ATNS on IATA “Wall of Shame”


The International Air Transport Association (IATA) expects African airlines to post cumulative losses of US$500 million for the 2009 financial year, based on a loss of market share combined with the impact of the global recession and high costs.

In this regard he grouped South Africa`s Air Traffic and Navigation Services as one of a small number of monopoly suppliers on the IATA “Wall of Shame” for proposing a 44% increase in charges from next year.

The half-a-billion loss is part of the US$9 billion IATA expects the global industry to lose this year. IATA Director General and CEO Giovanni Bisignani says this is the result of an unprecedented 15% revenue drop that will see industry revenues shrink by US$80 billion to US$448 billion.
“I am a realist and I don`t see facts to support optimism,” he said at the IATA AGM and World Air Transport Summit that warps up in Kuala Lumpur, Malaysia, today.

“The industry is in survival mode. Whether this crisis is long or short, the world is changing. Travel budgets have been slashed and consumers will need to reduce their debt. It will not be business as usual in the post-crisis world.”

He says this disaster has created the opportunity for governments and airlines to build a stronger industry. “That means resizing and reshaping,” Bisignani adds.

He says IATA`s “Simplifying the Business” programme has given the industry a head start on cost cutting, with US$4 billion saved last year alone by phasing out paper tickets in favour of electronic equivalents and the deployment of self-service kiosks.

“This was only the beginning. We have our eyes set on another US$10 billion in savings by improving baggage management, travel processes and with e-freight,” said Bisignani.

Bisignani notes that the burden of change must be shared across the industry value chain. “Resizing and reshaping is not just a problem for airlines. Everyone in the value chain lives off our revenues. All must contribute to industry change”.

Of the various role players he said:  

·         Labor: “We cannot reshape without flexibility. This is not the time for salary increases. To protect jobs, we must modernize work practices and we must all do more with less,” said Bisignani.

·         Travel Agents: “The clock cannot be turned back. To survive in the global online market, travel agents need to reshape services and business models to provide greater value that travelers are willing to pay for,” stated Bisignani.

·         Monopoly Suppliers: “Every supplier—monopolies included—must reshape products and services to reduce their costs and ours. When demand drops, they cannot simply divide the same costs among fewer customers,” said Bisignani. An IATA “Wall of Shame” gives special mention to the most serious cases of infrastructure providers not keeping pace with the industry`s need for improved efficiency, he adds, which includes: BAA and the UK Civil Aviation Authority for agreeing an 86% increase in London Heathrow charges for 2008-2013; Airports of Delhi and Mumbai for their 207% increase in charges; Quiport in Ecuador for increasing charges by 79% since 2005 to pre-finance a new airport that may never be built; Air Traffic and Navigation Services (ATNS) South Africa for proposing a 44% increase in charges in 2010/2011 and the EUROCONTROL States of Denmark, the  Netherlands and Poland for proposing charges increases between 27% and 32%.

·         GDSs: “We cannot accept that Western GDSs charge around US$4 per transaction when China TravelSky does the same job for US$0.50. This must change,” avered Bisignani.

New relationships

Bisignani also urged a resizing and reshaping of the relationship between airlines and governments. “Our relationship with governments must move from punitive micro-regulation to joint problem solving,” said Bisignani who cited four areas for enhanced cooperation.

·         Making Aviation Greener: Aviation`s emissions will fall by 7% in 2009—5% from the fall in demand and 2% as a direct result of the industry`s united four-pillar strategy to address climate change. “Airlines have taken a monumental decision. Today we have committed to achieving carbon-neutral growth by 2020,” said Bisignani. Airlines have set three important sequential goals:

o       1.5% annual improvement in fuel efficiency until 2020;

o       carbon-neutral growth in 2020 and

o       a 50% reduction in emissions by 2050.

“We cannot achieve these ambitious targets alone. Governments must move from punitive taxation to actions that support reductions in CO2. That means

establishing a global sectoral approach for aviation emissions under Kyoto 2 and

supporting improvements in technology, operations and infrastructure,

particularly the development of aviation biofuels and the implementation of

important infrastructure projects such as a Single European Sky and NextGen in the US,” said Bisignani.

·         Protecting citizens with better security: “We must spend the US$5.9 billion that airlines and their passengers pay for security more wisely by focusing on the threats, rather than the 99.9% of travelers who are not a risk,” said Bisignani. He challenged governments to coordinate security measures and standards across borders to avoid the double checking of the nearly one million passengers a day who make connections. “Europe is progressively doing this with One-Stop Security. It`s time to push this much further,” said Bisignani.

Improving efficiency by reducing delays: Airlines are investing billions in new avionics to fly more efficiently, reduce delays and improve environmental performance. Bisignani noted significant progress on a Single European Sky and urged President Obama to make NextGen a reality in the United States. “The trillions of dollars being spent in stimulus programs are a great opportunity to improve infrastructure. The combined benefits of NextGen and a Single European Sky in 2030 would be 41 million tonnes of CO2 reduction and US$21 billion in fuel savings. To achieve these, we need the investments now,” said Bisignani.

Saving jobs and stimulating the economy: “We don`t want bailouts. All that we ask for is access to global capital. If we cannot pay the bills, saving the flag on the tail will not save jobs,” said Bisignani in asking governments to progressively liberalize access to markets and capital. “This would be a cheap stimulus. Liberalizing key routes would create US$490 billion in economic activity and 24 million jobs. The next logical step would be for the US and Europe to expand Open Skies to Open Aviation,” said Bisignani. IATA continues to push for similar progress globally with its Agenda for Freedom—a group of 15 key government players in aviation policy. “Later this year, IATA`s Agenda for Freedom will deliver an important policy tool with governments signing a Multilateral Statement of Policy Principles,” insisted Bisignani

“Air transport is a responsible industry—in good times and in crisis. Today`s situation is unprecedented—the most difficult ever. Governments and partners must understand that we are struggling to survive in a new and harsh reality. We are, however, resilient and capable of great change. Together we must turn challenges into opportunities to be safer, greener and profitable,” said Bisignani.

But the ATNS told Business Day newspaper Bisignani`s comments were “premature” as the airports regulator is still consulting ATNS and the airlines regarding next year`s increase.
“Iata has also not taken cognisance of the fact that in the previous three years we did not hike our tariffs at all. The airlines fully understand the reason for the proposed increase,” ATNS spokeswoman Anna Sanfilippo told the paper.
As with Airports Company SA, ATNS`s fees are determined over a five-year permission period based on capital spent in the previous period.
The airports regulator calls for submissions for the new permission period during the third year of the preceding cycle, and ATNS`s new five- year period is due to begin next year.
Sanfilippo says capital expenditure cost the ATNS R546 million since the last cycle began in 2007, more than the R457 million planned.
“We spent more than we had planned to due to our preparations for the Soccer World Cup and adverse changes in the exchange rate.”
She said ATNS planned to spend more than R800 million in the next five- year period.