rate. Each hull loss nevertheless is a

tragedy that rededicates the industry and its regulators to

making ﬂying even safer.

In March 2014, the world was shocked with the loss of a

passenger jet on a routine ﬂight from Kuala Lumpur to

Beijing. IATA is working with the International Civil Aviation

Organization (ICAO) and other industry stakeholders to

ensure that an aircraft cannot simply disappear ever again.

Working in partnerships to ﬁnd global solutions for

common problems has been a hallmark of our industry

throughout its history. Aviation is a team effort. Every ﬂight

involves interaction across a complex chain of partners—

airlines, airports, air navigation service providers (ANSPs),

ground handlers, caterers, fuel suppliers, travel agencies,

systems providers, security screeners, and many more.

Partnerships have been critical in recent progress on

several key industry challenges:

Security: IATA and Airports Council International (ACI)

are working together to deliver Smart Security. Security

processes are effective, but there is ample scope for

improvement. Building on the foundation of the Checkpoint

of the Future program, Smart Security aims to strengthen

effectiveness, increase efﬁciency, and improve the

passenger experience.

Distribution: The New Distribution Capability (NDC)

initiative took a major step forward in January 2014

with the signing of an agreement with Open Allies for

Airfare Transparency. Several NDC pilot projects are now

operating, and it is anticipated that the US Department of

Transportation will soon provide the approval needed to

make NDC’s consumer beneﬁts broadly available.

E-freight: The e-freight initiative will replace paper-based

air cargo processes with the exchange of electronic data

and messages. Airlines, freight forwarders, ground handlers,

shippers, and customs authorities are aligned with the need

for modernization. Airlines, for example, are working toward

80% e-air waybill implementation by 2016. This will be a key

enabler of the broader e-freight vision.

Environment: Governments and the aviation industry

are committed to achieving carbon-neutral growth from

2020. The long-term strategy is to achieve this through

advances in technology, operations, and infrastructure.

Market-based measures (MBM), however, will be needed

at least in the short term. The 69th IATA Annual General

Meeting resolved that a global mandatory carbon offset

scheme is the preferred industry option. Shortly thereafter,

governments agreed at the 38th ICAO Assembly to develop

a framework for a global MBM by 2016. These two landmark

developments place aviation in the forefront of industries in

achieving sustainability. Nonetheless, much hard work lies

ahead, and the industry is fully engaged in supporting ICAO

as it builds consensus among governments.

These are but a few of the collaborative efforts of the

industry and its regulators to ensure that every day 100,000

ﬂights are able to link our world with amazing efﬁciency.

Behind the scenes, IATA, through its various settlement

systems, contributes directly to the industry’s ability to

operate efﬁciently and globally. In 2013, the IATA Settlement

Systems (ISS) managed $387.2 billion, with a 99.96% on-

time settlement rate. In the spirit of constant improvement,

an initiative (New Gen ISS) has been launched to ensure that

the ISS keeps pace with industry developments, including

the NDC, and remains relevant well into the future.

As we celebrate the centennial of scheduled commercial

aviation, the focus is on the future. Aviation is part of the

fabric of modern life in a globalized world. Yet aviation’s

strong performance on safety and reliability frequently

means that its contributions are taken for granted.

Our centennial is an opportunity to raise awareness of

aviation and its needs, particularly among governments.

Governments have a critical role in creating the environment

for aviation to continue to be a catalyst of economic and

social development. We encourage governments worldwide

to look to the future within the parameters of harmonized

global standards, reasonable taxation, enabling regulation,

and growth-supporting infrastructure.

Our mission is to represent, lead, and serve the airline

industry. We are committed to being the driving force for a

safe, secure, and proﬁtable air transport industry—one that

sustainably connects and enriches our world.

Tony Tyler

Director General and CEO

100 YEARS OF COMMERCIAL FLIGHT

Small world,

big future

100 YEARS OF COMMERCIAL FLIGHT

1 January 1914—A Benoist ﬂying boat takes off from St.

Petersburg, Florida, and crosses the bay to Tampa. On board

with pilot Tony Jannus is Abram C. Pheil, the world’s ﬁrst

scheduled commercial air passenger. This historic ﬂight

marked the dawn of the commercial air transport age. The

St. Petersburg-Tampa airboat line was the brainchild of

local entrepreneur Percival Fansler, who recognized the

commercial potential of linking the two towns with a daily

air service. As the inaugural ﬂight prepared to take off,

Fansler gave a speech where he predicted, “The airboat line

to Tampa will be only a forerunner of great activity along

these lines in the near future…what was impossible yesterday

is an accomplishment of today —while tomorrow heralds the

unbelievable.”

Pheil, who bid $400 for his ticket at auction (the regular fare

was $5), was the ﬁrst passenger. The industry has carried

more than 65 billion people in the 100 years since then. From

one route, one plane, and one passenger in January 1914, the

industry will in 2014 serve 3.3 billion passengers with a ﬂeet

of 25,000 planes on almost 50,000 routes. Air transport has

touched every country on earth, bringing social and economic

beneﬁts and transforming the way we live and do business.

To mark this historic milestone, in 2014 IATA launched

a website—www.ﬂying100years.com— that is gathering

together the industry and its supporters to join the

celebration and join the conversation on aviation and its

future. The site features a timeline of signiﬁcant events,

and stories from the public on what air connectivity means

to them. Videos, pictures, and comments from airlines,

airports, manufacturers, and many other organizations

connected to aviation are being showcased on the site

each month. And using social media, the story of aviation’s

incredible century is being shared around the world.

Aviation has made a small world. And if connectivity and

the beneﬁts of aviation can continue to grow, the world is

guaranteed a big future.

100 years of aviation: Key milestones and passenger numbers

1914

1,205

passengers

First commerical

passenger ﬂight,

commercial airline

1919

6,549

passengers

KLM starts

operations:

oldest airline

still in service

1952

39,500,000

passengers

First commercial

jet passenger

service by BOAC

1921

13,559

passengers

First air trafﬁc

controllers

employed

at Croyden

Aerodrome,

London

1922

19,285

passengers

First use of aircraft

for government

business by

Colombian

president

1930

290,000

passengers

First ﬂight

attendant with

Boeing Air

Transport

(today’s United)

1934

652,000

passengers

First transatlantic

airmail services

operated by

Deutsche Luft

Hansa (Lufthansa)

1944

5,500,000

passengers

Chicago

Convention

signed —the

foundation

of global

aviation today

1945

2,000,000

passengers

The International

Air Transport

Association (IATA)

founded in Havana

1935

976,000

passengers

First transpaciﬁc

airmail services

operated

by Pan American’s

China Clipper

1936

1,300,000

passengers

Douglas DC-3

enters service with

American Airlines

1939

2,000,000

passengers

First scheduled

passenger

transatlantic ﬂights

operated by Pan

American

1971

411,000,000

passengers

First low-cost

carrier, Southwest

Airlines, enters

service

1970

383,000,000

passengers

The Boeing 747

enters service with

Pan American

1976

576,000,000

passengers

Concorde enters

service as ﬁrst

supersonic

passenger aircraft

1978

679,000,000

passengers

United States

deregulates the

airline industry

1981

752,000,000

passengers

First frequent ﬂyer

program launched

by American

Airlines

1998

1,471,000,000

passengers

First transpolar

passenger ﬂight by

Cathay Paciﬁc

2007

2,422,000,000

passengers

The Airbus A380

enters passenger

service with

Singapore Airlines

2011

2,824,000,000

passengers

First passenger

biofuel ﬂights

by KLM and

Lufthansa

#ﬂying100

ﬂying100years.com

INDUSTRY STORY IN 2013

Continuing

recovery,

challenges

remain

INDUSTRY STORY IN 2013

Achieving improved proﬁtability

In 2013, airlines saw improved proﬁtability as they continued

to claw back ground lost in the global economic recession

that began in 2008–2009.

Net posttax proﬁt for 2013 was $10.6 billion, a 1.5% margin on

revenues. This was the fourth successive year of proﬁtability,

and it builds on the $6.1 billion proﬁt (0.9% margin) in 2012.

Proﬁtability in 2013 was achieved largely on increased

demand, the positive impact on cash ﬂow of industry

restructuring, and slightly lower than expected fuel costs.

Jet fuel averaged just under $125 a barrel, about $5 less

than in 2012.

Demand for cargo and passenger services—manifested in

freight tonne kilometers (FTKs) and in revenue passenger

kilometers (RPKs), respectively—showed signs of accelerated

growth. This reﬂected the rebounding global economy and an

increase in world trade. Business conﬁdence strengthened to

its highest level since 2011, but the trend is ﬂattening.

Industry net proﬁts (Sources: IATA, ICAO)

Annual trafﬁc growth

and proﬁt margin (Sources: IATA, ICAO)

margin %

annual growth %

-1

-2

-3

-4

-5

-10

-15

-20

-25

-30

US$ billions

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2011

2012

2013

Consumers in mature economies gained conﬁdence from

a 2% increase in global GDP. In emerging economies, GDP

growth had an even greater impact, as each unit of GDP

generates more air travel in emerging economies than in

mature markets. This trend was bolstered by signiﬁcant

price drops in airline fares in some African and Asian

markets because of increasing competition.

More than 31.6 million scheduled ﬂight services were

provided in 2013, a 2% increase on the previous year. There

was also an increase in aircraft deliveries in 2013, to over

1,400 new aircraft. The in-service ﬂeet rose to 25,310 aircraft,

from 24,613 in 2012. Replacements for older aircraft were

generally larger in size than their predecessors, adding yet

more seats to the market. Overall, the number of seats rose

to 3.4 million, adding 5% capacity to the global market.

Examining trafﬁc by route area

RPKs between regions of the world continued to grow for

the most part, although the rate of growth decreased. Given

increasing demand, this ﬂattening is proof that airlines have

improved their capacity management. Increasing aircraft size

and high load factors have helped, as has a more cautious

approach to adding destinations and frequencies.

Exceptions to the trend are RPKs between Europe and

Africa, which have decreased because of weaker growth

and political uncertainty in parts of Africa and continuing

economic weakness in much of Europe. RPKs across the

North Atlantic show a modest increase in growth rate,

although this comes from a low baseline. Improvements in

employment and consumer spending in the United States

are likely behind the upswing.

annual growth %

RPK growth by route area (Sources: IATA)

-5

-10

Central –South America

Middle East–North America

Europe–Middle East

Within Asia

Global Average

Asia–Africa

Europe–Africa

North Atlantic

Net post-tax proﬁt margin (LHS)

RPK growth (RHS) FTK growth (RHS)

Facing high jet fuel prices

Jet fuel averaged $124.5 a barrel during the year under

review, to remain within the high range of the past three

years, during which it averaged $127 a barrel. In 2012, jet fuel

averaged just under $130 a barrel.

The growth in the US energy supply forced a moderate

decrease on jet fuel, but fuel continues to be the largest

number in the airline debit column, accounting for 31%

of airline costs. The economic outlook for growth in the

United States and in Chinese exports and an improved

economic situation in Europe suggests fuel prices will

remain high in 2014.

Jet fuel price per barrel (Sources: IATA, ICA))

Passenger load factor Freight load factor

Passenger and freight load factors

(Source: IATA)

available capacity utilized %

Unit costs, yields, and

breakeven load factor (Sources: IATA, ICAO)

capacity utilized %

annual change %

-5

-10

-15

-20

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

US$ per barrel

140

120

100

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Reaching records in passenger load factors

Passenger load factors reached a record high in 2013, at

80%. This is the result of an increase in passenger volumes,

coupled with strong capacity management, particularly in

such key sectors as the North Atlantic.

Cargo load factors remain rooted below the 50% mark.

Enlarged belly-hold capacity in new passenger aircraft

has exacerbated the situation, with capacity growing

irrespective of cargo demand.

Just as passenger load factors and asset utilization reached

record highs, the breakeven load factor came down for the

ﬁrst time since 2009. The breakeven load factor dipped to

64.2% in 2013, from 64.8% the previous year.

Improving asset utilization marks a signiﬁcant change from

previous business cycles. Rising aircraft deliveries—which

is the case in the industry—usually hit on the down cycle,

crushing proﬁtability. Consolidation in the mature markets of

North America and across the North Atlantic has underlined

this reversal of trends and allowed airlines to generate better

returns from their aircraft.

Passenger yields in 2013 remained unchanged from 2012

for various reasons. Fierce competition provided downward

pressure, but increased ancillary sales and a more robust

industry structure generated some buoyancy. Overall yields,

though, were disappointing in light of increases of around

5% in each of the previous three years, but robust load

factors should positively inﬂuence yields going forward.

INDUSTRY STORY IN 2013

Breakeven load factor (LHS)

Yields (RHS)

Unit costs (RHS)

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2008

2009

2010

2011

2012

2013

Cargo rates were relatively stable in 2013, although the

long-term trend of slow deterioration continued. As with

passenger yields, decreases in cargo rates were notable in

Asia, where new aircraft deliveries and slow growth in such

key markets as India had an impact.

Other challenges for cargo included increased space

availability in the belly hold of passenger aircraft, which

has led to a rise in overall capacity despite freighters being

parked or retired. A growing tendency toward protectionist

measures as governments attempt to protect jobs and

domestic economic recovery has also had an impact on

cargo operations.

Airlines, however, have continued to make progress in

managing costs. And the slight fall in unit cost has forced

the breakeven load factor lower.

INDUSTRY STORY IN 2013

Inceasing role for ancillary revenues

Passenger ancillary revenues are playing an increasing role in

the industry. Revenues from added-value services improved

from $36 billion to $42 billion in 2013 from a year earlier, or

more than $13 a passenger, and form an increasing share of

passenger yield. Airlines, though, managed to keep as net

proﬁt an average of just $3.39 from each passenger served.

Overall, the return on invested capital in the industry rose

from 4% to 4.5% in 2013. This is still well short of the 7%–8%

expected by investors based on the returns available through

investments in other industry sectors. It is, nevertheless, a

marked improvement over 2012’s return of 3.6%.

Challenging cargo markets remain

Cargo markets remain challenging. In 2013, some conﬁdence

returned, although not to any signiﬁcant degree. Load

factors were weak, at 45.3%, while capacity outstripped

growth, 2.6% versus 1.4%. The 2% growth in FTKs in 2013

was mainly achieved in the last six months of the year, after

a period of stagnation. A trend of accelerating growth and

conﬁdence in air freight has marked the beginning of 2014.

The relationship between world trade and air freight is looser

than previously because of the loss of air freight business to

alternative transport modes and the move toward onshoring.

At the top end of the air freight market, integrators are taking

an increasing share of the business. At the bottom end, there is

a continuing modal shift to less-expensive maritime transport.

World trade, meanwhile, grew 3% in 2013.

The value of connectivity is nevertheless clear. Airport

connections continue to grow. There are some 50,000

scheduled airport pairs, and that connectivity resulted in

goods worth $6.6 trillion being carried by air in 2013.

Total air freight tonnage was near 50 million metric tons.

US$ per departing passenger

Net proﬁt per departing passenger (LHS)

ROIC % (RHS)

return on invested capital %

Proﬁt per passenger and

return on capital (Sources: IATA, ICAO)

-2

-4

-6

-8

-10

-12

number of airport pairs

Scheduled airport pairs (LHS)

Value of international trade carried by air (RHS)

US$ trillions

Airport connections and value

of international air freight

(Sources: SRS Analyser, WTO, Colography Group)

52,000

50,000

48,000

46,000

44,000

42,000

40,000

annual growth %

Air freight FTK World trade (exports)

Air freight and world trade growth

(Sources: IATA, WTO)

-5

-10

-15

Beyond

borders,

advantages

for all

BENEFITS OF AVIATION

Passenger 1

This businesswoman is on her way to conclude a deal

that will provide jobs and prosperity. Aviation’s total

global economic impact is $2.4 trillion, equivalent to 3.4%

of world gross domestic product (GDP). The industry

supports more than 58 million jobs worldwide.

And these ﬁgures do not include other economic

beneﬁts of aviation. Take, for example, the jobs and

economic activity that occur when companies or

industries exist solely because air travel makes them

possible. Or consider the intrinsic value that the speed

and connectivity of air travel hold for economic activity.

Passenger 2

Vacation travelers such as this gentleman

constitute a large percentage of everyday ﬂiers.

Aviation plays a central role in supporting tourism. Over

52% of international tourists travel by air. Tourism is

particularly important for many developing countries,

where it is integral to economic development

strategies. In Africa, overseas visitors who arrive by

air directly support 2.5 million jobs. Global tourism

directly contributed $2 trillion to world GDP in 2012

and provided more than 101 million jobs.

Beneﬁts of aviation

Featuring beneﬁts across all borders

The 2014 Aviation: Beneﬁts Beyond Borders report, published

by the Air Transport Action Group (ATAG) and compiled by

Oxford Economics, shows that air transport supports $2.4

trillion in economic activity and 58 million jobs globally.

Oxford Economics analyzed the economic and social beneﬁts

of aviation at a global, regional, and national level in over 50

countries to build a comprehensive picture of air transport’s

many beneﬁts. ATAG has built on that analysis to tell the story

of an air transport system that ensures jobs, trade, connectivity,

tourism, and vital lifelines to remote communities.

Passenger 3

Students, too, avail themselves of air transport to

carry them to studies abroad. Aviation thus is an

enabler of international learning. According to the US-based

Institute of International Education, there were over 800,000

international students in the United States in 2012–2013. US

Department of Commerce ﬁgures show that these students

contributed $24 billion to the US economy in 2013 and

supported some 300,000 American jobs.

Among the many beneﬁts of international study is the

global perspective instilled in students and the boost that

this may give to international and economic relations,

especially when former students attain positions of

inﬂuence in their home countries or elsewhere.

1 2

BENEFITS OF AVIATION

Family

Families such as this one commonly utilize air transport as

a reliable and speedy way for a return trip home. Modern

demographics mean that airlines are often the only viable means

of traveling to visit family and friends.

According to the United Nations, more than 230 million people

live outside their country of birth. Labor mobility is a particularly

important aspect of this trend. Workers from emerging economies

often send money back to support their home economy. The World

Bank discloses that in 2012 such “remittances” were up to three

times the level of ofﬁcial, government development assistance

ﬂows to developing countries, reaching an estimated $401 billion.

Cockpit

l Nearly 1,400 airlines worldwide operate a global ﬂeet

of over 25,000 aircraft.

l Airlines are served by almost 4,000 international airports

through a route network managed by 173 air navigation

service providers.

l Airlines carry 8.6 million passengers

and conduct 99,700 ﬂights every day.

Engines

Airline operations produced 705 million metric tons of

in 2013, just under 2% of the total of man-made

carbon emissions of over 36 billion metric tons. Aviation has had

tough sector-speciﬁc climate change targets since 2008. The

industry is already delivering on the ﬁrst target—to continue to

improve ﬂeet fuel efﬁciency 1.5% per year until 2020. From 2020,

aviation will cap its net carbon emissions while continuing to

grow to meet the needs of passengers and economies. By 2050,

the industry has committed to reduce its net carbon footprint

50% compared with 2005.

Aviation stakeholders are collaborating to reduce emissions using

a four-pillar strategy of new technology, efﬁcient operations,

improved infrastructure, and market-based measures.

Aircraft noise is also being tackled. Modern jet aircraft are 75%

quieter than the original models, and each new generation of

aircraft continues this trend toward quiet operation.

Wheels

Aviation pays for the vast majority of its infrastructure

costs, unlike other transport modes. In 2012, airports

invested $19.3 billion in construction projects, creating jobs

while building infrastructure.

Cargo hold

Aviation is responsible for 35% of world trade by

value. That is equivalent to $6.4 trillion worth of

goods annually, or $17.5 billion worth of goods every day.

Getting perishable goods from developing economies

to markets in industrialized nations wouldn’t be possible

without air transport. Kenya’s cut ﬂower industry, for

example, supports 90,000 Kenyan jobs and 1.6% of Kenya’s

economy. It yields around $1 billion in foreign exchange each

year and is dependent on air transport.

Air freight is integral to many facets of modern life. The

pharmaceutical industry relies on air transport to deliver

time-sensitive medical supplies, particularly vaccines. Most

people have personal electronic devices that were built

using a global supply chain linked by air. And Amazon.

com and other e-commerce websites rely on the express

delivery services made possible by aviation to get those

devices and so much more to their customers.

Fuselage

The manufacture of aircraft has a global impact.

More than 65 Japanese companies support Boeing

programs, for example, accounting for about 22,000 direct

and indirect jobs—or more than 40% of Japan’s aerospace

employment. Japan builds 35% of the 787 Dreamliner

airframe and more than 20% of the 777. When the Airbus

A350 XWB reaches its full production, it will account

globally for 34,000 direct and 68,000 indirect jobs.

Economic gain, moreover, will be married to environmental

responsibility. At the A350 XWB ﬁnal assembly plant,

22,000 square meters of solar panels will produce the

equivalent of 55% of the total energy needs to power

the production processes.

SAFETY

Flying safely,

the number

one priority

Emphasizing safety as the

aviation industry’s top priority

Of the more than 29 million ﬂights of Western-built jet

aircraft in 2013, there were 12 hull losses. That is one

major accident for every 2.4 million ﬂights and a 14.6%

improvement on the ﬁve-year industry average (see map

for regional breakdown). Aviation accidents are exceedingly

rare, and fatal accidents are rarer still. But tragedies still

occur, and the industry cannot be complacent on safety.

The disappearance of Malaysian Airlines MH 370 has

identiﬁed an unprecendented challenge to which the

industry is responding. An aircraft tracking task force will,

by December 2014, have identiﬁed the best solutions to

ensuring that never again can an aircraft simply vanish.

Safety throughout the ﬁrst century of commercial aviation

has depended on partnerships, information sharing, and

global standards. No matter how hard airlines may compete

within an industry sector or how differently they may see

the world when it comes to commercial issues, airlines do

not compete on safety. Every improvement is a gain for

the industry. And that has allowed aviation to develop a

tradition of transparently sharing information, experiences,

and best practices to make ﬂying ever safer.

IATA ANNUAL REVIEW 2014

Western-built jet hull-loss rate per million sectors

Global

average

0.20

0.41

IATA

members

0.00

0.30

Blue is 2012

Gray is 2013

N o r t h A m e r i c a

0.00

0.32

Latin America

& the Caribbean

0.42

0.44

Europe

0.15

Africa

3.71

2.03

Middle East and

North Africa

0.00

0.68

Asia-Paciﬁc

0.48

0.70

North Asia

0.00

Commonwealth of

Independent States

0.00

2.09

SAFETY

Addressing today’s biggest challenges

Managing risk is essential to safety. IATA works with airlines

and other industry partners to identify risk mitigation

measures and produces guidance and standards to reduce

operational risks, such as loss of control in ﬂight (LOC-I),

controlled ﬂight into terrain (CFIT), and runway excursions.

LOC-I accidents are rare but almost always involve fatalities.

In the ﬁve years from 2009 through 2013, LOC-I accidents

caused 1,546 fatalities, or nearly 60% of all accident fatalities,

despite accounting for just 10% of aviation accidents overall.

IATA is collaborating with its aviation-safety partners in

developing a Loss of Control Prevention website and toolkit

to provide a single point of consultation where LOC-I and

aircraft upset recovery training aids will be available.

Although the number of CFIT incidents is rare, CFIT has

been identiﬁed as the second greatest cause of fatalities

in aviation. Most CFIT accidents occur in the approach and

landing phase of ﬂight, and there is a strong correlation

between the lack of instrument landing systems or state-of-

the-art approach procedures, such as performance-based

navigation (PBN), and CFIT accidents.

From 2009 through 2013, 52% of CFIT accidents involved

an imprecise approach. IATA is raising awareness about the

risks of non-precision approaches and is seeking accelerated

PBN implementation in accordance with ICAO Assembly

resolution A-37-11. Unfortunately, implementation continues

to be slow, with only a 10 percentage point rise between

2008 and 2012, from 32% to 42%.

Runway excursions were the most frequent accident from

2009 through 2013, representing 23% of all accidents. Data

also reveals that over the same period 58% of all accidents

occurred in the runway environment. A broad approach to

runway-related events is therefore required that focuses

not only on overruns but also on other events, related risks,

and conditions.

The European Aviation Safety Agency, the US Federal

Aviation Administration, the International Civil Aviation

Organization, and others have signed agreements with IATA

to join the GADM project. Already, de-identiﬁed data from

some ﬁve million recorded ﬂights and more than a million

incidents is stored in GADM. It’s a powerful tool that grows

stronger with each additional piece of data.

A “just culture” of reporting that captures as many insights

as possible is a prerequisite for gathering meaningful data.

Within the aviation industry, the concept of nonpunitive

self-reporting is well established but not yet universally or

sufﬁciently applied. Such reporting, moreover, needs to

extend even to third parties, again so that issues can be

seen from as many angles as possible.

With GADM, the industry will have access to comprehensive,

cross-database predictive analysis. This will enable the

identiﬁcation of emerging trends and, more, the ﬂagging of

risks for mitigation through safety programs.

To further GADM’s predictive analysis capabilities, IATA

is working with the Technical University of Munich. That

institution has developed a methodology to predict the risks

of particular accidents or incidents, such as runway overruns

or excursions, for example.

SAFETY

An IATA-led initiative is investigating incidents, such

as runway incursions, hard landings or tail strikes, and

contributing factors. The latter encompass but are not

limited to approach procedures, including the availability

of PBN; landing aids for all weather conditions; runway

conditions; crew training; and ATC.

Improving runway safety is a team effort. IATA has

helped to develop a Runway Safety Implementation Kit in

collaboration with numerous stakeholders. It provides the

latest guidance updates to assist aviation safety, including

a centralized online resource. It also includes the ICAO

Runway Safety Team Handbook and the contents from 12

regional safety seminars. IATA is working toward a common

taxonomy for runway safety from which to develop a

universal set of key performance indicators.

Working to raise cabin safety

Accident survivability has increased since 2009. Data for 2009

shows that 85% of passengers and crew members involved in

accidents survived. In 2013, survivability was at 96%.

Upgraded cabin safety requirements and improved cabin

crew training are among the chief contributors to positive

developments in cabin safety. IATA is strongly committed

to improving cabin safety and in 2013 produced the Cabin

Operations Safety Best Practices Guide. Also in 2013, IATA

hosted the ﬁrst Africa Cabin Operations Safety Seminar.

More recently, in May 2014 in Madrid, Spain, IATA held the

ﬁrst Cabin Operations Safety Conference.

Driving safety improvements through data

Historically, aviation safety has improved through a well-

established process of accident investigations that identify

the probable causes and recommend mitigation measures.

The information provided from this process has helped

aviation take steps to reduce the risk of similar accidents.

Accidents, however, are on a downward trend—only

81 accidents were reported in 2013. So future safety

improvements will be driven largely by analyzing

information from all of the 36.4 million ﬂights on jet and

turboprop aircraft that operate normally each year and

not just from the handful of ﬂights where something went

wrong. The data will enable us to identify challenges long

before they become safety risks.

Aviation generates an enormous amount of data. Every

stakeholder, from airlines to ﬂight crew and ground staff,

aircraft and engine builders, systems providers, airports,

air navigation service providers, and governments, has

something to contribute.

The outcomes of data analysis only improve by combining

data gathered from diverse sources and viewpoints. And IATA’s

vision is to collect data from as many information sources

as possible and to develop the analytical tools to unlock the

insights that data holds. The Global Aviation Data Management

project, or GADM, is helping realize IATA’s vision.

GADM is an ISO-certiﬁed 9001 master database that supports

a proactive, data-driven approach for advanced trend analysis

and predictive risk mitigation. Sources for GADM include

the IATA accident database; the Safety Trend Evaluation

Analysis and Data Exchange System (STEADES); IOSA

and ISAGO audit ﬁndings; Flight Data Analysis (FDA) and

Flight Data eXchange (FDX); the Ground Damage Database

(GDDB); and operational reports; among others. More than

470 organizations around the globe and over 90% of IATA

member carriers submit data to GADM, making it the most

comprehensive airline operational database available.

Auditing to global standards and practices

Auditing programs are crucial to driving safety

improvements. They ensure that globally recognized

standards and best practices are followed.

The IATA Operational Safety Audit (IOSA) is the gold

standard for operational audits in the air transport industry.

All 240 of IATA’s members are among the 391 airlines on

the IOSA registry. Their safety performance in 2013 was

more than two times better than that of airlines not on the

registry. IOSA registrants experienced 1.46 Western-built jet

hull loss accidents per million ﬂights compared with 3.60 for

non-IOSA registrants.

IOSA is a key part of the Africa Strategic Safety

Improvement Action Plan. And the implementation of two

important developments will ensure that IOSA continues

to evolve with industry advancements to support that plan

and overall industry safety objectives: safety management

systems (SMS) and Enhanced IOSA.

The IATA Safety Audit for Ground Operations (ISAGO)

is the global standard for the oversight and auditing of

ground service providers (GSPs). It helps improve safety

and reduce billions of dollars in annual costs related to

ground damage. Additionally, ISAGO provides cost savings

of up to 30% for airlines and GSPs by decreasing the

number of redundant audits.

More than 700 ISAGO audits have been performed

worldwide since 2008. As of 29 March 2014, the ISAGO

registry had 147 registered providers with 263 registered

stations in 181 airports worldwide. The ISAGO audit pool

comprises 44 member airlines, consisting of 280 ISAGO-

qualiﬁed auditors. Globally, 28 regulatory authorities and 37

airports worldwide support ISAGO.

Aviation safety enhancement remained the priority

of the International Airline Training Fund (IATF)

in 2013. The IATF in particular continued the SMS

Implementation Training Program in Africa, the Middle

East, and Latin America and launched the new IOSA

Implementation Training Initiative for African airlines in

support of the Abuja Declaration.

In 2013, 34 SMS Implementation Training Program

workshops were held in Africa (13), Latin America (13),

the Middle East and North Africa (8). Fully 27 IOSA

Implementation Training Program workshops were held

exclusively for African airlines. In 2014, a new round of

IOSA Implementation Training Initiative workshops will be

offered to 10 additional airlines in Africa.

Key safety ﬁgures at a glance

Western-built jet

hull-loss accidents

2012 = 6

2013 = 12

Total accidents

(all aircraft types)

2012 = 75

2013 = 81

Fatal accidents

(on 36.4 million ﬂights)

2012 = 15

2013 = 16

Total fatalities

(out of 3.1 billion passengers)

2012 = 414

2013 = 210

Other audit programs include the IATA Fuel Quality Pool, the

IATA Drinking Water Quality Pool, and the IATA Deicing/Anti-

icing Quality Control Pool. Ensuring that global standards and

best practices are being followed in all areas of aviation is the

best way to remove risk from daily operations.

Implementing SMS

An SMS is a systematic approach to managing safety that

includes organizational structures, accountabilities, and

procedures. As per ICAO requirements, airlines and other

service providers are responsible for establishing an SMS.

IATA is an active member of the ICAO Safety Management

Panel and was involved in the drafting of the latest ICAO

annex, namely Annex 19—Safety Management. That annex

came into effect on 14 November 2013 and underpinned

the development and launch of the Regional SMS Network.

IATA is committed to helping IOSA members implement an

effective SMS.

SAFETY

Implementing enhanced IOSA

In the 11 years since its launch, IOSA has become aviation’s

global standard for operational safety management. But

IOSA’s protocols have remained largely unchanged, with

all IOSA participants required to undergo audits on a two-

year cycle. To increase IOSA’s effectiveness, it has been

upgraded to Enhanced IOSA, which incorporates systems

to monitor compliance in the time between the two-year

audit cycle.

Airlines began undergoing Enhanced IOSA on a voluntary

basis in 2013. Enhanced IOSA will become mandatory for

all renewal audits in September 2015.

Carriers that are outside the IOSA criteria—either because

of aircraft types operated or the nature and scale of their

operations—also need to be supported. To address this

segment of the market, IATA is developing the Standard

Safety Assessment Program (ISSA).

Following a Six-Point Safety Strategy

All IATA safety-related activities are coordinated in a

comprehensive Six-Point Safety Strategy. That strategy is

established in close cooperation with IATA member airlines

and strategic partners through the IATA Safety Group and

Operations Committee and was again updated in 2013. It

is regularly monitored and revised for relevance to ensure

a comprehensive approach to identifying organizational,

operational, and emerging safety issues, including

l reducing operational risks, such as CFIT, LOC-I, and

runway excursions;

l enhancing quality and compliance through audit

programs;

l advocating for improved aviation infrastructure, such

as the implementation of performance-based navigation

approaches;

l supporting the consistent implementation of safety

management systems;

l encouraging effective recruitment and training to

enhance quality and compliance through programs such as

the IATA Quality and Training Initiative and ICAO’s Multi-

Crew Pilot License; and

l identifying and addressing emerging safety issues,

such as lithium batteries, and the challenges posed by

the outsourcing of commercial functions to third-party

service providers, which is one of the largest corporate

risks for legacy carriers.

SAFETY

NORTH AMERICA

IATA and the US Commercial Aviation Safety Team

(CAST) signed a letter of understanding in 2013 to align

their safety programs and objectives centered on shared

data. This involves jointly developing and harmonizing data-

sharing programs.

AFRICA

IATA and stakeholders committed to ICAO and other

aviation-related governance bodies have united

behind the Africa Strategic Safety Improvement Action Plan.

That plan aims to achieve world-class safety levels in Africa

by 2015 by addressing safety deﬁciencies and strengthening

regulatory oversight capabilities.

The good news is that we are seeing signiﬁcant progress.

African airlines experienced only one Western-built jet

hull loss in 2013, for a hull loss rate of 2.03 per million

ﬂights. That was still well above the global average, but it

represented a signiﬁcant improvement from the ﬁve-year

average for Africa, of 6.44.

A key focus for African governments in their efforts to

achieve better safety oversight will be the implementation

of ICAO’s safety-related standards and recommended

practices (SARPS) under the Universal Safety Oversight

Audit Program (USOAP). Only 11 African nations had

achieved 60% implementation of SARPS at year-end 2013.

Meeting the Abuja Declaration’s 2015 commitment will

require an accelerated pace of implementation.

The Abuja Declaration also commits African governments

to require that all airlines complete an IOSA. To support

this effort, IATA is sponsoring in-house training through

the International Airlines Training Fund for 10 nonmember

airlines to complete an IOSA gap analysis, paving the way

for the completion of an IOSA.

Examples of regional aviation safety developments in 2013

LATIN AMERICA AND CARIBBEAN

It was an important year for air transport safety in

Latin America and the Caribbean in 2013. The region’s

stakeholders, through the Regional Aviation Safety Group

Pan-America, agreed to a common objective of reducing the

fatal accident risk in the region by 50% by 2020 compared

with 2010. The focus is on reducing runway excursions,

LOC-I, CFIT, and trafﬁc collision avoidance system events,

which are the main contributors to fatalities in the region.

The region’s IOSA-registered carriers have not experienced

a fatality in ﬁve years. That is why IATA is working with

regional governments and stakeholders, such as the

Latin American and Caribbean Air Transport Association,

to broaden the use of IOSA and make it a part of the

operational approval process.

The IATA-Latin American and Caribbean Air Transport

Association (ALTA), meanwhile, is proving to be an

effective information-sharing partnership. It is providing

crucial de-identiﬁed safety data to ALTA-member airlines

to help them focus their safety efforts where they will have

the biggest impact.

COMMONWEALTH OF INDEPENDENT STATES

The Commonwealth of Independent States (CIS) was

the only region where IATA members experienced

zero accidents in 2013. Overall, however, the CIS experienced

a signiﬁcant deterioration in safety compared with 2012 when

the performances of all airlines are included.

IATA’s proposed safety enhancement strategy for the CIS

seeks to boost individual nations’ oversight capabilities and

ensure compliance with ICAO standards and recommended

practices. It encompasses introducing SMS; launching an

IATA Training and Quality Initiative (ITQI)-based model;

and developing infrastructure, including assistance in the

implementation of PBN. IATA is encouraging the regulators

in each CIS country to beneﬁt from such internationally

recognized audit programs as IOSA to enhance safety

oversight systems already in place.

SAFETY

Security

processes,

effective

and efficient

SECURITY

Focusing on outcomes

Security is a key priority for the aviation industry. Equally

crucial is that security measures be efﬁcient and effective.

So IATA is exploring the beneﬁts of an outcome-focused

approach to security regulation, whereby it is the result

and not the implementation of aviation security that

counts. IATA hopes that this allows stakeholders the

ﬂexibility to determine the most resource-efﬁcient method

of implementing measures to deter, detect, and disrupt

potential attacks against the air transport system.

The outcome-focused approach to security is a work in

progress. Efforts are continuing to deﬁne its scope and

mechanics and to understand how it meshes with legal and

regulatory requirements.

2% 2%

24%

21%

49%

51%

25%

27%

More than 20 minutes Between 10 and 20

minutes

Between 5 and 10 minutes Less than 5 minutes

60%

50%

40%

30%

20%

10%

2013 2012

Acceptable queuing time at a security point

Source: IATA Global Passenger Survey

SECURITY

Providing data for border security

Border control and policing are the well-established

responsibility of governments. But for security to

function smoothly and effectively, all stakeholders

need to work together.

The Advance Passenger Information (API) and Passenger

Name Record (PNR) systems are cases in point. Almost 60

nations require airlines to provide API, and the industry goes

to great lengths to ensure that their governments receive

reliable data, including passport information.

In return, government processes for vetting and using API in

conjunction with, for example, the Interpol Stolen and Lost

Travel Documents database and other, national databases

must be constantly and consistently applied.

l Governments should conform to ICAO standards when

asking for passenger data. The nonstandard requirements of

some governments should be eliminated, as they complicate

the system with no beneﬁt to security.

l Governments must modernize their collection of data.

Airlines are transmitting data electronically, so it is time for

governments to do away with the paper forms that they

demand airlines and passengers submit.

l Governments should establish a single harmonized means

by which passenger data can be sent.

l Governments should explore how passenger data can

improve not only the effectiveness of border control but

also its efﬁciency. It should be possible to measure the

effect of applying passenger data correctly.

IATA is developing an online security data toolkit

in collaboration with ICAO and the World Customs

Organization that complies with global standards. In 2014,

IATA is also hosting a series of workshops to engage

regulators and stakeholders in security-related issues.

(Source: IATA Global Passenger Survey)

Bolstering cyber security

Commercial aviation depends on reliable, robust, and secure

IT systems. This reliance extends to all business-critical

functions, including for reservations, aircraft maintenance,

and ﬂight management.

Yet there are thousands of entry points to aviation’s IT

infrastructure. These include connectivity through the

Internet, mobile devices, global distribution systems,

governments, ﬁnancial systems, and other access points. The

industry has consequently become increasingly sensitive to

the potential of cyber threats.

In 2013, IATA analyzed the management of cyber security by

airlines and the industry as a whole. The result is a ﬁve-year

industry strategy for bolstering cyber security. That strategy

has three areas of activity:

l Risk management

l Advocacy

l Intelligence and reporting

Guidance material for pursuing the strategy will be

published in 2014. That material will look at key threats,

limitation strategies, and how to establish a cyber security

management system.

Driving the implementation of Smart Security

Smart Security is the evolution of the Checkpoint of the

Future project launched in 2011. The Smart Security vision

is to improve the journey from curb to airside so that

passengers proceed through security checkpoints with

minimal inconvenience. Under Smart Security, security

resources will be allocated based on risk, and airport

facilities will be optimized for efﬁciency and effectiveness.

Smart Security checkpoints will focus on components that

deliver process innovation, contribute to the evolution

of risk-based security, and make use of technologies

that enhance detection. There will be less divestment of

clothing and personal items and fewer intrusive processes

on the whole.

Smart Security has three goals:

l Effective security

l Efﬁcient operations

l Enhanced passenger experience

Most frustrating elements of the security screening process (by region of residence)

45%

40%

35%

30%

25%

20%

15%

10%

Queuing time Removing

laptops and other

large electronic

equipment from

luggage

Restrictions on and

special processing

of liquids

Removing shoes,

belts

Pat downs by a

security ofﬁcer

Full body scans

North America

Latin America

Europe

Africa

Middle East

Asia Paciﬁc

In 2014, the Smart Security work program will focus

on two areas:

l Testing components in an operational environment

and assessing the impact on operational efﬁciency,

the passenger experience, and security effectiveness.

Amsterdam Schiphol Airport and London Heathrow

Airport will run trials in 2014.

l Continued testing of components to advance the vision

documented in the 2017 and 2020 Smart Security blueprint.

A key driver for Smart Security is collaboration with Airports

Council International (ACI) World. IATA and ACI World

signed a memorandum of understanding (MoU) regarding

Smart Security in 2013.

The MoU covers projects that will drive improvements in

airport throughput capacity and efﬁciency as well as cyber

security. It also includes the Security Access and Egress

project, which focuses on streamlining access to and egress

from the passenger-screening checkpoints that will be

integrated with Smart Security in 2014.

SECURITY

(Source: IATA Global Passenger Survey)

Smarter

regulation,

the fair

way

forward

REGULATION AND TAXATION

Pushing for smarter, coordinated regulations

The airline industry needs smart regulation. That means

a regulatory structure that ensures safety, promotes the

industry’s success, and takes a harmonized approach to

facilitating the global aviation system that is so critical to

modern life.

This is the vision of the 1944 Chicago Convention that is the

regulatory bedrock of global aviation. That convention set

up the International Civil Aviation Organization (ICAO) and

put in place a framework for global cooperation in moving

people and goods by air and in ensuring the safety of air

travel and the legal rights of air passengers. Some 70 years

later, the Chicago Convention’s principles remain as integral

as ever to global aviation’s ambition and success.

The 38th triennial ICAO Assembly held in late September,

early October 2013 was the focal point for aviation

regulatory activity over the previous 12 months. Its

outcomes afﬁrmed in most cases the need for greater global

regulatory convergence. There was a landmark agreement to

develop a global, market-based measure to tackle aviation

emissions (see Environment chapter). The assembly also

encouraged the universal adoption of Montreal Convention

1999 (MC99); approved the development of high-level,

nonprescriptive core principles on consumer protection; and

agreed updates to the Tokyo Convention on dealing with

unruly passengers.

Analyzing costs and beneﬁts

In dealing with ICAO and with governments worldwide, IATA

and the industry are focused not only on inﬂuencing speciﬁc

regulatory proposals but also, at a more general level, on

promoting the beneﬁts of aviation and air connectivity.

Beneﬁts of Aviation papers were developed in 2011 and 2012

to give a country-by-country analysis of the employment

and economic activity generated and supported by aviation.

The research was collated as a single global document,

Aviation: Beneﬁts Beyond Borders. That document was

updated in April 2014 (see Beneﬁts of Aviation chapter) and

shows that the economic impact of aviation is increasing.

Aviation: Beneﬁts Beyond Borders gives governments more

information to take into consideration when performing cost-

beneﬁt analyses on proposed regulation and taxation of the

air transport industry. That information, moreover, serves to

remind governments that aviation is an enabler of economic

and social growth and of rising living standards.

Focusing on smart regulation

There is, amid the enduring legacy of the Chicago

Convention’s principles, much aviation regulation that

remains unharmonized. Wherever possible, the aviation

industry advocates for smart regulation that can be applied

globally and consistently. But local variations exist and

potentially add cost, complication, and confusion. They also

can lead to unintended consequences—most damagingly: an

impact on the level of air connectivity.

IATA and its members are promoting a smart approach

to regulation to reduce the regulatory burdens on the

industry. The priority is to pinpoint the growing number of

disjointed regulations that speciﬁcally affect connectivity.

Target countries and issues will be identiﬁed, and action

plans and campaigns will be developed to address those

countries and issues.

Countries, conversely, where governments are adopting

a positive approach to regulation will be championed.

Singapore and Australia, for example, have questioned

the need for aviation-speciﬁc regulations on consumer

protection, arguing that governments should only intervene

when there is a market failure and that airlines should have

the ability to operate like any other business. Both countries

referenced their independent consumer protection agencies,

which monitor all industries. Countries such as these

are mindful of overregulation that adds unnecessarily to

business costs.

Focusing on smart regulation allows the industry to open up

a positive advocacy with governments whereby government

and industry interests are aligned around impartial policy

design and the principles of smart regulation. Some of

the issues that IATA is engaging governments on include

passenger rights, MC99 ratiﬁcation, unruly passengers, slots,

appropriate taxation, and blocked airline funds.

REGULATION AND TAXATION

Promoting harmonized passenger rights

Passenger rights legislation exempliﬁes uncoordinated

global regulation with the potential to harm connectivity.

More than 60 passenger rights regimes are in place—each

with differing requirements (see map for examples). This

patchwork is confusing to passengers, who should clearly

understand what they are entitled to, and has engendered

an almost unworkable situation for the industry. Air

transportation is highly competitive, and market forces

provide a strong incentive for airlines to operate on

schedule. On the rare occasions where problems occur, the

effectiveness of an airline’s response is often a key element

of the service that it offers to passengers.

Proliferating prescriptive passenger rights regulation is

signiﬁcantly costly and yet adds little value for passengers.

IATA estimates that the potential liability to airlines posed

by the expansion of such regulation could nearly triple

in the next ﬁve years, from over $4 billion in 2012 to $12

billion in 2017.

At the 69th IATA AGM in June 2013, IATA members

unanimously agreed to a resolution on baseline passenger

rights. The resolution strikes a balance between sustainable

air transport and reasonable consumer protection. It fosters

compatibility among passenger rights regimes and serves

as the foundation for proactively shaping the debate on

the need for a balanced approach between safeguarding

passenger rights and protecting air connectivity and

competitiveness.

The 2013 ICAO Assembly agreed on the need for greater

convergence in this area, directing ICAO to work on

developing guidance on passenger rights. IATA and its

member airlines are seeking to promote a coordinated

approach to global passenger rights regimes based on

their resolution and are strong supporters of the ICAO

work on this issue.

Ratifying Montreal Convention 1999

Even when global regulations are agreed to, they need

to be transposed into national law. Montreal Convention

1999 (MC99) in particular requires ratiﬁcation by individual

countries. Civil aviation, meanwhile, requires a universal

liability regime for international carriage by air. Unless MC99

is ratiﬁed, a country cannot participate in electronic data

transfer, the cornerstone of the e-Freight program, including

the e-air waybill. Nor will compensation rates be globally

harmonized.

To date, 104 nations have recognized the importance of

and ratiﬁed MC99. IATA worked with countries attending

the 38th triennial ICAO Assembly to forge Resolution A38-

20, which calls on all remaining 87 nations to ratify MC99

as soon as possible. Following the assembly, the ICAO

secretary general took the unusual step of writing a letter

urging those countries to ratify MC99.

Burkina Faso and Mozambique have, as a result, recently

ratiﬁed MC99. And although some key markets, such as

Indonesia, the Philippines, Russia, Sri Lanka, Thailand, and

Vietnam, have not yet ratiﬁed the convention, for the most

part their governments acknowledge its beneﬁts. Only

a lack of political will or delays in the legislative process

prevent them from changing their local legislation. In Russia,

however, the amended local legislation is before the Duma

and is expected to be approved by midyear. Kazakhstan,

too, has publicly stated that it will ratify MC99 by the end of

2014, and IATA expects that a number of other countries will

also ratify the convention during 2014.

Dealing with unruly passengers

There are more than 8,000 reported incidents of unruly

behavior on aircraft every year. The impact on passengers

and crew from an unruly passenger can be signiﬁcant,

especially if the aircraft is forced to divert.

The legal framework for dealing with passengers whose

unruly or disruptive behavior leads to physical assault

or poses a threat to the safety of a ﬂight is the 1963

Tokyo Convention. IATA has supported revisions to that

convention to reﬂect the changes in the structure of the

aviation industry over the last 50 years. In March 2014,

attendees at a diplomatic conference in Montreal agreed

on a number of further important revisions to the Tokyo

Convention. Those changes will give airlines and authorities

an effective means to deter unruly passengers and include

key reforms to the following:

l Jurisdiction

l Protection of ﬂight crew and airlines from legal proceedings

l Scope

l List of offences

l Right of recourse for airlines to recover costs

The requirement now is for countries to ratify the changes

to the Tokyo Convention as soon as possible. IATA continues

to urge nations to do so and is working with stakeholders to

move the process forward.

REGULATION AND TAXATION

Examples of Passenger rights legislation

Uncoordinated passenger rights regimes cause confusion

for passengers and difﬁculties for airlines. Prescriptive

regimes also have unintended consequences, sometimes

causing more inconvenience for passengers and a

loss of connectivity for markets. Airlines are seeking a

harmonized global passenger rights framework based on

the key passenger rights principles agreed to at the 69th

IATA AGM in June 2013.

EUROPEAN UNION

The European Union is revising EU Regulation 261/2004

on passenger rights. This regulation creates an

estimated $4 billion in potential liability for airlines every

year. There are some positive signs to reduce this burden

among the revisions, but the revisions also include several

disturbing proposals. The latter include penalizing safety-

related delays and cancellations and placing the burden

of care and compensation on the ﬁrst carrier in case of

connecting ﬂights, thereby jeopardizing interline trafﬁc. A

revised EU Regulation 261/2004 on passenger rights is not

expected to be ﬁnalized before 2015.

USA

The US Department of Transportation (DoT) is

considering a notice of proposed rulemaking (NPRM)

on a new passenger rights regulation called Consumer Rule

III. One of the potential new provisions of concern is the

requirement that airlines sell ancillary services through GDS’s.

BRAZIL

Brazil’s Civil Aviation Agency (ANAC) is revising

its conditions of carriage regulations. A proposal

allowing consumers the “right to repent” purchase decisions

after a set period of time could restrict the pricing freedom

of carriers. In addition, efforts to standardize certain

conditions of carriage could interfere with the ability of

airlines to introduce a diverse array of products and services

in the marketplace—and cause difﬁculty with foreign airlines

that ﬁle their contracts of carriage in other jurisdictions.

Brazilian courts, moreover, often award damages beyond the

limits stipulated in Montreal Convention 1999.

CHINA

The Chinese government is contemplating a revision

of its passenger rights regulations, including the

possibility of introducing compensation in cases of delays.

IATA and the Chinese Air Transport Association (CATA)

are working with the Civil Aviation Administration of China

(CAAC) to propose revisions to China’s passenger rights

regime along the lines of the industry’s core principles on

consumer protection. In the industry view, entitlements

related to delays should reﬂect the reality that a majority of

delays are beyond the control of airlines and recognize that

airlines are highly incentivized to get their passengers to their

destinations on time.

BAHRAIN

In December 2013, Bahrain introduced consumer

protection regulations, the second Gulf Cooperation

Council country to do so after Saudi Arabia. The

newly introduced rules have several areas of possible

inconsistency with Montreal Convention 1999. Additional

proposals constitute a costly and complex burden on

carriers, such as a requirement to reroute passengers, at

their choice, onto other airlines, even at a higher class

of travel, or unlimited care and assistance based on the

passenger’s choice of an alternative ﬂight. Such burdens

can have the unintended consequences of reduced

connectivity and higher fares for consumers.

NIGERIA

The Nigerian passenger rights regime is concerning

for its extraterritorial reach, meaning that two

or more passenger rights laws could apply at once to

a given passenger. Ideally, Nigeria’s regime should not

apply to events occuring outside Nigeria. As it stands, the

country’s extraterritorial application of its passenger rights

regulations makes possible an overlapping of legal regimes

that will be confusing for carriers and passengers. That

Nigeria’s passenger rights regime applies to foreign aircraft

after their departure from Nigeria is particularly disturbing

and raises questions of conformity with Articles 1 and 11 of

the Chicago Convention.

REGULATION AND TAXATION

Evaluating capacity constraints

Airport capacity is a major concern for the industry in the

most congested markets. The constraints on capacity are

best alleviated through the construction of runways and

terminals. Until that is achieved, however, it is necessary

to manage scarce capacity through globally coordinated

regulations, the rules for which are laid down in the

Worldwide Slot Guidelines (WSG). The WSG is the accepted

global standard for the policies, principles, and procedures

of airport slot management. Adherence to the WSG ensures

consistent practices and the smooth performance of the

system. Conversely, local rules or deviations from the WSG

can cause disruption to passengers.

There remain several examples of such deviations, and these

must be resolved:

l Latin America has many fast-growing markets where

infrastructure capacity lags growth. Consequently, many

countries in the region are considering slot regulation. Brazil,

Colombia, and Mexico in particular have proposed legislation

that differs signiﬁcantly from the WSG, but strong advocacy by

IATA in 2013 has ensured signiﬁcant progress in limiting their

divergence from international standards.

l IATA also was engaged in Indonesia, Thailand, China,

Dubai, Saudi Arabia, Turkey, and Greece in 2013 to help

reduce their divergence from or practices contrary to the

WSG. In 2014, IATA has been asked to engage with Egypt,

Morocco, Tunisia, and Russia regarding capacity issues in

those nations.

Calling for appropriate taxation

The Chicago Convention contains a number of provisions

with regard to aviation taxation. For example, it states

that tax cannot be levied on fuel used for international

air transport. ICAO also recommends that value-added

tax (VAT) and other sales taxes should not apply to

international air tickets. Many governments, however,

ignore the recommendations and levy passenger taxes,

VAT, or other taxes, including tourism and visa charges (

see map for examples).

IATA and its members and a growing body of independent

economic researchers consider such taxes and charges

to have a dampening effect on air connectivity and the

economic and social beneﬁts of aviation. The industry is

willing to pay its fair share of corporate taxes. But given

that air connectivity is a proven enabler of economic

development, overtaxing ﬂying will have a negative effect

on national economies and government revenues.

The air transport industry, therefore, attempts to show

governments that taxes

l often contravene bilateral air services agreements or are

inconsistent with ICAO policies and

l often are counterproductive; evidence from some

countries indicates that the economic loss from taxes can

outweigh the expected returns.

REGULATION AND TAXATION

Urging the release of blocked airline funds

There are a number of nations that restrict or block airlines

from repatriating funds from ticket sales. Of particular

concern are Venezuela, Iran, Sudan, Eritrea, and Algeria.

According to IATA’s 2013 Remittance of Foreign Balances

(RFB) survey, $3.7 billion of members’ funds remains

delayed or blocked in 13 countries. This is over double the

2012 year-end ﬁgure of $1.05 billion. By far the biggest issue

is with Venezuela, which accounts for more than 90% of all

blocked funds.

IATA is urging the Venezuelan government to honor

a commitment it made in March 2014 to permit the

repatriation of airline funds at fair exchange rates.

The effect of the Venezuelan government’s position is

measurable in lost connectivity. In 2013, 11 of the 24 airlines

operating in Venezuela have reduced operations there

between 15% and 78%, and one air carrier has stopped

ﬂying to the country altogether.

Examples of aviation taxation

Taxing air connectivity for budgetary purposes does not

aid economic growth. On the contrary, there is increasing

evidence that such taxes diminish the tax-raising potential

of national economies. The reduction or the removal of

passenger taxes in the Netherlands, the Republic of Ireland,

Australia, Northern Ireland and the United Kingdom is

evidence that governments are starting to accept this view.

Despite successes in this regard, however, airlines and their

customers continue to be burdened with a multitude of

counterproductive taxes.

CHILE

October 2013 brought positive news from Chile

following representations there by IATA. The Chilean

government decided not to implement its proposed

passenger tax of $20 per passenger. This results in an

estimated saving of around $62 million.

REPUBLIC OF IRELAND

To boost the Irish economy and support Ireland’s

tourism sector, the Irish minister of ﬁnance has

abolished the country’s Air Travel Tax as of 1 April 2014.

The tax, which was ¤3 per departing passenger,

represented some $47 million annually.

UNITED KINGDOM

There was a notable change in the UK Air Passenger

Duty (APD), the world’s largest single aviation tax, in

March 2014. The UK government announced that the upper

two tiers of the tax, Bands C and D, would be abolished,

harmonizing the tax band for all ﬂights of more than 2,001

miles in length and saving around $300 million annually.

The rationalization offered for the change was to promote

connections with fast-growing economies. The remaining

tiers of the tax, however, will rise with inﬂation. IATA will

continue to argue, therefore, for the APD to be abolished.

MOROCCO AND TUNISIA

In December 2013, the Moroccan government

announced the introduction of a new tax, to come

into force on 1 April 2014, of MDH100 ($12) per passenger

departing on economy ﬂights and of MDH400 ($48) per

passenger departing in premium class. The estimated $50

million annual revenues from this tax are allocated 50% to

the Fund of Support for Social Cohesion and 50% to the

Moroccan National Ofﬁce of Tourism. IATA has determined

that this tax is self-defeating, as it will not increase travel to

the country but, instead, encourage passengers to turn to

other destinations. Tunisia introduced a similar tax, although

at a much lower rate, of TND2.50 ($1.60), at the beginning

of 2014 that covers international departures.

GERMANY AND AUSTRIA

The German Air Transportation Tax (ATT) raises

almost ¤1 billion per annum. The Austrian tax mirrors

that of Germany and garners ¤75 million per year. These

taxes damage their respective national economies, and the

tax revenues are outweighed by the long-term economic

harm. IATA continues to press the German and Austrian

governments to abolish these taxes.

INDIA

In India, IATA continues to help airlines reduce their

exposure to the service tax levied on tickets for air

navigation service charges for international ﬂights. Airlines

are able to reclaim partial service tax credits, but there is

inconsistency in the way different airlines are treated.

REGULATION AND TAXATION

Meeting needs,

the right

way to build

INFRASTRUCTURE

Working with infrastructure operators

on charges and investment plans

Air transport requires plentiful high-quality infrastructure

at competitive cost if it is to fulﬁll present and future

demand for air travel. Collaboration with infrastructure

partners—especially with airports, air navigation service

providers (ANSPs), and fuel suppliers—is crucial. Airlines

and airports, for instance, can maximize customer service

and boost connectivity by agreeing on fair and cost-

efﬁcient airport charges (see map for examples). It is

also important that, as per ICAO guidelines, airports align

their development plans and capital expenditure with the

capacity requirements of airlines as airlines strive to meet

their customers’ demands for connectivity.

Examining the importance

of economic regulation

In the light of growing concerns within the industry over

airport charges, and particularly issues with the application

of the EU Airport Charges Directive, IATA published a

report, Airport Competition, in November 2013. That report

investigates the relationship between airport pricing, market

power, and competition and concludes that the major

changes that have taken place in the airline industry in recent

decades, driven by a signiﬁcant increase in competitive

pressure, have yet to be mirrored in the airport sector.

There is evidence that consumers have a preference for using

their local airports, conferring considerable local market power

on airports regardless of their size, ownership structure, or

business model. Robust government economic regulation is

therefore required to protect passengers and shippers from

unreasonably high airport charges and fees, to ensure service

quality levels, and to drive improvements in cost efﬁciency.

The report has provoked a useful debate with Airports Council

International and the European Commission on the merits of a

strengthened regulatory regime for airports.

Delivering airport efﬁciency and quality

The efﬁciency and quality of operations at airports, in

ground handling and overall operations management, are

important factors for airlines. The cost of ground damage

runs into the billions of dollars per year, and ineffective

airport operations cause delays and raise costs and

emissions. Because airlines increasingly rely on outsourced

ground service providers (GSPs), IATA is working to improve

operational practices and cost efﬁciencies in ground

handling through the global standardization of procedures.

The IATA Ground Operations Manual (IGOM) consolidates

international best practice on ground operations procedures.

By promoting the adoption of IGOM by airlines and GSPs

worldwide, IATA is aiming to harmonize standards. In

2013, the LATAM Airlines Group became the ﬁrst airline to

implement IGOM across its operations.

The IATA Safety Audit for Ground Operations (ISAGO)

similarly provides a globally recognized set of audit

procedures that can improve safety and reduce redundant

audits. In 2013, the Greater Toronto Airports Authority

mandated ISAGO audits for all of its GSPs as a tool to

improve service levels. Work will continue to enlarge the

ISAGO audit pool and to promote further IGOM adoption

throughout 2014.

IATA works with airports to drive greater efﬁciency in

airport operations management in operations, contingency

planning, baggage handling, security, infrastructure renewal,

asset utilization, and elsewhere. Two particular tools for

enhancing this work are airport collaborative decision

making and service-level agreements.

l Airport collaborative decision making ensures planning

and developments enshrine the potential for collaboration

between airlines, ANSPs, airport operators, and GSPs to

optimize turnaround efﬁciency and reliability.

l Service-level agreements promote a balanced customer-

supplier relationship. Service levels are benchmarked to

ensure that comparisons can be made across operations.

Total cost reductions achieved in 2013

Industry taxation:

$131 million

Airport charges:

$350 million

ANSP charges:

$114 million

Fuel fees & taxes:

$274 million

$869

million

Total cost reductions

achieved in 2013

INFRASTRUCTURE

Examples of airport charges and development plans

Airport development requirements should be agreed on by

all parties based on a robust cost-beneﬁt model that is in

line with expected demand. Where airport privatization is

being considered, early collaboration, including decisions

on investment, cost allocation, and charge setting, is needed

among all parties to avoid unfair concession agreements.

The European Commission, meanwhile, needs to improve the

EU Airport Charges Directive, especially with regard to the

consistency with which it is transposed into national law.

IATA’s advocacy work with airports to ensure that charges

are justiﬁed and reﬂect a reasonable value for airlines and

passengers resulted in some notable results over the past

12 months.

USA

IATA supported a campaign by US airline association

A4A to prevent increases in customs fees and the

passenger facility charge (PFC) proposed in the 2014 US

budget. Revenues from the increase in the security fee

will be ring-fenced to fund aviation rather than used to

reduce the federal government deﬁcit. It is important that

airlines are not used as revenue-generating machines for

government budget deﬁcits, and the industry will guard

against further increase proposals in the 2015 US budget.

EUROPE

IATA has worked with industry partners on escalating

the European Commission’s attention to issues

concerning concession or price-cap agreements at, for

example, Budapest, Lisbon, Vienna, Athens, and Larnaca.

The EC is expected to provide guidance on how the EU

Airport Charges Directive applies to concession agreements.

Engagement continues in countries, such as Greece, where

privatization planning is at an early stage.

TURKEY

IATA is working with Turkish authorities to ensure that

operations in that nation will support trafﬁc growth prior

to a transition to a new, third airport in 2019–2020. IATA is also

assisting with the review of the master plan for the new airport.

SOUTH AFRICA

IATA and partner associations in South Africa have

engaged in constructive dialogue and collaboration

with Airports Company South Africa on capacity planning

in consultations on the 2015 charges review. This will be an

important process considering the previous review resulted in

large increases in charges.

INDIA

The equalization of landing fees for domestic and

international ﬂights at Guwahati was a positive outcome

for the industry. At Hyderabad, the airport is appealing the

application of a single-till approach that, if implemented, will

result in the removal of the user development fee and no

increases in other airport charges. The industry is continuing

with a legal challenge against the high tariff increases

implemented at Delhi and Bombay.

HONG KONG

The Airports Authority of Hong Kong is engaging

positively with the aviation community as planning

for the third runway and the replacement of Terminal 2 at

Hong Kong International continues. A public consultation

process is under way. The overall management of the Pearl

River Delta airspace is an important project component as

well. Interconnectivity for passengers and baggage between

existing and planned new facilities to maintain Hong Kong

International’s competitive minimum connection times is a

particular focus of current discussions.

BRAZIL

Following concerns expressed over the operating

concessions awarded at the three key Brazilian airports

of Guarulhos, Viracopos, and Brasilia, much effort was spent

working with the Brazilian government to ensure that the

second tranche of concessions in 2013, to operate the Rio De

Janeiro and Belo Horizonte International airports, included a

robust regulatory framework. The terms of the new concession

agreements include IATA’s recommendations of a capped

charging model, an annual review involving a productivity

factor, and a service-level agreement—all elements that were

missing from the ﬁrst round of concessions.

LONDON HEATHROW

The UK Civil Aviation Authority (CAA) set a 2014–2019

charges cap at 1.5% below inﬂation. Although the

airlines using Heathrow believe an even bigger cut in charges

was possible, overall it was a good regulatory process from

the CAA. It sought to protect passengers from airport market

power, while encouraging the airport and airlines to agree

on investment requirements and improvements to service

levels. The overall regulatory process sets a good example

for other large international hubs.

INFRASTRUCTURE

Working for reliable fuel supplies

On average, fuel comprises 33% of airlines’ operating

costs. Securing a reliable supply of jet fuel is therefore a

vital objective for airlines, and IATA works with jet fuel

providers to ensure that the quality and consistency of

supply are maintained. In addition, airlines seek from

reﬁneries, suppliers, and governments the introduction of

internationally recognized benchmarks to set base fuel

prices and to show the breakdown of costs that make up

the ﬁnal price.

It is, furthermore, a tenet of the Chicago Convention, of

ICAO policies, and of bilateral air service agreements

that jet fuel not be taxed. Where such taxes exist, IATA

negotiates on behalf of its member airlines for the taxes

to be withdrawn (see map for examples). The overall

global pattern on the reliability and taxation of fuel is that

there have been some improvements but that new issues

continue to emerge. Fuel taxation is therefore an issue

requiring constant vigilance by the industry.

INFRASTRUCTURE

Increasing the efﬁciency of

air trafﬁc management

The global vision for air trafﬁc management (ATM) is

for a harmonized, cost-efﬁcient, and interoperable ATM

system. Airlines and ANSPs need to work together if this

vision is to be achieved. A number of ambitious regional

projects (see map for examples) are in place to address

capacity restraints and the lack of efﬁciency, but political

commitment to the success of these projects is essential.

There also remain many examples where ANSP charges

are too high.

ATM efﬁciency issues

Globally, four issues are being tackled to deliver a more

efﬁcient, more cost-effective, and more harmonized ATM

system than ever before:

l Aviation system block upgrades (ASBU). To ensure

that improvements in ATM technology and techniques are

being applied worldwide, ICAO has instigated the ASBU

program to assist countries with the systematic upgrade of

their ATM infrastructure at regional levels. It is essential that

ASBU solutions be globally interoperable. Two of the most

complex modules being implemented are the US NextGen

and the Single European Sky ATM Research programs.

Unfortunately, however, their fundamental principles and

technical capabilities are not aligned.

l Air trafﬁc ﬂow management. As congestion in the air

increases, innovative solutions for increasing the amount

of airspace available are required. IATA is leading the

development of collaborative decision-making training

materials and with ICAO and other stakeholders is creating a

prototype campaign on the ﬂexible use of airspace.

l ATM service priority. IATA developed a position paper in

partnership with industry stakeholders for the ﬁrst meeting

of the ICAO working group that is looking to integrate ATM

service priority, formerly known as “most capable, best

served,” into the ASBU work. This is a high priority, as it will

deﬁne operational and ﬁnancial incentives for investment by

airlines in ATM technology.

l Approach with vertical guidance implementation.

Controlled ﬂight into terrain (CFIT) is a rare cause of

accidents, but those accidents can incur a major loss of

life. CFIT risks can be mitigated through the use of vertical

guidance procedures. IATA is launching an awareness

campaign to accelerate and incentivize the implementation

of such procedures.

Examples of securing reliable jet fuel supply at transparent prices

Airlines wish to see a globally harmonized, cost-effective,

and interoperable ATM infrastructure. A number of

initiatives are under way in regions of the world, but,

particularly in the case of the US and European programs,

these are not aligned. It is important that airlines and

governments campaign to ensure the harmonization and

interoperability of these technological solutions.

VANCOUVER

The approval of a new pipeline to improve supply

sustainability at Vancouver airport marked the

successful conclusion of a long-term campaign by the

airport, its fuel supplier, its user airlines, and IATA.

PANAMA AND MEXICO

Advocacy efforts dissuaded the governments of

Panama and Mexico from imposing new taxes on jet

fuel for international uplift. This avoided some $72 million in

additional annual costs.

LONDON HEATHROW

IATA continues to be involved in a project to construct

much-needed additional jet fuel storage at London

Heathrow. As part of the UK CAA’s decision on the 2014–

2018 pricing period, $215 million has been earmarked for the

fuel tank project.

EUROPEAN UNION

Following representation from IATA and airlines, the

European Council agreed to remove the 4.7% duty on

jet fuel imports from Gulf Cooperation Council countries for

the next ﬁve years beginning 1 January 2013.

AFRICA

On average, fuel costs are around 21% higher in Africa

than elsewhere in the world. IATA continues to work

with a number of African countries on reducing costs and

improving reliability. IATA is, for example, negotiating with

Kenya, where a new rail levy tax applied on jet fuel for

international ﬂights adds an estimated $13 million to airlines’

fuel bills every year.

LIBYA

Discussions with Afriqyah Airways and the Libyan

government led to an adjustment in Libya’s jet fuel

price formula and to an estimated reduction of $31 million in

2013. IATA will continue to monitor developments to ensure

that Libya’s fuel price formula remains transparent.

SAUDI ARABIA

An agreement with the Saudi government and the Saudi

fuel supplier, Aramco, will adjust Saudi Arabia’s fuel

pricing formula. This will reduce prices an estimated 6%.

MYANMAR

As a result of representations by IATA to Myanmar’s

minister of transport in November 2013 and in

February and March 2014, the Myanmar authorities agreed

to reduce the tax on fuel from 8% to 5% effective 1 April

2014. Myanmar advised that it will also look to align its

taxation of fuel, aircraft, and spare parts with taxation by

ASEAN states over the next 12 months.

INFRASTRUCTURE

Reviewing ATM developments regionally

Airlines wish to see a globally harmonized, cost-effective,

and interoperable ATM infrastructure. A number of

initiatives are under way in regions of the world, but,

particularly in the case of the US and European programs,

these are not aligned. It is important that airlines and

governments campaign to ensure the harmonization and

interoperability of these technological solutions.

US: NEXTGEN

The Next Generation Air Trafﬁc Control system in the

United States (NextGen) is making steady progress

despite the momentary loss of momentum in 2013 as a

result of the US budget issues leading to the government

shutdown and sequestration. Investment decisions on the

next stages of ATM technology implementation will be made

in 2014. This is a critical period for ensuring that the US

and Europe make genuine efforts to harmonize their ATM

modernization efforts, and IATA and its industry partners

will be prioritizing this aim.

EUROPE: SINGLE EUROPEAN SKY

In Europe, the Single European Sky continues to

progress only slowly. The development of the airline-

supported SES II+ package by the European Commission

will ensure stronger economic regulation and help enforce

the commitments that European nations have made

to deliver functional airspace blocks and other needed

efﬁciencies. The SES II+ package, however, is being opposed

by several key countries, including France and Germany. A

priority for 2014 is to assist the EC in pushing the SES II+

package forward. SESAR, the technology component of

SES, is making progress. But it is not aligned with its US

counterpart, NextGen.

MIDDLE EAST: HARMONIZED SKIES

Political and economic challenges in some areas

of the Middle East have prevented substantial

improvements for airspace users. The political situations

in Libya, Sudan, and South Sudan are improving, however,

and dialogue with airlines is now open. The ICAO Middle

East ATM Enhancement Program is promoting regionally

coordinated and harmonized solutions based on user

requirements. In addition, the Gulf Cooperation Council,

comprising Saudi Arabia, Kuwait, Bahrain, Qatar, Oman,

and the UAE, is discussing the creation of a virtual ﬂight

information region (FIR) to harmonize operations between

the six nation’s different FIRs. Much work remains to be

done on this potentially signiﬁcant project.

ASIA-PACIFIC: SEAMLESS ASIAN SKY

In Asia-Paciﬁc—particularly in Southeast Asia—

individual, country-by-country solutions to ATM

challenges are no longer sufﬁcient to meet forecasted

demand. There needs, consequently, to be a multistate

solution to managing air trafﬁc in the region. This project is

known as the Seamless Asian Sky. In 2013, the Asia Paciﬁc

Seamless Air Trafﬁc Management Plan was accepted by the

ICAO Regional Planning Group and affected countries. IATA

was a strong supporter in the development of this plan and

contributed an economic study to the plan’s development.

The plan is based on available technology and processes.

IATA is working directly with the affected countries and

such organizations as ASEAN and APEC to drive the plan’s

implementation.

INFRASTRUCTURE

Environmental

commitments,

a year of

progress

ENVIRONMENT

Reducing carbon emissions

The aviation industry is united in its commitment to manage

and reduce its environmental impact. For aviation, the two

most signiﬁcant and complex environmental issues are

aircraft carbon (CO

) emissions and noise. The industry,

however, also addresses more general environmental issues,

such as waste management.

Air transport is responsible for 2% of man-made carbon

emissions annually. But the industry recognizes that it must

work ever harder on behalf of the environment to achieve

long-term sustainability, which will give the industry a

license to grow. In 2009, therefore, the industry—comprising

airlines, business aviation, airports, airplane manufacturers,

and air navigation service providers—committed to a united

approach in reducing emissions that includes three carbon-

emissions goals:

1. Improving fuel efﬁciency an average of 1.5% annually to 2020

2. Capping net emissions through carbon-neutral growth

from 2020 (CNG2020)

3. Cutting net emissions in half by 2050, compared with 2005

No other industry has set such ambitious global goals.

And through ICAO, governments worldwide are aligned with

especially the industry’s CNG2020 vision.

To achieve its three carbon-emissions goals, the industry

has adopted a four-pillar strategy comprising technology,

operations, infrastructure, and market-based economic

measures. Through continued investment in new aircraft

and innovative efﬁciency improvements, the industry

is meeting its 1.5% fuel-efﬁciency goal. The challenges

to achieve the second and third goals, however, are

signiﬁcant and cannot be overcome by the industry alone.

The support of governments is required, particularly in the

agreement on and deployment of a global market-based

measure (MBM) for addressing carbon emissions.

Catalyzing ICAO negotiations on a

global carbon emissions agreement

The year 2013 was crucial for global negotiations on aviation

and climate change. Following many months of in-depth

analysis, airlines came together at the 69th IATA AGM in June

to adopt a landmark resolution supporting the implementation

of CNG2020. The resolution explicitly called on governments

to implement a global, mandatory MBM, based on the industry

preference of a carbon-offset scheme.

The united position of the airlines generated impetus for a

positive result at the 38th ICAO Assembly. Nations attending

the assembly decided to develop the framework for a global

MBM by the time of the 39th ICAO Assembly in 2016, for

implementation in 2020.

The development of a global MBM is a huge task, politically

and technically. Following the 38th Assembly, ICAO set up

an Environment Advisory Group (EAG) to give guidance

on policy issues and a Global MBM Task Force to address

technical matters, such as monitoring and reporting protocols.

IATA is actively supporting the work that the nations involved

in these bodies are doing and is advocating for a global MBM

that is transparent, nondiscriminatory, and cost-effective. IATA

is also ensuring close coordination among its Environment

Committee (ENCOM), regional airline associations, and other

industry stakeholders through the Air Transport Action Group.

The industry has expressed overwhelmingly its preference

for a global mechanism in place of a patchwork of local and

regional regulations. And the outcome of the most recent

ICAO Assembly clearly shows that countries share the desire

for a global solution. The strength of this view among nations

revealed itself in the widespread opposition to the extension of

the EU Emissions Trading Scheme (ETS) beyond EU airspace.

In March 2014, in a positive development, the EU voted to

maintain the “stop-the-clock” rule, which prevents the EU ETS

from being applied to all carriers ﬂying to and from the EU,

even in their own airspace. This decision, though, is contingent

upon continued progress by ICAO toward a framework MBM

agreement at the ICAO Assembly in 2016.

-50% by 2050

No action

indexed to equal 100 in 2005

Carbon-neutral growth

More efﬁcient aircraft

Flying smarter

Biofuels

Economic measures

100

2005 2010 2020 2030 2040 2050

Emissions reduction roadmap

ENVIRONMENT

Helping airlines deploy affordable

and sustainable biofuels

Beyond the development of an MBM, the industry continues

to work under the four-pillar strategy on technological,

operational, and infrastructure solutions to reduce emissions.

The use of sustainable biofuels is a particularly important part

of the industry’s approach. Biofuels emit CO

, but over their

life cycle they save up to 80% in carbon emissions. Aviation,

meanwhile, enjoys a distribution system for aviation fuels

with advantages compared with other transport sectors’ fuel

distribution methods. Using that system, potentially 80% of

all ﬂights would be covered if biofuels can be delivered to just

190 airports worldwide.

Since the ﬁrst biojet fuel test ﬂight in 2008, the industry has

promoted and assisted biofuel initiatives in many parts of the

world alongside national and regional stakeholder groups.

Some 1,500 commercial biojet fuel ﬂights by 19 airlines have

taken place. In 2013, IATA partnered with new biojet fuel

deployment projects in Canada, Germany, and the Nordic

countries in addition to continuing to cooperate with multi-

stakeholder aviation biofuel initiatives in the United States,

South Africa, and Brazil.

The main obstacles to the widespread uptake of biofuels are

not technical. They are economic and political. Economically,

it is essential that biojet fuel is sufﬁciently produced and

delivered. Increasing the volume and the availability invariably

decreases price. Politically, a favorable ﬁscal and legislative

framework is needed to encourage the deployment of aviation

biofuel at levels comparable for automotive biofuel.

Especially important in this regard is implementing a means to

reduce the risk of investing in biojet fuel production plants. Also

crucial is establishing global mutual recognition of sustainability

standards. Under US and Dutch regulations, biojet fuel is treated

the same way as automotive biofuel in meeting renewable

energy targets and in eligibility for incentives. This is a model

that could be adopted by nations elsewhere to similar effect.

IATA is working toward agreement on global mutual recognition

of sustainability standards and on user-friendly methods for

reporting biojet fuel use in anticipation that biojet fuels will be

eligible for inclusion under a global MBM for aviation.

Reporting on airline fuel

In December 2009, the IATA Board of Governors agreed

that the reporting of CO

emissions to IATA by member

airlines would be mandatory as part of a set of practical

steps the industry needed to take to meet its CO

emissions

goals. IATA’s subsequent task was to develop and launch an

online reporting tool for fuel-consumption data.

IATA launched its online Fuel Reporting and Emissions

Database (FRED) in February 2013, and to date 89% of IATA

member airlines are participating. FRED enables IATA to

monitor and track progress against the annual 1.5% fuel-

efﬁciency improvement target with reliable and consistent

results. This accurate data will also be used to demonstrate

the beneﬁts of fuel efﬁciency and mitigation techniques,

such as winglets or weight-saving measures. Such techniques

often represent modest improvement individually but are

enormously effective when applied collectively.

IATA has also developed a harmonized fuel measurement

protocol and a common fuel measurement metric.

In 2014, IATA will enhance FRED to include greater

reporting capabilities and will seek the endorsement of a

recommended practice on fuel measurement.

Driving fuel efﬁciency with a CO

certiﬁcation standard

In July 2012, the ICAO Committee for Aviation Environment

Protection (CAEP) approved a metric for a CO

emissions

standard for aircraft. The intent is for this standard to be used

to help ensure that aircraft meet a minimum performance

level for fuel efﬁciency and, by extension, emissions.

IATA is involved in discussions about whether the standard

should be applied to in-production aircraft or to only new

design variants. The priority is to ensure that if the standard

is applied to in-production aircraft it will not be an undue

burden on airlines. IATA and its members will respond to

speciﬁc proposals as the development of the CO

standard

continues, in anticipation of ﬁnal approval of the standard in

February 2016.

Environmental measures for air cargo

Environmental sustainability is of increasing importance to

airlines and shippers. IATA is promoting the uptake of new

technology, such as lightweight unit load devices (ULDs).

And in March 2014 the Cargo Services Conference adopted a

recommended practice for a carbon calculation methodology

for air freight. This is a shipment-level formula that is aligned

with ICAO methodologies and addresses the operational mix

between belly and freighter shipments.

ENVIRONMENT

Addressing noise through the

balanced approach

Concerns about the effects of aircraft noise are the

main obstacle to expanding air links and frequencies at

some airports. In addition, noise mitigation measures

may adversely affect operators and passengers through

reduced connectivity and increased congestion.

ICAO’s balanced approach to noise is designed to ensure

that the maximum technological and operational beneﬁts

are achieved before it is necessary to introduce restrictions

or charges. Unfortunately, in many instances authorities

fail to follow the balanced approach. What results is a

proliferation of operating restrictions and charges, as is

especially the case in Europe.

Restrictions often are put in place without an impact

assessment and without evaluating alternatives for noise

reduction. And the increasing tendency to resort to

taxation or charges, for example in Italy and at London

Heathrow, is unproven as to any environmental beneﬁt.

Examples of actual and potential noise restrictions include

the following:

l Despite submissions from IATA and its member airlines,

the Civil Aviation Authority (CAA) in Israel decided

to extend the night curfew at Tel Aviv’s airport. A

consequence will be a loss of connectivity for passengers

traveling to and from Tel Aviv. The extension will force

some airlines to postpone early-morning departures to

European hubs, reducing the number of connecting ﬂights

for inbound passengers at Tel Aviv. For some airlines, the

share of connecting passengers on early-morning ﬂights

from Tel Aviv exceeds 70%.

l The UK CAA is reviewing its night-ﬂight regulations for

London airports and began consultations on this issue in

2013. The concern is that the UK CAA will further limit night

operations and worsen congestion. After the ﬁrst stage of

consultations, though, the UK CAA opted not to introduce

changes. The outcome of a second consultation launched at

the end of 2013 remains to be seen.

l The Italian IRESA is a regional tax on aircraft noise

introduced in several regions of Italy in 2013. It is designed,

however, simply to raise revenues for the treasuries of

the regions in question and not to cover costs related to

lowering noise. IATA, local stakeholders, and several regional

associations collectively expressed strong opposition to the

tax, fearing it will set a precedent for other regions in Italy

and even for other countries. Fortunately, following robust

industry reaction, several Italian regions withdrew the tax

and the Italian government legislated a cap on the tax. The

tax is nevertheless still in place in Lazio, the region that is

home to Rome.

Driving environmental improvements

in the aviation industry

IATA has developed its Environmental Assessment (IEnvA)

program to assist airlines with benchmarking and measuring

their general environmental performance. Participating

airlines are independently assessed for their performances

against environmental standards and recommended

practices at individual airports, in separate nations, and at

international levels.

In 2013, six airlines completed IEnvA Stage 1 planning for

compliance with environmental requirements. Two of those

airlines are continuing to IEnvA Stage 2, which involves

implementation and a review of recommendations. IATA

intends to accelerate airline participation in IEnvA in 2014

and beyond.

Addressing cabin waste

Intentions to recycle airline cabin waste further indicate the

industry’s environmental commitment and performance.

Different countries’ varying regulations on waste recycling

and a lack of global guidance, however, discourage

recycling and maximize waste volumes, adding to costs

and confusing passengers and crews. So IATA established

the IATA Cabin Waste Working Group to tackle this

issue. In 2013, two cabin waste projects commenced:

data collection and risk assessment. IATA will continue

to liaise with international regulators in 2014 to work on

harmonizing waste recycling regulations.

ENVIRONMENT

Faster processes,

faster delivery

CARGO

Addressing cargo challenges

Air cargo is a crucial enabler of the global economy. In 2013,

airlines transported 49.8 million metric tons of goods valued

at $6.4 trillion.

Despite these impressive numbers, the air cargo industry

faces signiﬁcant challenges. A modal shift from air to

maritime and rail transport has been continuing for some

years. In addition, the economic trend to onshore, or closer-

to-home, manufacturing and markets is affecting air freight.

And then there is the delay in shipping time or outright

prohibition of transportation of certain goods by air because

of the need for greater safety and security.

Enhancing the competitiveness of air freight

To address the competitive pressures facing air cargo, the

industry is challenging itself in 2014 to meet an important

objective by 2020. The air cargo industry will seek to cut the

average end-to-end shipping time by 48 hours, reducing the

delivery schedule of a typical shipment to four or ﬁve days,

from six or seven days. To meet this goal, the air cargo value

chain has agreed to an agenda encompassing a number of

interconnected work programs:

l Replace paper and analog processes with digital data

transfer through the implementation of e-freight

l Ensure a secure supply chain to minimize security-

related delays

l Measure the performance of the end-to-end air cargo

chain through quality management and benchmarking

l Develop a global facilities matrix to benchmark air cargo

infrastructure, particularly with reference to a cool chain

l Raise air cargo safety through the application of global

standards

l Foster closer partnerships among the various players in

the air cargo value chain

Implementing e-freight

Each air cargo shipment travels with a physical pouch

containing up to 30 different documents. At various

stages of the cargo journey, regulations require that these

documents be copied and processed manually, adding cost

and reducing efﬁciency.

The e-freight program is designed to modernize the process,

replacing paper with digitized standard documents adapted

for electronic commerce. This will help to achieve the goal

of cutting 48 hours from end-to-end shipment times. It also

will promote efﬁciencies by eliminating the need for multiple

data entry, which will reduce errors, and by enhancing security

through enabling advance data transmission to the authorities.

One of the most important documents for air freight

shipments is the transport document, the air waybill (AWB).

Unlike other documents in the pouch, the AWB’s use and

formatting lies within airlines’ control, and IATA and its

members have focused on replacing the AWB with an

electronic air waybill (e-AWB) as a ﬁrst step toward digitizing

the entire document pouch.

Signiﬁcant progress was made in 2013 in implementing the

e-AWB. Overall penetration increased from 6.8% to 12.3%. This

was, though, signiﬁcantly lower than the 2013 target of 20%.

Efforts to increase e-AWB penetration were given a

signiﬁcant boost with the advent of a multilateral e-AWB

agreement. This was accompanied by the establishment of

modern electronic communication standards (Cargo-XML)

and the conclusion of successful e-AWB pilot projects in

India and China that will enable the introduction of e-freight

into these important and growing markets.

With these achievements in place, the industry is committed

to advance the adoption of e-AWB rapidly. Milestones are

for 22% penetration by the end of 2014, for 45% by the end

of 2015, and for 80% by the end of 2016.

CARGO

In addition to assisting airlines with their compliance

with ACC3, IATA is engaged in a number of other cargo

security programs:

l The Consignment Security Declaration (CSD) is a

document that aids the transparency of shipments by

providing standard information to governments. To improve

the tracking of secure cargo and to enable advance

information to be transmitted, IATA led the development of

a digital (electronic) version of the CSD. The e-CSD proof of

concept was implemented in six countries over the past 12

months, and two further nations are expected to implement

e-CSD by the end of 2014. In 2013, the e-CSD was adopted

as a recommended practice by the IATA Cargo Services

Conference, was endorsed by the Federation of International

Freight Forwarders Associations (FIATA), and was published

in the eighth edition of the ICAO Aviation Security Manual.

l Secure Freight is an air cargo security solution that aims

to promote harmonized best practices associated with

Annex 17 of ICAO’s guidance material and standards for the

global air cargo supply chain. Following the completion of

two Secure Freight pilot projects in Malaysia and Kenya,

seven further Secure Freight pilot projects have begun,

in Mexico, Chile, Egypt, UAE, Jordan, Brazil, and Bahrain.

Another ﬁve are expected to start in 2014.

l Air Cargo Advance Screening (ACAS) is a US government

program to ensure the greater security of cargo entering the

United States. In 2013, IATA encouraged the participation

of 39 airlines in ACAS pilot projects. The experience will

help the industry to shape the drafting of upcoming US

legislation on ACAS.

Applying quality management

and benchmarking

Cargo 2000 (C2K) is a quality management system that

was developed to assist airlines and forwarders monitor

and benchmark delivery performance against their service

promise, deﬁne common processes and procedures, and

promote best practices. The C2K Master Operating Plan

(MOP) is an open resource free for airlines to adopt.

C2K delivers value by covering airport-to-airport cargo

processes. But work is under way to extend the C2K

approach from the time a cargo consignment is accepted

through its delivery. By introducing neutral quality

standards to the end-to-end process, the industry will

be able to track progress against the common goal of

reducing shipping time by 48 hours.

Securing the supply chain

Since the Yemen printer cartridge plot in 2010, the security

of the air cargo supply chain has been under scrutiny.

Governments have increased their oversight and require

enhanced information about or the 100% screening of

shipments. The effect of increased regulation, if not

managed by the industry, will slow down transit times,

damaging the value proposition of air freight as a speedy

way to transport goods.

The most onerous requirement facing carriers who transport

goods into Europe is the European Union’s ACC3 regulation.

This regulation applies to air cargo from third countries

that is inbound to the EU. It requires that carriers be

independently validated for the effectiveness of the security

arrangements at their stations by 1 July 2014.

Among the many challenges of meeting the ACC3

regulation was the lack of independent validators. So

in 2012, IATA established a Center of Excellence for

Independent Validators (CEIV) that to date has trained

in excess of 96 candidates, 85 of whom gained EU

accreditation as independent validators. IATA also has

delivered information and readiness workshops aimed at

ensuring 100% awareness among all IATA members of their

obligations under ACC3 and at helping them prepare for

independent validation.

The ACC3 regulation contains a provision for carriers to

apply for a six-month extension to the 1 July 2014 deadline

where, for reasons beyond their control, an independent

validation has not been possible. IATA is working with

airlines to identify such reasons and is urging the EU to look

sympathetically on airlines’ applications for extension.

CARGO

Developing a facilities matrix

The quality of cargo handling facilities at airports varies

considerably globally. This is a concern to shippers and

freight forwarders, particularly to those that rely on a 100%

cool chain to maintain the freshness of their produce.

To benchmark air cargo handling facilities around the

world, IATA has begun developing an assessment process

designed to record and measure facilities against industry

standards and best practices.

The resulting matrix will raise quality by, for example,

assuring freight forwarders that a package can be

100% temperature controlled throughout its journey; by

simplifying the handling process; and by encouraging the

adoption of new technology. The matrix is designed to

work alongside existing facility audits and to support airline

demands for solutions and investment that will be aligned

with customer needs.

CARGO

Ensuring global standards for air cargo safety

The safety of passengers and air crew is the top priority for

the industry, and extensive regulations exist to ensure that

freight is carried in a safe and secure manner. The Dangerous

Goods Regulations (DGR) manual governs the carriage of

potentially hazardous items. IATA publishes the DGR and

sits on the ICAO Dangerous Goods Panel, which continually

monitors and updates the speciﬁcations and regulations. Of

particular concern are the following:

l Lithium batteries. The safe carriage of lithium batteries

remains of vital concern to the industry. Incident data indicates

that there is still a lack of understanding of the regulations

governing the transport of lithium batteries. Civil aviation

authorities need to focus efforts on oversight of the shipper

community, and where systemic noncompliance is identiﬁed

the authorities must take appropriate enforcement action.

l Unit Load Device Regulations. ICAO is focused on

updating its regulations for the safe carriage of heavy

and out-of-gauge cargo in unit load devices (ULD) in the

aftermath of such tragic incidents as the UPS cargo ﬁre

accident in 2010 and the National Airlines crash in 2013

that occurred when cargo broke its restraints in the hold.

ICAO in particular has proposed recommendations on ﬁre

containment and restraining special cargo. Airlines are

being encouraged to adopt the recommendations and to

train staff accordingly. ULD assets represent over $1 billion

in replacement value, so in addition to enhancing safety

proper ULD handling will protect airline assets by preventing

unnecessary damage not only to the ULD but also to aircraft.

Emphasizing the value of partnership

The air cargo industry has many players, each with challenges

and priorities. There is nonetheless mutual value in collective

action to improve industry processes.

The Global Air Cargo Advisory Group (GACAG) was

founded in 2011 to focus on industry-wide issues and to

enhance cooperation among industry players. GACAG’s

principal focus is on e-commerce, trade facilitation,

security, and sustainability. In 2013, GACAG focused on

supply chain security, publishing policy papers on air cargo

supply chain security regimes and on standards for cargo

screening technology.

IATA, meanwhile, is engaging with the International

Federation of Freight Forwarders Associations (FIATA) to

strengthen formal arrangements among airlines and freight

forwarders. IATA members recognize that the agency

program that governs the relationship between airlines and

freight forwarders is no longer suitable. Consequently, they

support the Cargo Agency Modernization Process (CAMP)

joint project between IATA and FIATA.

CAMP is intended to develop a model that recognizes that

freight forwarders are no longer mere agents of airlines and

that this changes the dynamics of how airlines must accredit

and work with these partners. It is expected that the results

of CAMP will be presented at the end of 2014.

Tailor-made,

the journey

of the future

PASSENGER EXPERIENCE

Offering a vision of the passenger experience

A passenger’s journey should be simple, smooth, and

hassle free. A number of industry initiatives are

transforming the passenger experience into just that by

2020. Those initiatives span planning and buying tickets to

arriving at the ﬁnal destination.

The New Distribution Capability (NDC) will address the

travel industry’s distribution limitations. Those limitations

restrict the ability of airlines and other air travel related

bodies to provide all the information and options available

to enable travelers to make informed purchases.

Bettering the airport environment

Understanding what travelers want is the key to meeting

their expectations. IATA’s 2013 Global Passenger Survey

shows that two-thirds of travelers prefer to check in online

or automatically with a text message or e-mail from the

airline, while just 11% prefer to receive their boarding passes

from an agent at an airport check-in counter.

Travelers also express a desire to control other airport

processes. More than half (53%) want a permanent luggage

tag that is unique to them and reusable every time they

travel. And 80% of travelers express interest in tracking their

luggage throughout their journeys in the same way that

courier companies allow customers to track parcels.

IATA’s Fast Travel responds to passenger demands for a

seamless travel experience and for control over their journey

through time-saving self-service options. The industry’s vision

is to by 2020 offer at least 80% of global passengers a suite

of self-service options based on industry standards. That

suite will cover self or automatic check-in, bag check,

document check, ﬂight rebooking, boarding, and bag

recovery and lead to signiﬁcant industry savings.

In 2013, 15.77% of travelers had access to at least three Fast

Travel initiatives. This was behind the target of 20%. For

year-end 2014, the target is Fast Travel access for 27% of

passengers, which will require a signiﬁcant acceleration in

Fast Travel implementation from the current 16.5%.

Under the Fast Travel banner, the industry is also investigating

the potential beneﬁts of near ﬁeld communication (NFC).

IATA and the NFC Forum released the NFC Reference Guide

for Air Travel in 2013.

Simplifying the Business

Fast Travel is a part of the Simplifying the Business (StB)

initiative launched in 2004. In a decade, such essential StB

projects as e-tickets, kiosks, and bar-coded boarding passes

have revolutionized air travel. Passengers value the simplicity

and reliability of e-tickets and e-boarding passes, and airlines

rely on the savings both offer in time and money.

StB’s original goal of “improving the customer experience

and reducing industry costs” is broadening to emphasize

“making the industry easier to do business with for

customers and partners.” This will be achieved through a

focus on four elements of air transport:

1. E-services and airline products

Shopping for air travel is changing. Airlines are offering

more products and services than ever before, including

access to airport lounges, priority boarding, and enlarged

meal menus.

The New Distribution Capability is focused on upgrading the

ability to display and sell air travel products and services

through travel agents. But the IATA e-Services project is

modernizing the back-ofﬁce functions associated with airline

offerings. This includes fulﬁllment, tracking, and accounting for

participants in the travel value chain. IATA e-Services does this

by replacing all paper miscellaneous documents and excess

baggage tickets with the global IATA Electronic Miscellaneous

Document (EMD) standard. An EMD is an electronic record of

the sale and use of lounge access, preferred seat, excess

baggage, or other such products or services.

The strategy to adopt EMDs is in full force. By the end of 2014,

IATA’s Billing and Settlements plan will only support EMDs.

PASSENGER EXPERIENCE

2. Expedited passenger data

Many governments require international air travelers to

provide personal and travel plan information before entering

their countries. Incorrect or incomplete information can result

in air travelers facing delays and even being turned away by

border controls. It can also lead to punitive ﬁnes for airlines.

The vision for 2020 is that international passengers will

arrive at the airport knowing that they are ready to ﬂy

because governments will have conﬁrmed this through

direct electronic communication with travelers. At the

airport, it will be necessary for passengers to conﬁrm only

their identity through a biometric match.

Efforts to date to align airlines and governments in

achieving this vision have highlighted the complexity of

the task and made clear that further work is needed. A

subgroup of airlines, governments, and industry suppliers

is developing a new approach toward passenger data and

is identifying the beneﬁts of that approach in terms of

security, efﬁciency, and cost savings.

3. Real-time interaction

Travelers want, and should be able to, interact with their

travel providers anytime and anywhere during their trips.

This is essential for the industry to best serve customers,

especially amid irregular operations.

This degree of interaction, however, is impossible as of yet

because passenger contact information is not always

accessible to service providers. The solution is to develop

standards and recommended practices for proactively

notifying passengers of cancellations, delays, and other

operational information while engaging with industry

partners to support this initiative. IATA made signiﬁcant

progress in this regard in 2013, and the target for 2014 is for

global distribution systems to implement IATA’s Customer

Contact Information initiative.

The growing availability of airport Wi-Fi alongside the

Customer Contact Information initiative will give passengers

a number of valuable options. They will be able to receive

real-time ﬂight information, to rebook, to receive push

notiﬁcations, and to access airline websites. In 2013, IATA

handed over the Airport Wi-Fi project to increase the

availability of Wi-Fi to Airports Council International.

4. Hassle-free travel

It is no secret that many passengers are unhappy with their

airport security experience. Queuing times and removing

shoes and belts were listed most frequently as the biggest

irritants in the IATA Global Passenger Survey. Smart Security

aims to offer a fast and hassle-free passenger screening

experience at airports while strengthening security and

improving operational efﬁciency with a risk-based system.

Another annoyance that passengers face is delayed

baggage. Nearly one in three travelers have had baggage

mishandled, according to the IATA Global Passenger Survey.

InBag is the IATA program replacing IATA’s Baggage

Improvement Program. By 2020, InBag aims to reduce the

percentage of mishandled bags worldwide from 1% to 0.5%

and to elevate efﬁciency to 20% in ﬁve key baggage areas:

check-in, security, manual handling, arrivals, transfers. InBag

will also enable innovation in making such products as a

baggage delivery service widespread and in introducing

modern standards for communications and systems design.

In 2013, IATA began implementing 13 InBag projects.

Improving security access and egress

The IATA-ACI Security Access and Egress (SAE) project

aims to improve passenger ﬂow at security checkpoints with

existing technology and infrastructure. The goal is to reduce

queues and waiting times to facilitate a more efﬁcient use of

space and a possible deferment of infrastructure

requirements and costs.

In 2013, 14 airports were visited to analyze the causes of

bottlenecks and to recommend improvements in passenger

ﬂow. This brings to 20 the number of airports visited since

the project was launched in 2012. Given the program’s

growing success, and the high number of airports requesting

an SAE visit, IATA decided to accelerate its efforts and is

targeting 250 airport visits by 2016.

Automated border control

The aim of automated border control (ABC) is to expedite

the ﬂow of low-risk passengers. ABC is meant to balance

the integrity of borders with the identiﬁcation of travelers

as low risk to facilitate their movement amid anticipated

growth in international aviation trafﬁc. In 2013, 21 airports

implemented ABC, exceeding the target of 15. The target

for 2014 is 25 airports.

PASSENGER EXPERIENCE

Furthering the seamless journey

Ensuring a seamless passenger journey requires many

systems to communicate information that are not always

available. Some passengers, for example, experience

occasions when their aircraft lands at an airport and stops

upon leaving the runway rather than going directly to its gate.

This occurs where air trafﬁc and airline IT systems use

different standards to share ﬂight data, causing information

gaps. When that happens, the arrival is managed manually,

slowing down everything.

Information gaps can even occur among an airline’s systems

if those systems use different standards. If all in the industry

used a common standard or at least mapped their

respective deﬁnitions without gaps, problematic incidents

could be avoided, passengers would have a smoother

experience, and the industry would see lessened costs.

IATA’s Industry Data Model will provide the technology to

eliminate information gaps. The model will be an electronic

repository of structure information, including industry-agreed

vocabulary, data deﬁnitions and their relationships, business

requirements, and the like, and will be viewable by industry

people and usable by developers of airline communication

systems. It offers the capability and methodology to move

away from the manual XML schema development.

The standard expected from the Industry Data Model will

be easy for IATA members to implement. And because the

model will be available in its various individual “parts” as

well as a whole, industry members can add the parts to

their systems as required or desired. The model, moreover,

can be thought of as a repository of standardized parts.

From time to time, a custom part may be required, but in

most cases the model facilitates the use of the parts that it

has readily at hand.

l Target and achievements in 2013: Proof of concept was

delivered, and requirements for data architecture approved

l Targets in 2014: All new projects in need of messaging

standards are to use the Industry Data Model and its

associated methodology by September 2014

A number of other projects were explored in 2013 and will be

moved into development in 2014. They include the following:

l The order to cash project explored the need for industry

standards to bring the airline industry’s order to cash process

to the level of that of best in class retailers.

l The universal customer data exchange project explored

industry requirements for a transparent, industry-wide

customer travel data exchange that beneﬁts all stakeholders in

the travel value chain. This will contribute to driving cross-

industry capabilities in customer service.

Instituting the NDC

Transforming the air travel shopping experience

IATA’s New Distribution Capability (NDC) will transform the

air travel shopping experience. Speciﬁcally, the NDC will

address the travel industry’s distribution limitations. Those

limitations restrict the ability of airlines and others to

provide all the information and options available to enable

travelers to make informed purchase decisions.

The airline industry has entered an era of varied service options

designed to let travelers choose how they want to ﬂy. Airlines

are able to offer their customers bundled and unbundled

products and services on their websites and to recognize and

reward brand loyalty. Most travel agents, however, generally

have access only to limited and commoditized airline product

and service information. The NDC grants travel agents access

to the entirety of an airline’s offerings.

The NDC is an IATA-initiated, industry-supported program

for the development and market adoption of a new

XML-based data transmission standard for electronic

communications between airlines and travel agents. It was

formally launched in October 2012, when the IATA

Passenger Service Conference approved Resolution 787,

the foundational document for the NDC.

With the valuable input of our partners in the travel value

chain, the NDC standard will help to close the gap between

the rich content that is available to travelers when they visit

an airline website and the limited information available when

they shop through a travel agent, either online or in a

brick-and-mortar ofﬁce. The NDC is a voluntary standard

that is open and available for use by any third party,

intermediary, IT provider, or non-IATA member.

Global Distribution Systems (GDS’s), meanwhile, support the

delivery of full, rich content to travel agents. But each GDS

employs closed, proprietary standards, rather than the open

and global standard of the NDC. Technical standards,

however, assure interoperability between the NDC and the

GDS’s and enable competing producers of technology to

ﬁnd common ground. In the end, consumers reap the

beneﬁts of efﬁciencies, innovation, and lower product costs.

PASSENGER EXPERIENCE

Moving from drawing board to pilot projects

The year 2013 brought major progress for the NDC,

including the following:

l As required under a US Department of Transportation

(DOT) rule, IATA ﬁled for DOT approval of Resolution 787,

the foundational document of the NDC.

l A strong outreach to air travel value chain stakeholders was

launched through participation in more than 60 industry

events; the creation of the NDC Blog, NDC video, and NDC

Demonstrator; and the launch of an advisory forum with

representatives of travel management companies, online

travel agencies, corporations, and GDS’s.

l Five NDC pilot programs were launched.

The NDC left the drawing board with the launch of those ﬁve

NDC pilot projects, which involved airlines and their travel

partners in North America, Europe, China, and New Zealand.

The projects tested airlines’ abilities to construct product and

service offers and to merchandize their baggage, seat map,

and ancillary services with rich content in either an

anonymous or a personalized manner using the NDC

Shopping schema. The pilot projects involved the following:

l Endeavor by American Airlines, together with JR

Technologies and a consolidator

l Skycouch by Air New Zealand, together with JR

Technologies and a consolidator

l SkyDreamer by Hainan Airlines, together with TravelSky

and the CTBA

l Sunshine by China Southern, together with TravelSky

and Ctrip

l Alpine by Swiss International Airlines, together with HP,

PROS, and Datalex

History was made on 29 November 2013 when the Chinese

online travel agency CTBA issued the ﬁrst e-ticket resulting

from an NDC-based shopping transaction through the

TravelSky system. The booking was a one-way trip between

Beijing and Hainan Island on ﬂight HU7782 on Hainan Airlines.

It demonstrated the interoperability of the NDC Shopping

schema with existing airline processes and that the NDC can

support China’s domestic air travel. In the next phase of

Hainan Airlines’ pilot project, the focus will be on the speciﬁc

ancillary services of domestic and international travel.

Other pilot projects in 2014 will cover all of the critical

aspects of the NDC. Feedback from these projects will be

provided to the Distribution Data Exchange Working Group

(DDXWG) to ﬁne-tune all aspects of the NDC.

Building partnerships

Strong progress in developing the NDC standard has been

accompanied by a growing outreach to our travel and

technology partners to explain the beneﬁts of the NDC

standard and to boost buy-in to and participation in the

development process. IATA has been engaged through the

DDXWG, where the technical standards are being

developed, and through the Airline Agents Forum and the

Passenger Distribution Group Advisory Forum. Additionally,

in 2014 we established the Airline Distribution Stakeholder

Forum with the purpose of driving a common industry

perspective on major topics through the inclusion of airlines,

agents, and technology providers.

An important outcome of IATA’s outreach to industry

partners was the ﬁling of a joint motion with Open Allies for

Airfare Transparency (Open Allies) to the US Department of

Transportation concerning Resolution 787. The motion

offered conditions that IATA and Open Allies, which is a

coalition of nearly 400 corporate travel departments, travel

trade associations, consumer organizations, and independent

distributors and sellers of air travel, recommended be

included in DOT’s approval of Resolution 787.

The conditions clariﬁed our industry’s commitment to the

core principles of Resolution 787 regarding anonymous

shopping, the compatibility of existing data standards with

the NDC standard, and the voluntary nature of the standard.

In return for DOT’s acceptance of these conditions, Open

Allies agreed to withdraw its opposition to Resolution 787.

NDC pilot projects and schema development will continue in

2014, paving the way for the adoption of the standard in

2015. Beyond that, the implementation of the NDC standard

is slated to begin in 2016.

Following the implementation of the NDC

Airlines, regardless of business model, will be able to

differentiate their products and services and to present

them in an attractive manner using rich format. This includes

photos and videos and the ability to offer value-added

products and services in all sales channels.

Content aggregators and travel agents will gain access to

an airline’s entire portfolio of offerings, including ancillaries

and promotional fares. They also will be able to provide

personalized services based on customers’ travel and

preference history with airlines, if customers chose to be

recognized.

Corporate buyers and travelers will enjoy a transparent

shopping experience and the ability to compare the full value

of airline offerings, not just the base fare, and to receive

personalized offers. In the NDC environment, corporate buyers

will have access to all airline product and service information,

reducing the need for out-of-policy bookings.

PASSENGER EXPERIENCE

Settlement

systems

the backbone

of the industry

FINANCIAL SERVICES

Depending on settlement systems

Commercial aviation is a highly integrated, global network of

thousands of companies and organizations. That network

depends on reliable, efﬁcient, and secure systems to report,

collect, and remit funds between the different parts of the

value chain.

IATA Settlement Systems (ISS) are the backbone of the global

air transport system. The ISS enable the swift, reliable, and

cost-efﬁcient movement of funds among airlines and their

travel supply partners. In 2013, the ISS settled $387.2 billion.

Reducing unrecovered debt

The ISS seeks in 2014 to reduce its unrecovered debt to

0.025%, compared with 0.056% at the end of 2013. The

reliability of the ISS, meanwhile, was strengthened in 2013

when all in-scope migrations were completed by year’s end.

ISS processes from 60 local ofﬁces representing 318 operations

were migrated into ﬁve regional service centers, in Amman,

Beijing, Madrid, Miami, and Singapore. The completion of those

migrations represents an important milestone in a process that

began several years ago.

Strengthening ISS is a program that seeks to improve ISS

operations based on one organization, one process, and one

set of tools. The aim, of course, is protecting IATA members’

money and establishing a renewed ﬁeld ofﬁce role for the ISS

as the eyes and ears of IATA in the marketplace.

In November 2013, the second release of the global banking

tool for standardization—the IATA Remittance & Settlement

Integrated System (IRIS)—was delivered. It covered 96.7% of

net cash sales settlements migrated to it. In 2014, IRIS will

cover the remaining percentage of net cash sales settlements

and will implement direct debit for ISS operations.

New Gen ISS

IATA’s vision for the ISS hinges on the New Gen ISS. The

New Gen ISS will grow and protect the relevance of the ISS

and increase from 46.0% the share of airline funds settled

through the BSP. As such, the New Gen ISS will ensure

continued relevance for the BSP and CASS.

$259.1

billion

$31.2

billion

$57.1

billion

$36.4

billion

$3.3

billion

The Billing and Settlement Plan (BSP) facilitates and simpliﬁes the selling, reporting, and

remitting procedures of IATA-accredited passenger sales agents and improves ﬁnancial

control and cash ﬂow for its roughly 400 participating airlines. At the close of 2013, there

were 88 BSPs covering 179 countries and territories, with BSP Rwanda added during the

year. The on-time settlement rate was 99.96%.

The Cargo Account Settlement System (CASS) is designed to simplify the billing and settling of

accounts between airlines and freight forwarders. It operates through CASSlink, an advanced,

global, web-enabled e-billing solution. At the end of 2013, CASS was processing 83 export

operations, 11 import operations, and two domestic operations and serving over 500 airlines,

general sales and service agents (GSSAs), and ground handling companies. CASS’s on-time

settlement rate was 99.98%

The IATA Clearing House (ICH) provides an efﬁcient, on-time settling of interline accounts

between the world’s airlines, airline-associated companies, and airline travel partners. In 2013,

the ICH achieved two records. It increased its throughput 10% versus the previous year, and it

had a 100% on-time settlement rate. All ICH transactions ﬂow through the Simpliﬁed Interline

Settlement (SIS) electronic invoicing platform that has gathered some 500 participants,

including 370 airlines and 130 suppliers. The target for 2014 is to attract 41 new members.

IATA Currency Clearance Services (ICCS) is the global cash management

service that enables airline treasurers to centrally control and repatriate

their worldwide sales funds. It is used by more than 290 airlines.

Enhancement & Financing (E&F) helps air navigation service providers

(ANSPs) and airport authorities improve the efﬁciency and quality of

their invoicing and collection processes.

IATA Settlement Systems

FINANCIAL SERVICES

Supporting success,

solutions in all areas

AVIATION SOLUTIONS

Emphasizing business intelligence

Business intelligence is critical in a ﬁercely competitive

market. Constant pressure to reduce costs while enhancing

customer services necessitates ever-greater operational

efﬁciency.

IATA products support the strategies of players across the

aviation value chain and help them to improve their business.

And the commercial returns on these products are reinvested

to support industry-wide programs in such critical areas as

safety, security, and the passenger experience.

Direct Data Solutions is an evolution of the tried-and-trusted

PaxIS product. It delivers crucial market insight using

ticketed passenger data. This helps airlines to understand

customer needs and supports many critical decision-making

processes, including network planning. Such knowledge

leads to business decisions that ultimately focus on

providing airline passengers with the destinations and ﬂight

frequencies they desire.

Direct Data Solutions covers 88% of worldwide agency sales

and complements this with direct sales from 18 airlines. Only

airlines that contribute to Direct Data Solutions are able to

utilize its data. Direct Data Solutions is already the most

comprehensive travel database in the world, and its

continuous improvement through greater data inclusion will

enable airlines to make the best-possible service decisions.

Ensuring airport solutions

AirportIS provides airports and consulting ﬁrms with

comprehensive trafﬁc data in support of marketing and air

service development. New clients continue to bolster this

industry-leading offering.

The Airport and Civil Aviation Consulting group also had a

positive year. It delivered some 30 projects on all continents,

tackling topics such as airport capacity enhancement

solutions, trafﬁc forecasts, business planning, and safety

oversight related initiatives.

Underpinning passenger solutions

Airs@t covers another aspect of the passenger experience

by surveying and scoring airlines across more than 70

customer touch points. Airs@t measures what customers

most value during their travel. Cabin crew behavior, for

example, is emphasized in the most recent survey results.

A single unpleasant experience with cabin crew can lead to

overall passenger dissatisfaction even if an airline provides

excellent service at other customer touch points.

Every year, Airs@t speaks with more than 50,000

passengers traveling on the world’s top airlines and routes.

In 2013, the product was enhanced to include even more

routes, including intra-Americas routes, and Airs@t will be

further updated to reﬂect developments in distribution and

communication channels.

The Frequent Flyer Program Benchmark Survey has been

added to IATA’s survey portfolio in 2014. This will allow

airlines to compare the performance of their frequent ﬂyer

program with that of competitors’ programs.

Weblink, meanwhile, continues to support agency sales

through IATA’s BSP. Weblink processed around $4 billion

in 2013.

Timatic is IATA’s offering of an industry standard for

compliance with border regulations.

Timatic Autocheck automates the document veriﬁcation

process through its integration with booking and departure

control systems. This helps to reduce immigration ﬁnes,

increase passenger processing efﬁciencies, and improve

the customer experience. Emirates, JetBlue, and Jetstar are

among the airlines to have become Timatic Autocheck clients

in the past 12 months. IATA continues to work with industry

solution providers, such as Amadeus and Sabre, to offer

Timatic Autocheck as a standard component of their systems.

IATA’s Consulting group complements these products.

The Consulting group provides ongoing assistance to

airlines across all facets of the aviation business.

Frequent ﬂyer/Mileage programme

Direct ﬂight (non-stop)

Lowest fare

Most convenient schedule

Previous good experience

Value for money offered

for this ﬂight

Reputation of airline

Partner of my preferred airline

Recommended by company

travel dept.

Recommended by travel agent

Others

14%

13%

12%

10%

Passengers

were asked:

What is the

ﬁrst reason for

choosing an

airline?

(Extract from Airs@t)

AVIATION SOLUTIONS

Working for cargo solutions

The Dangerous Goods Regulations (DGR) manual is a key

product given the high proﬁle of dangerous goods and of

lithium batteries in particular. The DGR is the industry

standard reference manual for the carriage of dangerous

goods and is vital to proper safety assessments.

CargoIS uses data from the Cargo Accounts Settlement

System (CASS) to provide business intelligence on the

cargo sector. A new IT platform implemented in 2013 has

enhanced CargoIS’s usability.

The Air Cargo Tariff (TACT) continues to remove paper

from the air cargo chain.

TACT Online has been launched, and work is under way to

distribute TACT rules in new and innovative ways. A new

rates database, for example, will increase the efﬁciency of

rates management and distribution, and new TACT data

rates products will be rolled out throughout 2014.

Highlighting the IATA Training

and Development Institute

Equipping aviation professionals with the skills and

knowledge to function at high levels in an ever-more

sophisticated environment is vital. And the IATA Training

and Development Institute (ITDI) meets the requirements

of the dynamic air transport industry.

The ITDI, in fact, offers more than 300 courses in 140

countries in which nearly 100,000 students are enrolled

every year. More than 40 courses lead to diplomas, most of

which offer professional certiﬁcation. Two courses can be

applied toward an MBA in aviation management. All ITDI

courses are internationally recognized and provide a clear

path of advancement for the individuals who complete them.

IATA plays a leading role in setting aviation standards and

processes, so it is uniquely positioned to offer insight and

instruction in all aspects of aviation. But to extend its global

educational outreach and to ensure all available expertise

is utilized, IATA partners with more than 430 global

organizations, including ICAO, established industry players,

and leading educational establishments.

A partnership with language-learning expert Rosetta Stone,

for example, provides online training in 23 languages. And in

2013, IATA’s collaboration with Florida State on Quick

Response Training delivered a very successful program. It

was oversubscribed and resulted in an increase of nearly

36% in trainees’ wages on average a year after trainees

completed their training. More than 60 such partnerships

were formed in 2013 alone.

Ensuring that people worldwide are able to beneﬁt from

IATA’s and its partners’ wide-ranging educational

opportunities is the role of the International Airline Training

Fund (IATF). This nonproﬁt foundation is funded by

donations from IATA members and other organizations

involved in the air transport industry and helps fund training

where it is most needed.

The IATF offers educational opportunities in most areas of

the airline business but gives priority to instruction in airline

operational safety. In 2013, the IATF trained 2,728 people,

and fully 74% trained in operational safety.

Holding events

IATA’s core conferences cover topics as diverse as law,

cargo, ground handling, passenger travel, airport slots, and

fuel. As such, IATA continues to respond to demand from

the aviation supply chain to meet and discuss critical air

transport issues.

In 2014, a major new event, the World Financial

Symposium, will add to IATA’s event offerings. The World

Financial Symposium will help shape important policy

decisions regarding the industry’s ﬁnances and ﬁnancial

systems. Its ultimate aim, and the aim of all IATA events, is

to continue creating value for the industry by bringing

decision makers together to promote best practice.

l World Cargo Symposium

l Legal Symposium

l Aviation Fuel Forum

l World Passenger Symposium

l Ground Handling Conference

l Slot Conference

l World People Symposium

New programs in 2013:

ITDI developed and delivered

new courses

1st year anniversary on Facebook:

ITDI has now reached

21,760

followers

new diplomas

AVIATION SOLUTIONS

ITDI statistics

IATA OFFICES

Geneva Executive Ofﬁces

33, Route de l’Aéroport

P.O. Box 416

CH - 1215 Geneva 15 Airport

Switzerland

Tel: +41 22 770 2525

Fax: +41 22 798 3553

Europe

Torre Europa

95 Paseo de

Castellana

Madrid 28046

Spain

350 Avenue

Louise

Louizalaan

Brussels 1050

Belgium

Main ofﬁces

Regional ofﬁces

Montreal Head Ofﬁce

800 Place Victoria

P.O. Box 113

Montréal, Québec H4Z 1M1

Canada

Tel.: +1 514 874 0202

Fax: +1 514 874 9632

Africa

Sandown Mews East Block

88 Stella Street

Sandton

Johannesburg 2146

South Africa

Asia-Paciﬁc

TripleOne Somerset

111 Somerset Road

#14-05 Somerset Wing

Singapore 238164

China & North Asia

3rd Floor,

China Digital Harbor

No. 1 Wangjing North Road

Chaoyang District

People’s Republic of China

Middle East & North Africa

Business Park

Building No. 8

King Abdullah Street

Al Shaab Roundabout

Amman 1194

Jordan

The Americas

703 Waterford Way

Suite 600

Miami, Florida 33126

United States of America

North America

1201 F Street N.W.

Suite 650

Washington, DC 20005

United States of America

Russia & CIS

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Paveletskaya Square

Moscow 115054

Russian Federation