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The luck of the Irish

Stephanie Taylor reports on the good vibes at the International Air Transport Association’s 72nd Annual General Meeting.

This year’s IATA AGM took place at the Royal Dublin Society (RDS) in sunny Ballsbridge (pictured above).

Last week’s IATA AGM in Dublin saw incoming director general and CEO Alexandre de Juniac and Willie Walsh, the new chairman of the IATA Board of Governors, promising to push the EU Commission on the Single European Sky and other aviation issues.

A pilot shortage doesn’t seem to be as high a priority, with Walsh claiming it’s “not a European problem.” However, Simon McNamara, director general of the ERA, took to Twitter following Walsh’s comment to argue that “it is a European issue at the small aircraft end, with pilots leaving to fly mainline and leaving a gap.”

Overall, the tone was one of positivity. Shane Ross, Ireland’s Minister of Transport, opened the event by saying that his country is both pro-consumer and pro-competition. He remarked, “an open and competitive aviation sector is the best mechanism to meet the challenges ahead.” This sentiment was echoed by the host of the IATA AGM, Aer Lingus CEO Stephen Kavanagh. More on his views on Irish Aviation here.

The macro-view also remained upbeat, with outgoing DG and CEO Tony Tyler declaring as part of his ‘state of the industry report,’ “This year we expect a collective net profit of $39.4 billion. It will be only the second year in our history – and the second in a row – in which airlines will make an aggregate return in excess of the cost of capital.

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Pictured left to right: Anthony Concil, IATA’s VP corporate communications; Tony Tyler, IATA’s outgoing director general and CEO; Andrés Conesa, CEO of Aeroméxico and outgoing chairman of the IATA Board of Governors; and Stephen Kavanagh, CEO of Aer Lingus

“Lower oil prices are certainly helping – though tempered by hedging and exchange rates. And your hard work is strengthening the business. Load factors are at record levels. New value streams are increasing ancillary revenues. And joint ventures and other forms of cooperation are improving efficiency and increasing consumer choice while fostering robust competition. Overall, despite generally adverse economic conditions, it is a good time for the air transport industry.”

Brian Pearce, IATA’s chief economist, supported this outlook by estimating that while the impact of hedging has delayed fuel price benefits, fares falling by a predicted 7% in 2016 will give additional stimulus to growth which is already forecast at 6.2% – well above average.

While many journalists were asking questions about Brexit, IATA doesn’t seem too worried. Citing the European Common Aviation Area (ECAA) agreement, which includes non-European Union member states Norway and Iceland, panellists at a general press briefing agreed a successful ‘Leave’ campaign wouldn’t necessarily have much impact.

Instead, the problems which took centre stage were flight tracking (which you can read more about here), blocked funds yet to be repatriated by airlines (most notably in Africa and Venezuela), the environment and cybersecurity.

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Gilberto Lopez-Meyer, SVP safety and flight operations, IATA

Although it wasn’t on the agenda, the legal disruption of the sector is also playing on the industry’s mind. When Cat Tully, co-founder of the School of International Futures, asked the audience whether they thought the taxi industry was prepared for Uber, 89% of delegates answered ‘no.’

Despite 44% of delegates agreeing there would be a similar disruption to the aviation industry in the next decade (with 39% opting for ‘maybe’), 45% of attendees said they wouldn’t be prepared for it (and a further 40% thought they may be prepared for it). The long and short of things? The aerospace sector needs to make more use of strategic foresight.

Nonetheless, future planning is already underway, with IATA emphasising the importance of paving the way towards capping net emissions with carbon-neutral growth from 2020 and cutting net emissions to half of 2005 levels by 2050. I look forward to finding out how the association hopes to do so in more depth at the 73rd AGM in Cancun next year.

Stephanie Taylor, assistant editor, LARA
Dublin, Ireland

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